the same can be said about drahma in greece 10 years ago 

The ASI has a great solution, debt writeoffs.

http://www.adamsmith.org/blog/international/can-debt-writeoffs-help-the-eurozone-avoid-a-default%3F/

Finally someone gets it. I can speak only for Greece. They did not pay for any of the airports or highways. German companies do and get royalties.

this is what i don't understand about the eu and brussells they want a super state like the usa,china,russia,india but with 90 different decision makers who don't agree on how to do anything

and can't all the so called professionals just up and leave greece for somewhere with money in the eu,it doesn't make sense to me,my dentist is portuguese now so i guess there is some truth in it,i wonder what would happen if the euro failed,can the euro actually fail?

yes here most of the people working in the public sector  here  in greece have gone in from the window , back door or  the cheminy 

As an outsider, I do not condone the riots in Greece, mainly because I believe such behaviour is only going to hurt the country in the long run, and that's what Greece needs the least these days, but I do understand that the majority of the people rioting are fearful of the great changes that their country has to go through in order to become a viable market once again, or at least have enough funding to get back on track.

But you're right, such a large public sector is unsustainable. I may be wrong, but I heard that Greece's public sector was almost 80% of their total economical weight, which is, of course, not a viable solution. Simply put, you cannot (as a government) generate enough income to sustain such a massive working force in a country, even if you pushed taxes to an insanely high value and cut on every social support and spending. Also, (I might be wrong in this point too), isn't Greece's major sector the tertiary sector, just as Portugal? If we're struggling with such a scenario and our public sector is only 35%, you can just imagine the damage an 80%, tertiary sector based economy would do to a country. 

I'll explain why I think my values aren't completely correct (anyone from Greece is welcomed to help me and explain it to me). These values are the last ones I heard from an interview with the official greek ambassador here in Portugal, back when Greece was receiving it's first share of the international aid in 2010, so they might be a bit out-of-date or not completely accurate.

Greece's public sector is about 40% of GDP currently.

One discussion I was reading on another forum (which has a few economists among other people) talked about one of Greece's main problems is that their tax structure is very, VERY poor. Many people avoid paying or get out of it entirely, especially the rich, which is causing tax revenues to be much less than what it needs to be - coupled with a very expensive public sector, you get insane amounts of debt-to-GDP.

Sad times are ahead for those who willingly voted themselves pay raises and benefits. This goes for every country that has relied on such actions to keep power.

That would work if the *random country* government only owed money to other *random country government* but when they say Greece owes 40 billions euros to France it means they owe 40 billions euros to French entities, not necessarily to the French government (though some of that debt might have been bought up by the French government so for that part it would work).

It would be an improvement in that instead of having France owing 185 billion euros to British entities and Britain owing 194 billion euros to French entities you would have France owe 185 billion euros to French entities and Britain owe 9 billion euros to French entities and 185 billion euros to british entities but it would not make most of the debt disappear, it would just go one step towards removing much of the domino effect that can crash the whole European (and worldwide as we are connected to US banks) economy simply by crashing a small portion of it.

But just doing that would not be enough because besides the debt there is the much bigger problem of CDS's. CDS's, or Credit Default Swap are basically a bet that an entity (a bank or a country) wil go bankrupt. If I have greek bonds worth 10 millions euros and believe Greece will go bankrupt I can buy a CDS from another entity who believes Greece won't default (good luck finding good prices on Greek CDS's today though). If Greece does default that other entity has to pay me the 10 millions euros. Of course I paid them less than that to buy the CDS, so I do not lose as much as if I had no CDS... at least in theory.

You might wonder why I call them bets and not insurance. After all, if I think my house might get hit by a tornado I can buy insurance from an entity for the value of my house at a much smaller price than the value of my house. The reason I didn't is that insurance is a regulated market so if I buy an insurance I have a reasonable assurance that the entity has the funds to pay me (has enough capital to cover its liabilities). It's not perfect because regulators can fuck up (or be captured) but there is at least an attempt at due diligence. Also, I cannot profit because of insurance; if I insure my house twice, each insurance company is only liable for half of the value, I cannot get twice my house's value by buying two insurance policies.

As you might have guesses, CDS's are not regulated so not only can you have a CDS on the plus side of your balance sheet that is practically worth bupkis because your counterparty wrote too many CDS's and does not have the capital to honor all of them (hello AIG) and having the entity against which you took the CDS default would cause the entity from which you bough the CDS default too which would affect your balance sheet and could thus cause you to default... yep, another domino effect.

There is also the problem that you can have a million in greek debt but CDs's with a value of 10 millions, the equivalent of insuring your house twice (or 10 times in this example), and because there is no regulation you can collect (or at least try to, see preceding paragraph) on the whole 10 millions. So the 83 billion euros Greece debt problem could be hiding a 830 billion euros Greek CDS problem. How much more CDS's are there than government debt? We don't know because they are not regulated.

This was.... more one sided then I expected.

Thanks for making it more clear  

Also, do you know what was/is Greece minimal wage rates in the public sector? I know that it isn't near as low as Portugal's minimal wage (we have one of the lowest minimal wage rates in the entire euro region, which has only seen a 45 eur increase in 10 years, from 440 to 485 eur).

Portugal also used to have a lot of tax evasion until 5/6 years ago, mainly due to poor fiscal regulation and poorly trained technicians in the sector. We have improved a lot in that aspect, though we still have the best tax control yet (there's still some loop-holes in the system, and some disparities like the banking system having much lower IRC, IRS and corporate taxes than other systems). Unfortunaly, our economy problems lie in the money we dry out in the import market (it's just unviable as it is, we need to restart our national agriculture and industry) and failed government policies.

Plus, as i said to kowenicki, shifting to the Eur currency had a huge impact in the overall population's purchasing power. Almost every product (especially the essential ones), doubled in price when the Eur was implemented (for example, a 6-pack of milk, which costs between 3 - 6 eur, used to cost between 400 - 600 escudos, about 2 - 3 Eur). Coupled with an increase of the VAT and only a slight increase on the minimal wage, we had an over 30% drop in the purchasing power of the overall population. To put it simply, there has only been downsides since the introduction of the Eur.