These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:
Just a year after wealthier European governments rescued Athens from default with $157 billion in loans, Greece is slipping into crisis again.
After seeing its credit rating sharply downgraded on Monday, and unable to meet deficit-reduction targets laid down by Germany and others, Greece is getting desperate–and Europe is getting anxious.
Officials are floating euphemistic phrases like “voluntary restructuring,” but make no mistake: The painful concessions Greece would probably require from creditors amount to a default. If that happens, the broader European economy will be on its knees, its credibility shattered. So what should Greece do?
The only real solutions are for Greece and other low-income countries to abandon the euro and for Europe as a whole to rethink its welfare state.