The crazy thing is that everybody knew at the time that Greece joined the Eurozone, that they’d cooked the books in order to meet the fiscal policy requirements. They’ve NEVER met the requirements. I remember reading about it at the time in The Economist, so it’s not like it’s a state secret. But it was boom times and I guess everyone figured it would all work out.
I think the only path forward is for Greece to default, exit the Euro, and inflate their way out of this mess. Greece is a tiny portion of the Eurozone GDP. The problem is when Italy, Portugal, Spain, and possibly Ireland all decide to follow suit, and I don’t see how that can be prevented one Greece establishes a precedent.
