Greece has always had a thriving underground economy. A significant amount of economic activity takes place outside of the purview of the political powers as a result of the long history of human civilization there and even the geography of the island nation, which has resulted in deep kinship relationships and long-standing traditions that circumvent official governmental channels. For hundreds of years, many Greeks have lived this way.παραδέχτηκε η πισπιρίγκο ρούλα

It is essential to comprehend this point. Greece's per capita economic output is comparable to that of France and Italy (at least until recently, when the EU began choking their economies to death), and the Greek people are no less hardworking than the French or English. If the underground economy is taken into account, Greece's economic output is comparable to that of France and Italy. The fact of the matter is that Greece never really joined the rest of Europe in undergoing economic reform and modernization after World War II.

The situation's whys and wherefores are culturally complex issues, but political will is all that matters—they didn't want to and never needed to. Naturally, the overall effect of a large underground economy is that a lot of economic activity takes place (money moves around) without the government contributing (since no one involved pays any fees, taxes, or other fees). The other overall effect is that people think it's okay to cheat the system. After all, my brother and neighbor make a lot of money and don't pay taxes, so why should I pay mine and barely make ends meet? Naturally, this attitude toward the system originates at the top and is culturally passed down from parent to child; on one level, it may even be justified by the fact that the political-economic system is largely "rigged," with politicians and civil servants almost all receiving very comfortable salaries.

The "Perfect Storm" that Greece faces today is the result of two or three generations of self-serving, incompetent, and increasingly bureaucratic political leadership, a major international financial crisis, and stubborn creditors with a different cultural perspective who demand that you now play by their rules if you want to stay in the EU.

To be fair to the Greeks, it is important to note that they are not the only society in the world—or even in Southern Europe—where underground economies have historically thrived and continue to do so. The non-exhaustive list includes Albania, Serbia, Spain, Portugal, and Italy, all of which have significant black markets of various kinds. As a result, the unofficial economy is the site of a significant amount of economic activity.

Effects of Defaulting on Greek Debt The question can be reduced to whether the Greek government should accept the stringent terms offered by the EU for yet another significant debt bailout or simply default and start over. However, treating the situation as a straightforward dichotomy overlooks the big picture—namely, the consequences for Europe and even the global economy if Greece defaults on any or all of its $375 billion sovereign debt.

Although only a few have publicly stated their belief, the majority of economists and financial analysts believe that the entire two-year dog and pony show between Greece and the EU negotiating bailouts has merely served to buy time to construct an economic "firewall" to shield the rest of Europe from the consequences of a Greek default. To put it another way, the majority of politically and financially competent leaders in Europe anticipate Greece's debt default at some point. Naturally, the nitty-gritty is the problem.

The European Union (EU) has had time to put together a variety of mechanisms to form the "firewall" they hope will protect the rest of Europe from the consequences of a Greek default, but the European Stability Fund (ESF), which is worth one trillion dollars, is the mainstay. The question with that sum of money is not whether Greece will suffer losses as a result of defaulting, but rather what will happen to the financial system as a whole as a result of the systemic shock of a sovereign default of several hundred billion dollars.

Due to the shock of a Greek default, some doomsayers predict a "Lehman-like" collapse of the financial system, with debt costs spiraling out of control in Italy, Spain, and Ireland. However, the majority of economists now appear to believe that the odds of a complete default, which could possibly produce that kind of systemic disruption, are very low and that the most likely outcome is a "controlled default," in which the various creditors agree to take a haircut.

The Future of the Greek Economy The first point to make is that Greece is only partially to blame for this whole situation. Although they racked up debt and, even worse, fudged the accounting throughout the middle of the 2000s with Goldman Sachs and other Wall Street crooks to make it look worse, everyone is aware of Greece's culture and economy, and those who loaned them money did so knowing this. In addition, a number of economists and historians have pointed out that Greece, Spain, Portugal, and even Italy were essentially forced into the EU before they were ready (in terms of the financial and regulatory infrastructure), and other nations like Germany and France made a lot of money in the first decade or so from the unequal economic relationship.

The second point is that the EU's stringent austerity measures as part of the bailout guarantee that the Greek economy will be in a severe recession or depression for at least five to seven years, possibly a decade. There is absolutely no doubt that the Greek economy and people would have been better off going into default a year or two ago and, yes, leaving the EU given this now inescapable fact. When dealing with sovereign debt, having control over one's own currency is an invaluable tool. If the Greeks had been able to deflate their debt in the same way that we are doing now, they would have been able to rebalance their economy much more quickly, which would have reduced the number of years of suffering they currently endure.

A completely different story concerns the effects that a Greek default would have had on the economies of Europe and the rest of the world in 2009 or 2010. To tell you the truth, it probably would have made the financial crisis much worse and slowed down the economic recovery that most of the rest of the world is currently enjoying. In that sense, we all owe the Greeks a great deal of gratitude, and ironically, those who are pushing the Greeks off the figurative cliff edge are the ones who owe them the most.