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While it is premature and insulting to suggest that Greece, failing to form a definitive coalition government after its legislative elections that were themselves held in the framework of a caretaker government ingratiated as a condition of the first bailout package, will flagrantly choose to not uphold its obligations—attracting no clear majority though like-mindedness abounds—it does beg the question at what cost default. Greece is already in hock for the better part of a generation just keeping current on payments to service its rescue packages, with acutely less to show for it in the end: the dictates of creditors and angel-investors are superseding public services and the cultivation of a jobs market. Prophets of doom are probably not exaggerating when the say that Greece will suffer an extended period of massive poverty if they are forced to default (there is not much choice left in the matter) and quit the euro, but such consequences are temporary, surely less than the terms of the loan, and the Greeks could begin clawing their way back right away. Such a precedent, though, would be dread to see, dread to hear for other countries on the economic ledge and the minders of the EU—a cue for Spain, Ireland, Iceland, Portugal, Belgium and Italy, another nation imposed with a caretaker government, to consider doing the same.
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I venture that the biggest fear behind the potential for contagion and strict monitoring of Greek conduct lies in not the potential for poverty but rather that it is a renegade category of poverty. Consumption continues at a pace, regardless of financial standing, so long as there is credit and interminable refinancing. Trade partners can still sell their exports and settle payments with a common currency in understood and agreeable terms, but once those conditions disappear and a country is unable to afford imports, established trade routes break down and there’s a turning inward and countries become more self-sufficient, relying on native products and developing local manufacturing (even if not as immediately efficient and technically advanced), perhaps even getting accustomed to getting by with less. Stronger economies would not be sustained without broader markets for the export of their expertise, and their sterling credit.
I venture that the biggest fear behind the potential for contagion and strict monitoring of Greek conduct lies in not the potential for poverty but rather that it is a renegade category of poverty. Consumption continues at a pace, regardless of financial standing, so long as there is credit and interminable refinancing. Trade partners can still sell their exports and settle payments with a common currency in understood and agreeable terms, but once those conditions disappear and a country is unable to afford imports, established trade routes break down and there’s a turning inward and countries become more self-sufficient, relying on native products and developing local manufacturing (even if not as immediately efficient and technically advanced), perhaps even getting accustomed to getting by with less. Stronger economies would not be sustained without broader markets for the export of their expertise, and their sterling credit.
