[_delirium]

Among Greeks at least, there's a significant feeling that Greece won't come out ahead, and that these measures are being imposed for the benefit of: 1. other EU countries; and 2. bond investors, some of whom are the same as #1 (e.g. a bunch of German banks). May or may not be true, but there's a large sentiment (maybe even a majority) that the average Greek, especially those in, say, the bottom 75% of wealth/income, would be better off if the government just defaulted on the bonds. They point to Argentina, among others, as a successful example of taking that route.

[marcamillion]

Hah! I am glad you pointed out Argentina as an 'example' of 'a successful example'. I will definitely cover this in my blog post.

This recent crisis has shown that Argentina never did recover from that initial default and has had to default a second time. Talk about going back to the well!

[_delirium]

The "going back to the well" I think might actually be part of it: a lot of Greeks consider that a perfectly viable option, because they remember a past of periodic defaults / currency devaluations every 10 to 20 years or so (and remember Italy doing the same), and don't remember it being particularly bad. Probably a significant proportion would rather go back to that, even if it meant pulling out of the Eurozone, than enact neoliberal reform.

[marcamillion]

Well...the thing is, back in the day it probably was bad - but not as bad as it would be today. Today, everything is so interconnected. Society has progressed so much, and wealth has been generated at such a fast clip, that cutting off your nose would do nothing but spiting your face.

The reality is that when you look at what has been powering Greece's astounding growth from 1996 - 2006, it was mainly tourism + foreign direct investment.

If you do an Argentina-type default, tourism will instantly be hit and FDI will go to nearly zero (or very close) VERY quickly. The unfortunate truth is that pulling out of the Eurozone wouldn't be a cure all. Without the discipline being forced on the politicians by the EU + IMF, what will force them to change and be fiscally prudent? Nothing will. If anything, things would only get worse because they would be able to print their own money again.

You know what happens when a profligate government can print their own money? Ask Zimbabwe.

[_delirium]

The 1996-2006 growth is actually part of the disagreement as well: a lot of Greeks feel ambivalent at best about it, because they feel it went disproportionately to a relatively small elite (I don't have the numbers on whether that's true). Total GDP went up significantly from 1996 to 2006, but the feeling is that it went mainly to the top 25%, with a good portion going to the top 10%. I believe (though I'd have to look it up) that real income of the bottom 50% was flat or declining over that period, which would mean that fully half the country doesn't perceive 1996-2006 as a positive economic period at all.

On the inflationary side, Zimbabwe is an obvious example (with Weimar Germany) of the levels you don't want to go to, but the 1970s Italian/Greek levels of circa 30% annual inflation (with a sort of punctuated equilibrium yearly distribution, i.e. 5-10% most years and 1000% once a decade) aren't quite the same as circa 30,000% annual inflation. It has a lot of effects, some negative, some positive, but is a different sort of beast.