Wall Street Journal
September 16, 2011
Greece says it's not leaving the euro, and everyone else says Greece must default on its euro debt. What does such a scenario portend?
Athens, no longer able to borrow euros and hardly able to extract enough euros from its own population, won't be able to pay its bills. Many of the hundreds of thousands in the Greek government's employ stop coming to work because they stop receiving paychecks. Many private businesses that depend on their patronage also cease to function and cease to pay their employees. Savings vanish in a rash of bank failures.
What happens next? Greeks do what anybody would do when they can't grub up an income. They find things to sell: cars, houses, businesses, islands, beaches, historic sites and ouzo distilleries to tide themselves over.
Eventually the euro prices of a Greek vacation or a Greek factory or Greek-made goods become attractive and euros rush in from abroad. Jobs start to rematerialize. The economy, after taking a sound thrashing, begins to grow again.
All this is impeded, unfortunately, by riots and political instability and mass privation. Quite possibly, things keep getting worse for a long, long time, before they start getting better.
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