Default

My former colleague Stergios who, unlike me, probably has some idea what he's talking about, says Greece should default, and also adds some details about what that would entail and require.

The main problem with an exit from the eurozone is the transition period. Capital controls will have to be imposed. Temporary measures to ration foreign exchange for the importation of petroleum and other essential items will have to be undertaken. How will the Bank of Greece settle with the ECB? How will debt be converted from euros to drachmas?

It is clear that a tremendous amount of preparatory work is needed both for default and for exit from the eurozone, and much of it has to be undertaken in utter secrecy. Still, it has to be done – even if one were to disagree with exit from the eurozone. The reason is that such preparations would also enhance Greece's bargaining position with the troika. Instead of laughing at empty threats of renegotiation, as has occurred twice with the current finance minister, the troika would see that the government means business.