[pjc50]

> only sensible thing to do is default

The problem here was cashflow; defaulting might save you from more loan payments, although actually doing it is quite painful under international law (see Argentina). But Greece needed to take out further loans in order to meet immediate public funding needs - and defaulting would have prevented that, or made it much more expensive.

I've turned this over in my head a number of times. None of the options are particularly pleasant, but it's not a good idea to pretend that defaulting would have been trouble-free.

[marcosdumay]

"The only way out" != "trouble free"

Obviously Greece needs a balanced budget for defaulting. Too bad it seems to be moving the other way.

[Bartweiss]

The cynical play for Greece might have been trying to schedule their bailouts in a default-friendly way. Accept bailouts, conduct several rounds of aggressive cuts to balance the budget (while financing with tranche funds), blame the Eurozone for them at home, and then default with a balanced budget immediately after a funding unlock.

I'm not sure it was possible - the deficit was too big to close without damaging the economy - but I suspect that leaning on international support while preparing an easy default might have been the best chance.

[pjc50]

If they'd been able to balance the budget, they wouldn't have been in that state in the first place!