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The real Greek problem is not really government debt itself, but the private Greek economy. Even if all government debt was pardoned, straight up, they'd still be in trouble. The Greek government might have a lot of debt, but most of its obligations are not to servicing said debt, but to keep services running internally, and most of those expenses are paid to Greeks. If Greece had its own currency, inflating away some of those expenses becomes a viable strategy. Also, devaluing a currency means easier exports, more tourism, and more pressure to use products made at home, which means less money leaving the country.

All of those tools are used in countries with their own currency all the time. Monetary policies change to match the health of the economy. But in the Eurozone, monetary policy did not match what Greece needed, neither in their boom, or in their bust. Greece should have never, ever, joined the Euro, given how different their economy is from Germany. Unified monetary policy without a fiscal union doesn't make any sense.

The debate among economists is not whether Greece should have joined the Euro, but now that it's in, and in dire straits, if the very high cost of leaving the Euro is worth the advantages, or it's better to suffer yet a second consecutive bad decade trying to become competitive with Germany.



The Greek government has recently run a primary surplus. This means they would _not_ be in trouble if all government debt was pardoned.




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