[vidarh]

> Other countries have managed to claw themselves out of bigger holes than this.

Do you have examples of any that have done so without extensive debt relief? I can't think of any.

IMF's most optimistic numbers (which rests on wildly unrealistic assumptions) indicates it would take decades, and they've made it very clear that the debt isn't sustainable at all. When their past attempts at forecasting the Greek situation has consistently understated the problems, that ought to be pretty sobering.

> Right now there is no good or easy way out of the mess any more

Maybe not "good or easy", but substantially less damaging than what's been put on the table: Drastic debt cuts coupled with short term financing, coupled with reforms that aren't tied at reducing Greek government spending, or at least replaces any spending cuts with investment elsewhere (as the spending cuts have been a driver for the drastic contraction of GDP).

[jacquesm]

This is all true now, but it wasn't when this whole circus started.

As for the present my personal preference would be to simply forgive all debt and to ask Greece (politely) to exit the Euro and not to apply for re-admission until they have the house in order.

That's not going to be a very popular option but it would give the Greeks a fighting chance to solve this the Greek way.

Already a large chunk of the debt was written off (in 2012) so there is some precedent for that but back then the motivation was a different one (to keep Greece in the Euro at all costs and to offload the private sector problems onto the public one).

[maxerickson]

If you are willing to forgive all the debt there probably isn't much reason to kick them out of the Euro. I'm not watching the situation all that carefully, but I expect that kicking them out would further damage their economy, whereas if you don't kick them out, individual actors can just note that lending money to Greece isn't a good idea (so it shouldn't be the case that they are able to quickly build up a new untenable debt).

[jacquesm]

It would give the power to self-determine these issues back to the Greeks, and it would forestall any re-run.

[maxerickson]

I don't think it is clear that an exit would forestall a re-run any better than their already ruined credibility .

(another way to look at it: the interesting question on the table is how much of their existing debt the Greeks are going to repay, future debts aren't going to be a serious problem in the short term regardless of what happens)

I also (while not thinking my opinion is worth much) think that the economic damage from an exit would likely not be worth the ability to self determine further ruinous fiscal policies.

[vidarh]

If you forgive all debt, there's no reason for them to exit the Euro: They've been operating at a surplus for a while now. Their required ongoing bailouts are at this point down to servicing the mountain of debt.

There's certainly many more reforms they ought to carry out, but none of them are necessary for a budget surplus if the debt is removed.

[varjag]

> Do you have examples of any that have done so without extensive debt relief? I'm can't think of any.

Ireland perhaps the most recent one.

[vidarh]

Irelands debt situation was never anywhere remotely as bad as Greece's. Irelands debt to GDP peaked at 123% after the bailout. Greece's reached 177% in 2014, as is likely to go higher.

So it is in fact not an example of a country that has clawed itself out of a bigger hole than Greece.

[varjag]

Ireland's debt to GDP peaked 4x fold from it's longtime "norm" of 30%, while Greek was long at over 100% to begin with.