Well, no, it doesn't have to happen, and in fact will only happen if the creditors believe such debt forgiveness will be beneficial to them. Remember that one debt write-down already occurred as part of the second bailout, yet Greece then ended up reneging on the promises it made to secure that write-down and got itself into the current mess. On account of this I'd consider it unlikely to see another write-down/write-off occur as long as Syriza remains in power and the Greek people haven't made an indication that they're willing to accept the reforms the creditors think are necessary for Greece's finances to become sustainable.

It's important to keep in mind that it's not just a write-off that's currently being asked for, but a write-off followed immediately by the issuing of more loans. I see this as very unlikely to happen, nor do I think it should happen (as I don't think Greece is currently willing to take the steps necessary to put its finances in a state that would allow it to repay even the new debts if the old ones were forgiven).

While it's certainly desirable that Greece remain a stable country (something that may be threatened by an exit from the Euro and an inability to secure any loans), this needs to be balanced against the projected costs of what it would take to keep propping up Greece financially (both in terms of the actual costs as well as the costs of the precedent it sets for both how other countries handle their finances and how the international equity markets treat loans to iffy countries going forward). The reason that Grexit is now seriously being considered is that many within the EU have come to the conclusion that simply cutting off Greece is less costly than continuing to prop them up.

Well if I would be indebted to someone else and if I really, really could not work my way out of it under no circumstances and this someone else shows no sign of reducing the debt to any level I realistically could work my way out of, I may as well:

- stop working at all and enjoy the sun
- commit suicide
- drop all my nuclear warheads on the guy
- become a failed state
- stop any payments at all (and stay in the euro just for the principle)
- ...

I don't think anyone would ever want that and therefore I'm convinced a debt cut has to happen. It's an imperative to keep the peace (in a manner of speaking). Without a debt cut at some point all hell will break loose in Greece. (But reducing the interest rate to a really low rate close to zero is a debt cut too even if it is named differently.)

You name the arguments why it may not happen now but it has to happen at some point. It simply has to if the persons involved are any kind of sane.

It's the only published book by a guy who is unapologetic in his bias against Greece. He is based in Berlin and though he at least was a professional journalist for a real publication (not just a personal blogger) his work history has been writing an eighth of a page at a time. Consider it a small mercy you can't spend your money on this. I suppose it *might* be good (every author was a first-time author at some point) but the odds don't look good.

As I said earlier, it would likely happen eventually, but it would be after Greece managed to get their economy and national finances into a sustainable state, and they would need to do this with minimal help from other nations (in the meantime they'd pretty much be cut off from international equity markets). Basically they need to show that the country can at least stand on its own without constant infusions of capital before the current creditors would be willing to forgive the debt and give Greece access to equity markets once again. And it's quite possible that Greece does become a failed state rather than managing to turn itself around; the outcome there would pretty much be up to the Greek government and the Greek people.

It's also pretty much assumed that Greece is going to stop making payments on the loans (this is what it means to default, and they're already defaulted on the IMF loans, and will probably default on the ECB loans on July 20th). The ECB default will force an exit from the Euro, and Greece will have to implement their own currency once again. Basically Greece is currently heading towards a situation where aside from humanitarian aid they're cut off from assistance from other nations, and will have to either rebuild their economy on their own or watch their country collapse.

So, to summarize the really important open questions (in my eyes):

- euro or no euro
- how much stimulus needed for growth
- which reforms
- debt cut when and how much
- the issue of trust

I think that these must be answered or this crisis will never be over.
I don't think they need to be cut off from assistance, especially because I'm afraid they cannot rebuild their economy on their own but could with help. It's also not something I would want to see. I cannot believe it is the purpose of the EU to self destruct.

Well it was only a tenner so it would have been cheap enough if I could actually buy it, but when I "login" it disappears from the store so there may be a region lock on it.

As regards journalistic ability, I cant judge of course, but the parade of instances of financial abuse I have seen highlighted in reviews, is definitely food for thought.

Thanks for the insight into the author I never heard of him before, cheers :)

I can't really explain it logically- as I obviously think that a grexit has to happen under realistic, or logical, circumstances- but it is primarily an emotional attachment to the Idea of Europe. Greece wants simultaneously to have a place in the west and in Europe as embodied in the EU, for which the Euro is at least for now an essential, if eventual, component (unless you're Denmark or Britain) and to not have austerity. It is something they could, technically, get with debt forgiveness but it is exceedingly unlikely to actually happen that way. It is a battle between the emotional and idealist attachment to being a core part of Europe plus the fear that a Euro exit won't be the end and they'll get the boot from the whole EU- which unlike the Euro has been a big benefit to them overall- versus the practicalities of the Euro destroying their economy and burdening them with debt they cannot repay and fiscal policy run primarily for the far stronger German economy. Which isn't really a criticism of Germany either, it's just inevitable that that would be the result, it's just the way the Euro is designed.

The Euro has always been a bit of an emotional project anyway, if it were a logical one monetary union would be one of the last steps rather than one of the first. Ironically, it was likely done that way to give its adoption a feeling of inevitability, which is why the French (primary designers/ proponents of the Euro) are so keen to keep Greece in.

Part of the reason why I think Greece should leave is because I'm not European in the emotional sense, the idea of a unified Europe means little to me. But it clearly does mean a great deal to (some of/ many of) those in Europe in the same way that, I dunno, the All Blacks mean a great deal to New Zealand? There really isn't an equivalent here.

It's not a matter of whether or not they should be cut off from assistance, that's simply what effectively happens to nations that are cut off from equity markets due to being unable to pay their debts (in other words no one wants to loan them any more money because of their history of not paying it back). If you've got upwards of 100 billion euros you'd like to hand over to Greece out of the kindness of your heart go right ahead, but there aren't any others out there willing to do that. The result is unfortunate, but this is what happens when a country is mismanaged to the point that no one considers it reasonable to loan them any more money.

And this is what happens when you replace politics with finance. And this is what happens when a country's finances are too dependant on capricious interests rate (which boom played a huge role in what we like to call "the debt" as if it was simply made of expenses).

Meanwhile...

Short version, tax avoidance is using legal means to lower the taxes you owe, while tax evasion is illegally avoiding paying taxes you owe. Key difference is the legal vs illegal part.

Of course it is not kindness of my heart. I don't believe in such romanticisms. But seeing Europe becoming de-industrialized is not something I like. After all everything is connected with everything.

So the rather big question of letting Greece fail or not letting it fail is not really existing. Instead there is the rather more smaller question who pays how much. Naturally everyone wants to minimize their own contributions. But if Greece does not deliver they might still become a semi-failed state which I guess is not what they wamt.

In a way the EU is kind of a political union only with the problem that there aren't many rules valid for everyone. That is clearly a big problem.

However otherwise all the usual stuff applies. In the same way that Washington could not allow California to become a failed state, Moscow cannot allow St. Petersburg to become a failed city, Italy cannot allow Sicily to become a failed province (oh wait, aren't they already), ... in the very same way the European Union cannot allow Greece to fail completely and the only really complicated question is who pays how much.

As it is (there seems to be some kind of agreement now) I think the crucial point is that Greece still hasn't got its own currency. Therefore the solution will most probably be lose-lose and the pile of debt might get larger as well as the economy of Greece might shrink. Unfortunately the wisdom was not big enough to agree on the best possible solution. But also doom will not come right now. It will be delayed (as usual).

Let's meet again in one year and re-evaluate the situation.

Does it mean Greeks prefer the euro because they speculate that with the euro they'll get much more help than without, at least as much as the economy will perform worse in the euro area because of missing competitivity? Hmm, not sure if this speculation will work out as intended. This could be a miscalculation (if it is what is happening there) and they might end up with a totally destroyed economy.

Other Estern European countries like Romania, Bulgaria, Hungary, Poland, ... which have been growing quite strongly in the last years and which (what a surprise) have their own currencies, might overtake Greece in their economic development in the next years.

It seems that according to the compromise worked out last night they'll get more austerity and they'll stay in the euro and the debt will not be written-off (for now). This is a bit contradictory to what the Greek people said they wanted (further underlining the relative insignificance of the referendum one week ago) and probably they will not get asked again anyway. I would really like to know what the Greek people would say to the current proposal.

But getting all this through all the involved parliaments will be exciting enough already.

I don't care how many Nobels and Oscars Krugman has won, but that certainly was some highly opinionated bullshit.

For starters:

"It’s a grotesque betrayal of everything the European project was supposed to stand for."

Bailing out, or even trying, other EU countries of their self-induced problems is against what the "European project" was supposed to stand for. Maybe Mr Kruger should read the Maastrict Treaty at some point.

"Who will ever trust Germany’s good intentions after this?"

Umm, I think the main issue in EU currently is whether Greece leaders can be trusted at all, not whether Germany can be trusted. Krugman seems to live in some kind of parallel fantasy world.

Unfortunately the Finnish government and parliament seems to get a cold feet and will not oppose a new bailout at least alone. As the new (EU-positive) finance minister said: "It is not a good idea to object something like this alone.". FFS.

All this even though the government outlined earlier that they would be against a new bailout package. I knew they wouldn't hold onto that, unfortunately.

Nothing will change. Greece will get billions upon billions of new money by tax payers of other EU countries. They are called "loans", yet a few years from now Greece and the likes of Krugman will say they can't be expected to pay them back.