The “official” EU line (much of it pantomime) is that Greece should embark on a program of deep austerity. That’s understandable enough (and not just as political cover for the coming bailout): There’s no doubt that there’s something more than a touch Augean about the Greek state.

Nevertheless, we should understand that what is being suggested for Greece is in effect an “internal” devaluation somewhat akin to what’s being tried in the Baltics and Ireland. I wrote a bit about the Latvian experience of internal devaluation here. A more pessimistic analysis can be found here.

It would be an understatement to say that to push these policies through will take a remarkable degree of social cohesion. Does that exist in Greece?