Any fool can enjoy prosperity if someone else is paying for it. Surely it is not a punishment to require someone to live within their means. Necessarily, that involves reducing expenditures. There is no magic source of 'mana from heaven'. The world does not owe Greeks a prosperous living just because they lived well on borrowed funds. Unfortunately, when you borrow the implication is you pay interest and remburse the loan in accordance with the terms agreed. Otherwise, lenders simply lose confidence and ultimately won't lend. And why should they?
You are right to draw attention to the unpleasant consequences of having to tighten the proverbial belt and find the means to repay interest and loans. But the only alternative to Greece having the freedom to make that kind of mistake is to enforce strict regulation of government deficit and debt levels. Unfortunately for Greeks the negative consequences they may suffer are less important than the credibility that is gained by Eurozone Institutions if they take the measures required to retain investor credibility. Indeed, a European crash would inflict more damage on Greece than any reduction in profligate Greek expenditures or Greek bankruptcy conducted within the Euroone.
An essential diference between the Greek crisis and historical examples cited is that the Greek economy is only one small part of the the European economy at risk. At least Greece is advantaged by a continuing ability to trade in a relatively stable currency and thus protected froom the full consequences of its choices.
The chaos and devaluations, the austerity programs, the constraints and restrictions imposed on foreign trading, on holiday expenditures, on capital transfers and foreign purchases, etc., experienced in the years before the Eurozone should be recalled before anyone advocates throwing it over in favor of a resuscitation of a multipicity of national currencies in Europe.
Interest rates paid by Greek borrowers are likely to remain high untill lender confidence is restored. Instability and uncertainty raises costs, and certainly some economic activities in Greece will suffer from reductions and redirection of expenditures. But that is to be expected and is required if constructive changes are to be realized. Self-evidently, when necessary confiidence can be won by achieving growth or demonstrating economic flexibility, rather than simply by maintaining austerity cuts, such policies should be vigorously pursued. The two policies are intimately interrelated, but winning investor confidence is vital. Austerity is not an end in itself, it is not necessary when demand is satisfied by increased productivity and lenders have enough confidence to extend indispensible credit. The difficulty is that once credibility is lost, tha the need for lender confidence is immediate and it inevitably takes time before the fruits of economic reform can enhance productivity.
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