Greece problems would be a lot less severe if it still had its own currency. The exchange rate of the drachma would adjust, exports would get cheaper and imports dearer, and Greece’s economy would stumble around a bit but then recover. Unfortunately, Greece is part of the eurozone, so they don’t have this option. They don’t control their own currency.
Now, if you were, say, a miscellaneous blogger who didn’t know much of anything about how this stuff works, you might have an idea: why doesn’t Greece leave the eurozone? Readopt the drachma, let it float, and watch as all their problems neatly sort themselves out. Then, later, when their economy has recovered, they can adopt the euro again. Problem solved.
If you wrote a post suggesting this, it would take about five minutes to get a dozen comments explaining why it’s impossible. But hey — you’re just a hypothetical blogger. Nobody expects you to know anything about this stuff. Live and learn.
But why does Martin Feldstein, one of the world’s preeminent economists, seem to think this would be a good idea? And why does the Financial Times give him space to suggest it? Paul Krugman is — uncharacteristically — too polite to actually ask this, but he’s pretty obviously shaking his head over it as well. What’s the deal, FT?