European leaders announce Greece bailout deal

Eurozone leaders have reached a tentative agreement on a new bailout deal for Greece. The deal would include new austerity measures for Greece in exchange for continued financial support.

If Greece is to really fix its economy and resume growth it will need far more draconian measures than just pension reform and more taxes. It will have to liberalize its markets, particularly its labor markets, but it will also have to reduce regulations across all sectors of the economy.

The kind of major realignments of input and product prices that are required may be done best during an inflationary period that a time-out from the Eurozone and a temporary currency would bring about.

It will take a generation for Greece to emerge from the economic wilderness on its own, with a new-drachma and a repudiated debt. But remaining in the Eurozone, with continued, endless subsidies paying for a socialism they never could afford, they'll never emerge.

The problem, of course, is that the price they've had to pay for past and current excesses, as well as a thoroughly dysfunctional governance characterized by a still-swollen public sector, inability to collect taxes, truly excessive labor protections and downright corruption, has brought the people to the edge of rebellion.

What happens when it becomes evident that an even higher price must be paid for a generation?

One way or another, expect blood in the streets in Greece. But cutting them loose is the only sensible path to take. Only Greeks can save Greece.