...Consider now what this grim choice of death by a thousand cuts involves. What Greece has in essence committed itself to is an internal devaluation lasting years, if not decades into the future. There is no discernible end to the austerity; year after year, it grinds remorselessly on. Even if everything goes according to plan, which seems deeply unlikely on the record so far, it takes until 2020 to reduce the national debt to 120pc of GDP, a level still far too high to be remotely sustainable.Read the rest here.
In addition to having to run big primary surpluses into the indefinite future, Greece also faces a massive hit to nominal wages and living standards as it seeks to impose competitiveness on an economy which in truth has about as much in common with the colder, northern climes to which it has joined itself at the hip as the Mediterranean does with the Baltic. To think that the two can ever be moulded into a unified whole is fantasy of the cruellest kind.
There is not a hope of Greece growing its way back to debt sustainability while still in the euro. As things stand, capital is leaving the country by whatever means available, sometimes stuffed into suitcases and spirited across the border.