How do you say devaluation in Greek?

Default is not the dirty word that nobody wants to say. Almost everybody now accepts that Greece will default. Several people will prefer to use the euphemism of “re-profiling debts,” but we all know what it means.  The interesting thing is that at least some authors, like Martin Wolf in a recent column, also acknowledged that default is not sufficient. The surprising thing that almost nobody asks is whether a default would actually solve the Greek problem.

Of course that would require understanding the problem in the first place. And herein lies the problem, since most people still argue that the Greek problem is fundamentally fiscal. In other words, in the conventional view the Greek government spent too much (and lied about it), and the solution must rely on the generation of sufficient fiscal surpluses to pay for the outstanding debt. Further, to obtain the funds it is assumed that austerity is the way to go, privatizing public firms, cutting public sector wages, and reducing pensions.

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