Krugman says the only plausible ending for the financial nightmare in Greece is for the country to end up in default and perhaps its eventual departure from the euro. Unlike California, which also has a history of financial woes, Greece has no central government to bail them out. California’s budget woes seem to have little effect on the state’s residents who can always rely on Washington to keep funding their Medicare reimbursements, Social Security checks, and defense contracts, but Greece has no such system in place. The only thing that could help Greece avoid default and get back on its financial feet is to leave the euro behind and go back to its own currency, which it could then devalue and increase its export competitiveness.
Krugman is a columnist for the New York Times.