I'm going to make a somewhat irrational prediction.
I think Greece is going to drop out of the euro.
This is an irrational prediction because there's no real way of knowing that this will happen. But it is no more irrational than predicting that Greece will stay in the euro zone. We're just conjecturing about something no one can actually know.
My conjecture is based on a simple fact: If I were Greek, I'd leave the euro zone. The debt burden is unsustainable and the austerity measures demanded by the "troika" will only make it more so. With unemployment already at 21 percent, further government spending cuts are likely only to drag the economy down even more.
More importantly, perhaps, it is simply intolerable for a free nation to allow itself to be pushed around by its creditors. The creditor nations may feel like they have the moral authority to shove around Greece, but they are wrong. They have neither the moral authority nor the actual, operational authority. Greece can hurt them as much as they can hurt Greece.
It will be tough going for Greece after a default. But not necessarily much worse than the situation Greece is already facing. The country is already more or less shut out of credit markets. The so called "rescue" packages aren't really rescues of Greece at all—they are rescues for Greece's creditors. Why should the Greeks tolerate this?
Even if Greece were never able to borrow another dollar from a non-Greek, its people would at least know that they were the masters of their own destiny.
But, to be perfectly frank, it would never come to that. A Greek default would not forever exclude Greece from the ability to borrow. Russia, despite its default, now has access to global credit markets. It's very likely that Greece would only suffer a temporary exclusion following a default.
So, there you have it. I think Greece will default, abandon the euro, and shake up the entire world. That's what I would do if I were running the place.
