Last Updated Jul 12, 2011 8:39 PM EDT
(Episode 784: 12 minutes 30) Listen on iTunes.
Greece secured further loans this week, but when they owe 160 percent of what they produce, how can they afford to pay it back?
Adam Creighton, an economist at the Centre for Independent Studies, says further loans are just delaying the inevitable --- Greece should default now before the situation gets even worse. In today's BTalk I ask him what that would mean? What happens when a country defaults on its debt?
The big question is, should Greece have ever joined the Eurozone? It really needs to devalue its currency to attract more investment, but it doesn't have that flexibility whilst its linked to the Euro. Perhaps they should opt-out. Let's hope they've got all those old Drachma's stashed away somewhere.
The danger is, of course, if Greece was to leave, others might follow. Their crisis is not unique --- gross debt for Ireland is 125 percent of GDP; in Portugal it's 115 percent; there are a number of countries where it's around the 100 percent mark.