Leading article: Opportunity in crisis

How we all miss the drachma! If Greece still had a sovereign currency, that currency would probably have halved in value, thereby providing cheap holidays for the rest of us. Greece would then have defaulted on its debt, in a way that would have inflicted minimum financial damage on its neighbours. A few banks would have been burned, deservedly. Like Russia in 1998 and Argentina in 2002, Greece would have got over the pain quickly. Calamitously, though, Greece joined the eurozone — so it remains in crisis, unable either to repay its debts or to devalue its currency and export its way to recovery.

Britain has the great luxury of watching this from a distance. We were never fooled by the idea of monetary union, or the claim that the euro would somehow mean more jobs or lower prices. Taking the euro meant surrendering the two most powerful weapons in a nation’s economic arsenal: the power to set interest rates and let the currency plunge in a crisis. The slide in the value of sterling in 2009 has been the single biggest stimulus to Britain’s economy.

It will not be long before other countries in Europe start to develop currency envy. What the eurozone chiefs are doing to Greece is little short of sadistic. The bailout money is not helping anyone in Greece, but is intended to help the banks in France and Germany that lent money to their Greek counterparts. This money will never be repaid in full. Greece will certainly default, in one way or another. The only question is when. To save itself, the eurozone is prolonging and intensifying Greece’s agony.