The Greek Crisis and the last bail-out package

 History shows that a large volume of debt cannot be serviced - either repudiation de facto or de jure or the benevolence of the creditors. Recall German reparation payments. Irrespective of whether Greek accepts the so-called bail-out package or not - try to repay or not their credit-worthiness is now at zero-level. So they have nothing to loose but their chains.

An individual faced with this scenario will sell their property and become home-less -sleeping on the pavement. In old days Germany could have taken some of the islands -even Athens (Merkel proposed selling some of the islands to get money to the earlier regime -so far as I can recall). France captured one German city as Germany could not continue reparation payments. In the present world scenario it is not possible.

Since the creditors took a hard stance against a 'leftist' govt., more radical steps are needed. Already there is large scale unemployment wage and other benefit cuts and reduction of real GDP. A drastic generation of budgetary surplus to repay will aggravate the situation -social unrest military coup etc. You cannot expect within a fortnight an efficient tax collection mechanism ( you cannot expect that in India and you cannot expect that in Greece). The Greek govt can go for privation of everything but it will not solve the problem. First start with a clean slate (either due to benevolence of the major countries or just by Greek govt dictum). Then take drastic measures - capital controls, introduction of drachma for domestic transactions side by side with Euro. Blunt following of Washington consensus type policies worked nowhere in the world. If Greece becomes obedient to the creditors the country will face more problems as the creditors are interested to get back their money at any cost -even it that means immense suffering of  Greek people.

 There is no question of ethics for non-payment. Debit and credit or surplus and deficit are two sides of the same coin. It was also the responsibility of the creditors to examine the creditworthiness of the debtors. Due to their vested interests they over-looked all these and sanctioned loans to earlier regimes for unproductive purposes (may be to buy submarines). They should suffer. They believe in market and it is the rule of the market. Why the ordinary people will suffer because of the unholy alliance between the ruling classes of different countries.