Greek lesson for Turkey

With eurozone leaders giving Greece until the end of the weekend to reach an agreement with its creditors or face leaving the euro, my blog?s host Nouriel Roubini feels that Sunday will be a ?make-or-break moment for deal,? with rejection making Greece?s exit (Grexit) ?a likely reality.?

Dr. Doom, as he is often called, is actually not the pessimist this time around: In a report published on July 8, investment bank Citi made Grexit their ?base case?: They now believe that Greece?s eventual exit from the eurozone is the most likely outcome, arguing that a deal over the next few days, while eliminating short-term risk, will only be delaying the inevitable.

Not that it would change anything, but there is also a discussion on who is to blame for what has happened and who is right in the ongoing stalemate. The debate has become extremely polarized, with some putting all the blame on predatory lenders, exporters and investors and others blaming irresponsible Greeks. As I outlined in an earlier column, I am somewhere in the middle.

But regardless of the culprit, the Greek tragedy offers a very important lesson for other countries: You cannot live beyond your means. Actually this is a well-established fact for individuals. I am sure you are familiar with the phrase, ?cut your coat according to your cloth.? The coat and cloth are replaced by ?feet? and ?quilt? in the Turkish version. I am sure every language has a similar expression.

What if enough individuals in a country have large coats or feet, or not enough cloth or quilt? Atif Mian and Amir Sufi, economics professors at Princeton and the University of Chicago respectively, show in their recent - aptly-titled book ?House of Debt? - how the Great Recession and Great Depression, as well...