There is a strong case that the only solution to Greece’s economic problems is to leave the euro. At current wage levels, Greek workers are unproductive, giving foreigners few reasons to buy their exports and giving Greeks every reason to import from outside their own country. There are two clear ways to restore competitiveness: drive down wages or depreciate the currency. The first diminishes demand in an already depressed economy and worsens unemployment, while the second allows the domestic economy to muddle through while sparking export growth. Argentina, Thailand and Iceland were able to emerge from financial crises on the back of a strong export sector enabled by a deflating currency.
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