The Current State of the Euro Union

David Beckworth (Macro and Other Market Musings) posts an excellent and comprehensive survey of the current Greek and Euro problem, as seen by journalists and professional economists such as Carmen Reinhart, Simon Johnson, Barry Eichengreen, Tyler Cowen, Paul Krugman: “The Eurozone: Déjà Vu Argentina 2001 & Other Thoughts”.

Among other considerations, this excerpt:

« I couldn't help but think of Argentina's crisis in 2001-2002. It too had a sovereign debt problem, an overvalued real exchange rate, and was effectively part of a currency union that did not meet the optimal currency area criteria. It too tried to cut wages and prices but found the deflationary price too high. Ultimately Argentina defaulted and broke the peso-dollar link, even though the currency board linking the two currencies was almost a decade old and considered an important institution. It seems possible some of the PIGS could go the way of Argentina. »

NB: "PIGS" stand for Portugal, Italy, Greece, and Spain.

I agree. A must read.