The only distinction that democracies reward is a high degree of conformity. Ambrose BierceSteve Keen thinks we are all turning Japanese, or as he puts it more starkly:
We are now in an era of permanent debt-deflation, countered only by government deficits…
The 'We' by the way is most of the developed democracies in the world. In the presence of crushing levels of personal debt - and absent high enough inflation to reduce their share of nominal GDP - then we're up 'Greek Creek'. Even The Economist has started channelling Steve:
So if inflation has been hard to achieve and default looks like a risky option, then stagnation (or near-stagnation) ends up being the outcome. That has been the case in Japan, where sluggish economic growth has been the norm since its asset bubble burst in the early 1990s. But stagnation only postpones the problem. Japan has faced less pressure than most, since it owes money mainly to its own citizens—it does not have to worry about foreign creditors. Yet even Japan has tired of the situation: Abenomics was designed to get the country out of the trap by generating more growth and inflation.
Greece is but a leading indicator of what the rest of Europe will have to face. With one of Europe's fastest ageing populations coupled with unaffordable pension commitments then more debt (private or public) is the last thing the country needs to escape its euro-denominated chains.
An orderly exit from the euro is Greece's 'least worst' option right now. And if they have any sense they'll introduce the Drachma as a parallel currency before the exit is complete. By the way, we should do the same in Ireland as part of our own Anti-Fragile strategy. Always good to have options.
As usual, Nigel Farage isn't afraid to speak truth to power: