I agree; currency wars are certainly not the answer as they most likely make everyone poorer in the long-run. I'm more talking about a 'nation level' currency/f

I agree; currency wars are certainly not the answer as they most likely make everyone poorer in the long-run. I'm more talking about a 'nation level' currency/floating exchange rate (to act as an automatic stabiliser) and interest rates that can be set domestically (as a stimulatory/destimulatory policy tool). Those 'loans' to Greece are a 'kinda, sort of' weak form of HFE. Most bureaucratic government organisations have a strong instinct for self-preservation. I imagine they would have been pressuring Germany and other nations pretty hard to effectively extend these loans to Greece via capital reserve deposits and corresponding drawing rights for Greece. I haven't looked at it in any detail, but I find myself wondering if there might be a half-way house resembling the Bretton-Woods system (though perhaps with something other than gold backing). Assuming the ECB is preceived to be credibly independent (as opposed to the IMF, who were suddenly less hawkish when the GFC hit rich western nations)... EDIT: Oh and agreed on allowing capital and labour to reallocate. I guess the point of contention is at what rate, and whether there are other non-distortionary ways of softening the social dislocation (possibly necessitating fiscal support).