I finally realized why this forum is inherently German, work hard, LYBM, don't borrow money, pay your debts. The other forum is inherently far more Greek
I would not make that assumption. In fact, it is not necessary to choose one or the other for blame, either Greece or the EU, they all are contributing to this mess. More importantly, if one party were to implement corrective actions (as discussed in this thread) and the other not do so, the problems would likely continue and the situation would get worse.
There are actually two different problems in Greece The first is public sector spending, which is excessive. The Greek government cannot fund its current level of spending and has not been able to do so since before it’s entry to the common currency.
A second problem is balance of trade. Greece consumes much more than it produces. The difference is imported and creates a negative balance of trade.
Both of these conditions result in debt, Greece joined the EMU in ’00, and since then the total debt it has accrued probably is half trade and half gov’t spending. That is, Greek banks lent similar amounts to the private sector and the public sector, they got their money from European banks happy to lend.
Before Greece became a member of the EMU interest rates to finance public and private spending were >20%. As an EU member they declined dramatically, falling to less than 5%. As rates fell borrowing increased, with EU banks lending to Greek banks, who then lent to all domestic borrowers. Greece, public and private sectors, were treated as low risk borrowers, which they never were. The money flows were open and transparent for all to see.
EU membership assumes the participating country has the mature governance and fiduciary structure needed to oversee this and take corrective action when needed. Greece had neither, and this is the result. If they hadn’t been EU members the currency would have declined and the interest rates would have risen log ago, forcing a change in behaviour. Instead, the money poured in, and much of it went right back out again, to the benefit of a few.
It is reasonable to expect the Greek government to balance its finances. It is also reasonable to expect help to get Greece out if its current depression, far more severe than anything faced in the US since the civil war. The reconciliation of profligate spending and foolhardy lending should acknowledge that some hardship can and should be avoided while the terms are worked out to settle the rest. Borrowers and lenders alike typically pay up, the idea is usually to maximize repayment and also to enable the borrower to recover.
The balance of trade issue is much more difficult to deal with. Perhaps impossible, actually. No member country has a currency that truly reflects the value of their economic production,. Some are wildly overvalued (Greece) while others seriously undervalued (Germany). This creates an imbalance which has no way of being resolved economically and is the critical challenge the EU faces today. It has nothing to do with living within one’s means, it’s a trade flow that is always out of balance. EU leaders don’t know how to talk about it because there is no easy way to deal with it, but it is always present. Treating it as debt between countries that must be repaid is not viable, the inability to reconcile this leads to greater economic imbalance. This is without doubt the EU's greatest challenge.