Was Greece profligate? Yes.
At the same time Saint Ronnie was 'proving' that deficits don't matter, Andreas Papandreou, the Prime Minister of Greece for the same period was doing the same in the "Florida of Europe." And he rode the money to electoral success. As did subsequent governments of both sides for several terms.
Did Greece fudge its entry into the Euro? Yes.
Was the rest of Europe aware of this? Yes.
But I really do not want to dwell on the past. The main point is that Greece is being forced to cut wages and pensions and that inevitably real estate values and stock market valuations will fall. The IMF will force Greece to privatize, at fire-sale prices, several core services such as electricity, water, sewage and and many others.
The really essential point is that values of land, labor, infrastructure will soon be really cheap in Greece. Corporate interests will be be be able buy up the country and its cheap debt.
Greece has been profligate and spendthrift but that is not why it is being attacked. It is the perceived weakest link, allowing an attack on the euro itself. Which is worth doing for some reason I can't figure out right now...
If debt attacks such this can be done to to a 200 billion economy, do you really think it can't be done to a ten trillion dollar economy with similar debt levels, especially after the perps have become even more fabulously rich after Spain, Portugal and Ireland?
Remember the confessions of an economic hitman.
Links:
http://en.wikipedia.org/...
http://www.nytimes.com/...
Lots of stuff worth reading and extremely apropos by the Nobel prize winner