>I'm not convinced that foreign investment is the most important factor here. Exports would surely go up and similarly tourism could flourish if the currency de

>I'm not convinced that foreign investment is the most important factor here. Exports would surely go up and similarly tourism could flourish if the currency devalues. Which currency are you talking about? If Greece defaults and institutes a new currency, there would be no devaluation within the economy, rather a complete shift from the Euro to some new currency. Also, exports (especially in the long run) are not driven so much by currency fluctuation as they are by the cost of inputs. So unless Greece suddenly finds a huge deposit of natural resources or drastically reduces the minimum wage and pushes down manufacturing wages, then exports really won't change much. Check out this graph: https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=1lOR https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=... If the value of the euro and total exports are inversely related, we would expect to see the lines moving in opposite directions. Thus exports would be rising as the exchange rate declines and vice versa. We actually see the opposite happening over the past 10 years, and we see that the relationship has especially broken down in recent months. Now check out this graph: https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=1lOX https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=... We see that there truly is an (lagging) inverse relationship of exports and the value of the euro for Germany. Why? I have no idea. It probably has to do with the different type of exports coming out Germany vs. Greece. It would be naively optimistic to hope that devaluations of the currency would lead to more than a few percentage points of increase to the overall Greek GDP, and that the (supposed) growth in NE and tourism would be enough to fund vast structural reforms within Greece. >It will take on a value, just much less than the euro currently has. If they control the supply, why would it not have value? I control the supply of "Roynotes", aka squares of toilet paper that I have signed and guaranteed to be redeemable for $100USD in 3 year's time. I'll purchase $50 worth of goods from you today with one note, and you'll make a profit of $50USD over 3 years for a nominal 100% return - not bad! What do you say, partner? Joking aside, supply is only 1/2 of the value equation, and wary investors + annihilated credibility = no demand for new currency = no value of new currency.