Turning the screws

The Greek legislature voted yesterday to let the beatings continue.  The rock throwing crowd outside felt somewhat differently.  It remains to be seen if democracy will survive in its putative cradle.  What the rest of Europe has done is to keep Greece in a straitjacket of austerity while not allowing it to inflate its way out of debt.  The current policies have the effect of deflating the economy and making the debt overhang even more recalcitrant.  If Greece had its own currency it could simply devalue it and jumpstart the economy, much as Canada did in the early 2000.  Because it does not have that flexibility, the government will subject its citizens to decades of crushing deflation until they are competitive with more developed economies.  In other words, they will have to turn themselves into a third world nation to satisfy their creditors.  Good luck with that.