Australia has enjoyed waves of Greek immigration in the post-war era. When we encountered people of Greek extraction we were struck that they are a driven lot, bound for secular success. Greeks have done well in all the professions, not least economics. I know of at least 20 economists in this country with Greek heritage.

Of course, it's the old joke where the preponderance of economics talent is in inverse proportion to the state of one's economy! It's ironic, too, that even the word economics derives from the Greek word "okionomia" meaning, (wait for it) household management. Well, right now the Greek household is bereft; there is little left in the larder. They are on poverty street.

So how could a small, resource-poor country of 11 million people end up owing their Europeans some €380 billion? The great recession of 2008 and its aftermath can be trotted out but the real source is the fiscal crisis of the Greek state. The Greeks have not seen a budget surplus for more than 30 years; the elites of Greek society feel it is good sport to avoid taxation. This has been going on well before 2001 when the Greeks adopted the Euro.

Strictly speaking, Greece should not have been admitted to the currency union because of its history of fiscal prolificacy and the lack of transparency over the true state of its national accounts. The Greeks promised to mend their ways: tax reform, privatisation and reducing the size of its unwieldy public sector. Think here of Greeks bearing gifts and a certain Trojan Horse.

It was all papered over and for the first five years it all looked good. Greece grew at 4 per cent and received bucket-loads of foreign capital. They actually were encouraged to borrow more given Eurozone's lower interest rates and the prestige of the Euro. The Greeks partied on and reached the highpoint of 2004 when they hosted the Summer Olympics. Money was spent on building stadiums and a new Metro system for Athens. Just months before the Olympics Greece astonished its European neighbours by winning the European soccer championships held in Portugal. The success of the unfancied Greeks was pinned down to a resolute defence in all of their games, including the final against Portugal.

Today the Greek national football team is, rather appropriately, back in relative obscurity. Even in those sweet times, though, Greece's budget deficit was high at some 12 per cent of GDP but the leading European powers behind the Euro gave them the benefit of the doubt.

It was the GFC of 2007 that basically turned the searchlights on to Greece's fiscal laxity in more ways than one. First it led to terrible domestic impact on economic activity. While the Greeks began to receive bailouts from the European central Bank from 2010 Athens continued to prevaricate on making asset sales, privatisation and other structural reforms.

Things like its complex tax structure with six differential regimes of value added tax, the excessive size of public sector and the early retirement schemes were again all held up to global scrutiny. When Greece buckled under and attempted austerity policies to please is creditors it merely pulverised the economy. Consequently that has basically been in an economic funk for the past five years.

GDP is currently at the level it was in 1999. The country has become enfeebled by austerity and also further weakened by the loss of its young. There is just no way Greece can even service its interest on the capital it has borrowed; the figures have a tyranny all of their own.

Default is the only option but how will their European creditors react? Surely those who lent Greece money should take some of the blame knowing the Greek government's spendthrift ways? The other path, of leaving the euro and restoring the drachma, is too rocky a road to contemplate.

Even if Greece took a massive devaluation of the drachma, it has so little export potential other than tourism, olive oil and shipping to make a show of it. Living standards would regress to last century because import costs would skyrocket.

That said, defaulting and going back to the drachma would mean that massive debt overhang would vanish overnight. That tempting choice is up to the Greek people to decide upon. Every Greek will have to make a weighty economic decision come Sunday morning. There will be plenty of ouzo drunk the night before.

Alex Millmow teaches economics at Federation University Australia