The IMF-peddled solution to this is "internal devaluation" - wages fall, prices fall, asset prices fall.
In its place is internal devaluation where wages and pensions are cut over years.
With the ECB determined to keep inflation at around 2%, internal devaluation brings severe recession, even depression.
Speaking recently in Brussels, the IMF's Nemat Shafik compared such a process of internal devaluation to painting a house.
Their only remedy is internal devaluation, cutting wages and pensions in the hope that they can restore competitiveness with Germany.
So why not then break free of the euro and have that deflation as a currency devaluation rather than an internal devaluation of wages?
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Spain, Portugal, Italy and Greece would all do much better taking the one off currency devaluation than suffering through the years, decades perhaps, of internal devaluation that continued euro membership will impose upon them.
As well as being burdened by unsustainable levels of external debt, all five economies share the misery of trying to regain lost competitive ground through internal devaluation, in which domestic costs are ground down year after year.
With the exception of Ireland, which has achieved a worthwhile reduction in its unit labour costs (though after the biggest rise of all), you could hardly select a group of countries less able to make a success of internal devaluation.
"All the potential effort that these countries are doing painfully for internal devaluation by cutting wages, keeping them below productivity growth and so on can be undone by the strength of the euro, " said economist Nouriel Roubini at an interview in Davos last month.
It is for this reason that, while the Greek CP wants out of the euro, the growingly influential far left parliamentary group SYRIZA does not, and neither does the hard-right religious party LAOS. Everybody can see that an external devaluation will be chaotic, painful and cause its own kind of social unrest, just as the attempted internal devaluation is doing.
In both countries, but particularly in Ireland, there has been savage devaluation of an internal sort - wages and livings standards of workers have been slashed to a far greater extent than in the UK, which has improved the competitiveness of their businesses.
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