"Greece, Ireland and Portugal can’t and won’t repay their debts in full"

That's Paul Krugman in a recent column. The lead-in to that conclusion is worth reading, a nice cautionary tale about how the Europeans got there. But the bottom line is in the headline, and the consequences won't be pretty.

It isn't going to be just Greece (my emphasis):

But as I said, the confidence fairy hasn’t shown up. Europe’s troubled debtor nations are, as we should have expected, suffering further economic decline thanks to those austerity programs, and confidence is plunging instead of rising. It’s now clear that Greece, Ireland and Portugal can’t and won’t repay their debts in full, although Spain might manage to tough it out.

Realistically, then, Europe needs to prepare for some kind of debt reduction, involving a combination of aid from stronger economies and “haircuts” imposed on private creditors, who will have to accept less than full repayment. Realism, however, appears to be in short supply.

On one side, Germany is taking a hard line against anything resembling aid to its troubled neighbors[.] ... On the other side, the E.C.B. is acting as if it is determined to provoke a financial crisis.

Not pretty, and not promising. He closes: "If Greek banks collapse, that might well force Greece out of the euro area — and it’s all too easy to see how it could start financial dominoes falling across much of Europe."

There's talk of causes in the column — why the E.C.B. is on this self-destructive course. But that's not my subject. Wrong-headedness; ideological addiction; salvish concern for German bankers — I'm not sure any of that matters as much as the consequences. Who cares why he's a drunk; look what he did.

I don't think this will end well, for the elites or the impoverished.

GP