Early Greek default now inevitable

Irish Independent
February 11, 2012

The withdrawal of the far-right LAOS party from the Greek coalition government and the resignation of two junior ministers from the socialist PASOK party now makes it increasingly likely that Greece will default on its debts and leave the euro, possibly within days.

As the latest phase of the Greek crisis has dragged on, it has become increasingly apparent that this time it's for real. Unlike earlier phases, which frequently had an almost ritual quality to them, the shadow-boxing is over. At some stage over the next few weeks, maybe just days, matters will come to a head, Greece will default on its debts and the country will either leave or be ejected from the euro.

There are a number of reasons for this. Simple exhaustion is one. The Greek crisis has dragged on since October 2009, 28 months, with no resolution in sight. There comes a time in every long-running crisis when fatigue overcomes the participants and the urge to reach a conclusion, no matter how unsatisfactory, becomes irresistible. We're very close to this point, if indeed we haven't reached it already, in the Greek crisis.

But that's only a partial explanation. There is also the fact that Greece should never have been allowed to join the single currency in 2001. Indeed it only secured entry to eurozone by cooking the books, a fact that only came to light eight years later. Greece was, and remains, a totally unsuitable candidate for membership of the single currency.

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