I saw a TV programme a couple of weeks ago that featured Michael Portillo, a former big beast in the Conservative party, speaking to Greeks about the Euro.
Like many on the right wing of the British political system, Portillo is highly critical of both the EU and the single currency. So his starting point was that Greece needed to get out of the Euro, and return to using the Drachma. The theory being that a devaluation would make the country competitive again.
However, most, if not all of the Greeks he spoke to wanted to retain the Euro. The reason that came up repeatedly was that it imposed a level of discipline on the government, and prevented the cycle of devaluations that had hitherto characterised the country's recent economic history. In fact, 70% to 80% support remaining in the single currency.
The trouble is that the Greeks don't like the terms and conditions of the bailout. The message that the political parties are peddling is that they can stay in the Euro but not continue with the austerity package by somehow renegotiating the terms of the deal. So having their cake and eating it.
What gives the Greeks some leverage is that a default could cost the Germans around €1 trillion, against a GDP of €2.6 trillion. In fact, Satyajit Das is very gloomy about the Eurozone's prospects because of this. (If you haven't, listen to
this recording from the Sydney Book Festival. It's worth listening to, even though it sounds like we're all doomed, but Oz seems better positioned.)
I'm not sure what the solution is. I suspect that it probably needs politicians to admit to what state we're in, and come up with honest solutions. These probably involve austerity, paying more tax for fewer services, and cracking down on both tax evasion and avoidance. But I'm coming from a position where I believe a lot of the sense of prosperity over the last decade or so has been illusory, created by borrowing, and now we're into a cycle of deleveraging.
But do bear in mind that despite all the talk of Eurogeddon, the debt and deficit levels there are lower over the single currency area than in the UK, Japan or the US. None of those countries seem to be in imminent risk of a similar crisis, so the causes are probably down to sclerotic leadership as much as anything else.