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But there are two very interesting bright spots for the Greeks.
One, the IMF expects the government’s finances to have returned to a primary surplus during the first half of this year. In other words, ignoring debt repayments, the Greek government is broadly funding its spending out of tax receipts.
And two, Greece’s gross external debt stands at 193% of GDP, three quarters of that public sector debt and a quarter of that private.
Were Greece to default and withdraw from the euro once it gets the latest chunk of euro-zone cash, it could renege on its external debts, public and private, lifting an enormous burden off its people’s shoulders.
It wouldn’t need access to international markets once it didn’t have to worry about debt. A devaluation of the new drachma would make the economy instantly competitive, allowing it to eliminate its current account deficit.
What’s the downside? A bunch of irate Germans. But they’ll be irate whatever happens.
WSJ
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