That's it. What did we expect after new austerity measures were agreed to? Who the heck goes to work in Greece anyway? Clearly they aren't going to pay anything back to their creditors. The
Europeans should just give the Greeks the boot and let the banks take their losses as an example to the others. (H/T
The Grumpy Economist.)
Greece is a smokescreen. Germany could payoff the entire Greek debt and not miss a blink. The only concern with Greece is the contagion effect in that a messy default might spread fear and cause a run on the debt of (mostly) Italy. Italy, and to a lesser extent, Spain are large enough that, if they go, Germany can't help. If we remain focused on Greece long enough, Italy gets more time to get their act together. They're working on it. Last I checked, in 6 more months, Monti might have things under enough control. As soon as he does, expect Greece to be tossed aside as no longer relevant.
ReplyDeleteAnon, you could be right, but it seems it would still concentrate the minds of the Italians if the Greeks were booted out of the euro. The example of the United States being unwilling to bail out the states in the 1840s comes to mind. Regardless, the math is bad for everyone whose workforce hasn't kept pace with productivity improvements over the last two decades.
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