“Your assuming the Greeks won’t simply riot and burn half the country down. Or in other words, you are assuming they are rational. I’ve seen no evidence of that.”
It’s hard to be too complacent. The union stuff in Wisconsin is a US prelude to exactly the same behavior. We’re not quite as far down the road as Greece. Only limited, state-level initiatives to curb union power and government handouts have been attempted here. Imagine the Wisconsin solution being forced on CA by reality. It would fall apart, just like Greece.
I have read that the Bankruptcy Code does not contemplate the bankruptcy of a State. If true, the Code should be amended to do so. The short term problem created by such a change would be an immediate increase in the borrowing costs of California, Illinois and other irresponsible States. The long term benefit would be a solution to the fiscal problems that have been created by the unionization of public employees and the consequent corruption of the means by which their compensation is determined.