The only leverage Athens has is to default and go back to the drachma.

There’s no possibility that Greece will be able to meet its debt obligations with an economy being bled dry by the Germans and a lack of competitiveness.

A currency devaluation of 75% will give some hope to Greek workers: see Argentina and Iceland.

Short-term (not decades long) pain will bring with it long-term gain.

And the Germans at long last will be forced to abandon from their utterly amoral, stupid and unnecessary austerity morality fetish.

Gorilla says: “In the name of Socrates, GO!”

Greece would be better off leaving the eurozone, going back to the drachma, and devaluing by 80%.

Euroland would be better off if it allowed the ECB to play the role every central bank in history has played: lender of last resort.

Instead, we continue to get endless dithering, endless lying, and endless denial from Merkel and Sarkozy, the worst European leaders since WWII.

Gorilla says: “Contagion is what they bring, when resolution is what is needed!”

And it’s the first stage in what will be the breakup of the Eurozone.

The Greeks have no capacity to pay off their debts, regardless of the size of the haircuts Germany negotiates.

The choice for Greeks is between decades of social unrest and the chance, like Iceland and Argentina, to regain independence and genuine economic growth. It won’t be easy, but default and a return to the drachma is clearly the better choice.

The Germans, on the other hand, refuse to face reality. Their banks are largely bust, their Chancellor is a liar, and their fetish about non-existent inflation threatens to bring down the Euro for good.

Gorilla says: “Democracy always gets in the way of entrenched, corrupt elites!”

The haircuts need to be on the order of 80-100%, and the ECB needs to step forward as a lender of last resort.

What the Greeks don’t seem to realize is that they have far more leverage to get a sensible solution than do the German, French, Dutch, and Austrian banks that financed the country into bankruptcy.

Gorilla says: “Arise Greeks, and screw your bankers, the only way is up!”

One wonders when the idiots now running Euroland will stop the utter nonsense that is fiscal austerity at a time of zero economic growth.

Gorilla says: “Just as soon as our idiots stop financing their idiots!”

It will be a painful exit, probably leading to the destruction of the Greek banking system, but it’s the only viable way for Greece to become competitive and generate actual economic growth.

The tone deaf and idiotic EU finance ministries, as usual, think that deficit problems can be solved magically by laying off hundreds of thousands and cutting spending at a time when private sector demand is nonexistent.

Gorilla says: “And so contagion continues, and with it comes another lost decade of disaster for Europe!!!”

Gorilla translates: “Check returned: insufficient funds”

Austerity wins again, the only losers are all the citizens of all the countries whose banks led the lemmings over the cliff!

And the reality is that this utter folly won’t save Greece or the banks, contagion will continue until national leaders stop lying about their banking systems, stop fearing nonexistent inflation, and stop trying to conjure up confidence fairies when there simply isn’t sufficient demand for anything more than a very weak recovery.

What the world needs is vastly more stimulus, particularly in the US and Europe, accompanied by global balance adjustments through currency appreciation in more vibrant emerging markets like China, India, and Brazil.

What we’re getting is a lost decade of high unemployment and mediocre growth, an entirely preventable disaster if we had leaders who weren’t wholly owned by the financial services industry.

Gorilla says: “Capitulation to the forces of stupidity is not what used to be called democracy!”

It’s all another version of extend and pretend. The Greeks simply don’t have the resources to pay off their northern European bankers, and the debt will only grow larger if the ridiculous austerity program continues to cripple the Greek economy.

What’s needed is default, a haircut of probably 30-50% for the bankers, an exit from the euro, and a return to competitive growth over the next decade.

Alternatively, European governments will have to guarantee all of Greece’s debts, and most likely those of Portugal, Spain, and Ireland.

This won’t go over well with French and German voters, whose leaders have lied to them about both the extent of the sovereign debt and the fundamental weakness of the European banking system.

Gorilla says: “There’s only an ugly dog in this fight!”