Greece has been borrowing money since the late 1800s, each time they get close to paying it off some other disaster befalls them and they need another loan. They borrowed heavily after WWII and defaulted (as well as defaulting to some degree a few times before as well), so when they asked for another loan they ended up paying about 120% interest, it was like the other countries were being loan sharks. They are still paying loans with massive overheads and poor terms.
If Greece defaults it is far worse for France and Germany than for Greece, France and Germany have the greatest exposure, the top five French banks would be crippled if Greece defaulted. The Greeks import almost no food and while fuel might get very expensive they are already thrifty (almost no one has more than a 1.6L car) and almost all water is heated with solar boilers. The biggest problem would be currency devaluation for a decade (because they would have to go back to the Drachma), but there is enough import of foreign currency through tourism to help offset it. They have to stop public building projects and lay off lots of public sector workers, but these people are just a stone round the neck of the rest of the people because many of them aren’t productive because they effectively have “Job For Life”.
They have already started getting serious about corruption, so that should help a great deal, but corruption is endemic!
Every Greek born has €31,000 of public debt.
Unemployment is 43% among 15-24 year olds.
Every Greek will evade an average of €3,000 in tax in their lifetime
Europe has demanded €50bn of public assets to be privatised or sold (20% of GDP).
In my opinion Greece should default, and the state should start operating just with New Drachma, don’t convert savings from Euro to Drachma but the government should only pay out in Drachma and should insist on taxes being paid in Drachma. State industries should only accept Drachma. They could sell their assets but it wouldn’t achieve anything. Most of the phone network is owned by the German telecoms company. The power company has an aging infrastructure and horrible regulation which no one would pay much for. Many of the major road developments are already PPP. They don’t have enough assets to sell at a good value! Tourism and natural circulation would restore the value of the Drachma in a decade or two, there could be inward investment and with restricted ability to import products there would be a boost to local industries/production!
In addition: after the push to get Greece into the Euro they fudged their economic data once in to show they were maintaining their financial performance, it was only later, after they were well embedded that it was realised.
My partner and I have often discussed that despite being declared the “home of democracy” the Greeks now have neglected their duty and forgotten about what it really means to be democratic. I believe also they are negligent because they don’t have independent checks and balances. Politicians have the right of asylum in parliament rather than the idea that they should fear even more because they are in the home of democracy! Greek higher education believes it is impure to mix business and academia, they don’t leverage their massive assets (even the waiters in the cafes in Greece have a Masters or higher!) and universities don’t even know what an “Enterprise Unit” is. The agricultural school sells their excess stocks because they have more than their canteen can handle, but that is a rare exception!
Hope that gives you an idea. Every one in Greece seems very subdued and depressed at the moment, but they are getting on and trying to live their lives with an average of 20% less money in their pockets.