But, prior to the crisis itself, exactly how terrible was the Greek economy?
One indicator we might want to look at is Greece's per capita output compared with that of the EU as a whole, on a price-harmonized (i.e. purchasing power parity) basis. Conveniently, Eurostat publishes exactly that, expressed as an index for each country with the annual EU average pegged at 100. Here's what it looks like, with Germany included for comparison.
From 2003 to 2009, Greece averaged 93 (i.e. its per capita output was around 93% of the EU average), with no particular trend evident. That is, a slightly below-average performer, but basically keeping up with growth in the EU as a whole. Note in particular that the 2008-9 recession didn't hit Greece any harder than the average EU country.
The train wreck, of course, occurred in 2010 and beyond -- that is, the "bailout years." By 2014, "reforms" had reduced Greek output per capita from 94% of the EU average (in 2009) to 72%. (Aside 1, Aside 2)
So let's get back to the original question: How terrible was the Greek economy? Not terrible at all, it turns out. Certainly mediocre: it's not hard to find richer or more dynamic countries. But hardly the crony-socialist nightmare economy you might expect based recent public discussion.
Why, then, all the high dudgeon about the urgent need for radical reform of the ostensibly corrupt and hidebound Greek economy? It's easy to say that it's self-serving rhetoric, but that begs the question: why does this rhetoric actually serve anyone? Why does it go over so well?
That question opens up the issue of the role of moral reasoning in economic policy, which deserves a post of its own. (OK, probably more than one.) Because the "rhetoric of reform" has less to do with pragmatic, technical policy-making than with the (moral) intuition that some things are just wrong and must be punished, no matter what the consequences or cost.
Aside 1: I know, I know: "If only there had been more austerity, things would be different." Undoubtedly. Not better, perhaps, but surely different.
Aside 2: Over the same period, German output per capita grew from 115% of the EU average to 124%. Well played, Germany!