In my survey of international economics class today we had an excellent discussion of possible end-games for the current Euro crisis.
One point that really struck home with me was when a student asked "Why did Greece even want to be in a monetary union with Germany in the first place"?
Greece was a serial defaulting, non-tax collecting, relatively corrupt, but seemingly happy country. They were never going to be Germany, and I can't understand why they wanted to be Germany. Yet they moved heaven and earth to meet the Mastricht criteria and get into the Euro. They hired Goldman to swap around their future revenues, and maybe they fibbed a little bit too. At the time, many people were surprised that they made it in.
Short term, they got a ton of cheap (for them) credit and enjoyed a spending binge. But their economy grew ever less competitive and their external position ever weaker. Now they are down and out, humiliated, wracked by social unrest, and pretty much flat broke.
Yet they still want to stay in! People, Greece is never going to be Germany. I don't say that as a negative about Greece but as a statement of history/culture. The values are different, the comparative advantages are different. Thus, German monetary policy is not really ever going to be right for Greece. Unless Germany is willing to adopt them and put them on a perpetual allowance, the Euro is not going to work out for Greece.
It's time for Greece to pull the full Argentina, or as Hillary likes to say, press the reset button.