On the eve of the crisis (2009) Greece had a fertility rate of 1.5 per woman; Australia had a fertility rate of 1.9 per woman. Australia's was higher, but not by a dramatic amount. Australia's fertility rate is below the replacement level. Further, in 2004, Australia's fertility rate was only 1.75 per woman.
Immigration.
Not sufficient to close its trade deficit, otherwise it would be not be facing a crisis. This is what bond investors are saying by voting with their feet, and why European partners in the north are not facing similar problems.
Correct, but let's tease this out a bit further. The question is whether the depreciation would be pain-free. Compared to the euro, a counterfactual drachma would need to depreciate an additional 60-75% further against the dollar. The reason why the depreciation would be so drastic is that their export sector is so inflexible - their price elasticity of supply is inelastic - due to the structural problems I have already outlined. Even a drastic depreciation of this kind would likely be not enough to close the trade deficit in sufficient time due to supply-side constraints so a debt crisis would still exist in a different form.
An additional option would be to accelerate depreciation further by expanding the money supply to deflate the debt burden. First, this only reduces the real value of debt, not the real value of the deficit which will incorporate inflation expectations into the yield - so the question of how to close the deficit is still present. Secondly, import prices would go through the roof, pushing the economy into recession and leading to a sharp fall in standards of living. Thirdly, by defaulting in this way, it essentially kicks the can down the road. The central bank crowds out all private investment, it drives away foreign investors; in short, it lets structural problems continue without a decisive solution.
There is no pain-free option precisely because of the ex ante structural problems present in Greece. This is the fundamental problem.
This is an ignoratio elenchi. The argument is whether the crisis is economic, not about the fairness of it. The historical record is that Greece is a serial defaulter, as i have already mentioned, which only had a temporary reprieve by using credit. Lastly, your final sentence is irrelevant, since the question is not whether there are political overtones, but whether the crisis itself is economic.
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Actually, the final paragraph may not as irrelevant as I suspected, in the sense that it could explain your willingness to argue that Greece's fundamentals are solid. It appears as though you are trying to deflect attention away from the fact that European states have welfare states, and instead blame the crisis entirely on the currency union.
If this is your motivation, then I agree with you that the welfare state is not the cause of Europe's problems. But to defend this position, you do not need to defend every country with a welfare state. Greece has a welfare state, but it also has unsustainable structural and fiscal arrangements. Sweden has a welfare state, but it has sustainable structural and fiscal arrangements. If you really believe in the welfare state, then you should not have to argue for impossible positions to defend it.
