– Greece lied and cooked the books to get into the euro. Country is very corrupt.
– When they first started cracking around 2008, investors bought up their bonds, figuring (correctly) that the eurozone would bail out their junk debt for reasons of prestige.
– Lo and behold, other EU countries bailed out Greece, achieving nothing to help Greece itself, but giving the investors a pretty penny on their junk bonds.
– Sine then, consecutive cycles of bailout-crisis-bailout-crisis. Greece can’t really reform without serious pain for the next 50+ years. This is what the rest of the eurozone wants them to do. B/c then they can stay in the euro and the debt will be fulfilled.
– When centrists fail, the loons come out and play: Last election, voters put hardcore socialists in power; neonazis and communists also had good elections.
– New socialist gov’t tried playing hardball with EU, especially Germany, over this last round of elections, getting them to give more money to Greece.
– Germany, very ISTJ country, got tired of Greece. After several handouts and plans, Germany is now butchering Greece in the negotiations, giving them nothing. Instead, stepping up austerity demands on Greece, threatening to let them collapse. I.e. Germany got enough and is now putting the gun to Greece economically. Don’t try to play chicken with them.
– But while most of the eurozone has been on Germany’s side this whole time, many are now saying that Germany is being too harsh on Greece.
– What should also be considered is that Greece is a NATO member and if EU/USA doesn’t bail them out, Russia probably will do so in exchange for military knowledge, doctrines etc. from NATO. More than just economics is at stake.
– Basically, Greece is a corrupt douche, and Germany/France don’t want to see their prestige project crumble. There’s also the problem that if Greece bails on the debt, then Italy, Spain, Portugal, etc. will probably do the same. These countries are shitty as well.
What should be done?
– No one really knows because a cessation on this scale within the union has not been seen before.
– Two camps:
— (1) Libertarian: Rip the bandaid off now. Let Greece leave the euro, let them devalue their currency (i.e. their debt too), set prices at an attractive rate to gain better import/export balance. However, short term (~5 yr) consequences of this will be bad, while the long term consequences will be good. But it also carries the danger that a new Greek central bank that can set its own money supply is going to undermine the wealth of their own country (right now EU sets their money supply).
— (2) More centrist/pragmatic: Let them stay in the euro, give them even more debt relief (in spite of the fact that they’ve had nothing but handouts for 7 years now). In the short term this is better than a cessation; in the long term (~50 yrs) this will condemn Greece to an arid economic backwater.
Major clusterfuck, many considerations, no really good options left.