Why Greece Should Default and Devalue - in Three Charts

The headline is superfluous, as Greece defaulting on its debt is a mathematical certainty. The only alternative is for another country to pay the debt, which is more likely than Greece paying the debt off, but not much. While default is a certainty, the Eurozone seems to be avoiding the issue entirely. More importantly, after default Greece will leave the Euro, adopt the New Drachma, and rebuild its economy. I believe this is not only likely to happen, but the only sensible choice. Greece leaving the Euro allows Greece to survive and the Euro member states to allocate limited resources to shoring up countries more likely to avoid default. 

Most important for Greece is that leaving the Euro and adopting a devalued local currency is a strategy than can work. Argentina defaulted on its debt and devalued the local currency in 2002 and here are the results. 

Unemployment Rate

 

GDP per Capita (PPP)

Industrial Production 

Default is not an ideal situation, but history shows a country can survive it. I'm not sure Greece can survive another decade of 20+% unemployment. 

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