General consensus in Europe is it's hard to see Greece staying in the Euro zone - there is a limit to how much bail out money they can expect and they themselves will not want to bear more austerity.

(Of course them they will be back to drachma, massive devaluation and debts still in Euros)

My biggest concern with the global economy (as with climate change and a few other big issues) is the divergence of opinions as to how to deal with the problem, and the various political axes that get ground while supposedly finding a solution.

Watching the US from overseas there seem to be a lot of half truths, lies and poor analogies coming from all quarters and so the chance of finding a solution and implementing it seems low.

When you think about it, the Marshall Plan was a remarkable idea--give tons of money to help rebuild the mortal enemies you just defeated.

I guess we had learned what happens when you shatter a country's economy and saddle it (e.g. Germany) with too burdensome a debt load (i.e. war reparations) "really bad things" can ensue politically, like Hitler. But I agree with Byrd_Huntr that today's situation is very different than post-WWII.

In fact, the international financial system established at Bretton Woods after WWII which made the US dollar the center of the financial universe is arguably on its last legs now.

You don't hear it anymore, but it wasn't that long ago that there was a lot of talk of China becoming Europe's savior and riding to their rescue.

It's my understanding that when Greece leaves the EU and reverts to the Drachma, the debt is reset to the Drachma. Then Greece prints a lot more Drachma and pays the bill with much cheaper currency. It's a haircut either way. Greece would rather manage the haircut themselves than allow the Germans to dictate the terms. IMO, $.02

I can't blame the Germans for insisting that the kids cut up their no-limit credit cards as a condition for a bailout. That's a given whether Greece keeps the Euro or not. Germans haven't forgotten the hyperinflation they went through in the '20s (3 billion marks for a pound of bread), and have managed their postwar finances accordingly.

I don't blame the Germans either. As a nation of responsible savers, the Germans really want to avoid hyperinflation, they've BTDT. Everyone does what they perceive is in their best interest -- even if it isn't. IMO they're all trying to control their losses and manage the Greek default to minimize damage, but for some Greeks so much damage has already been done that national pride is all that remains.

From what I've read, the Greeks have a history of defaulting. Unfortunately for Europe, the Greeks may take that road one more time but because European financial ties are so intermingled, once the first domino falls more will follow. In the end, even people/nations who have tried to do the right thing will be dragged under.

Then there's the biggest debtor nation on Earth. What should be a survival event for financial institutions could become a survival event on a very personal level, with "Well-dressed Americans foraging in dumpsters".

If they follow Iceland's example, they basically repudiated all foreign creditors' claims. Iceland did guarantee domestic savings, though.

Iceland did pretty well for itself, overall, and mostly recovered in a short period of time, by basically telling the international bankers that they weren't going to let themselves and their children and grandchildren become indentured serfs to them. Individually, many Icelanders are still really hurting, but overall, the country is doing pretty well considering the impossible financial situation they were put in just a few short years ago. Actually, the Greeks are in a similarly impossible financial situation with the added shackle of being part of the Eurozone.

Pardon me for making niggling distinctions, but as I understand it, Iceland and Greece put themselves in an impossible financial position. It wasn't done to them from the outside.

Yep, Greece following the Iceland model is a realistic alternative. It wouldn't do much to stop the dominoes from falling, but it may be a way out for Greece.

dougwalkabout -- as I understand (and I'm certainly not an expert), Iceland repudiated the debt incurred by their central bank which was a privately owned institution much like the Fed in the USA is privately owned, not government as many seem to believe.

In The Meantime Iceland Is #Winning

Iceland fared better by letting banks fail

Daniel Hannan: "until they leave the Euro, the Greeks have got no light at the end of the tunnel"

You're right, I shouldn't be lumping the two situations together. Apples and oranges.