SO THE home of democracy is going to have a vote on whether to accept the latest European debt deal (if the government survives to hold such a vote). At one level, the idea of "voting away your debts" seems rather odd. But voters have every right to do so, as long as they accept the consequences. In his book "Golden Fetters", Barry Eichengreen argued that one reason the gold standard failed to work after the first world war was that most states had become democracies; regular doses of austerity were needed to ensure sound money. But that was politically impossible once the working classes had the vote, especially as politicians were worried about the threat of communist revolution.

The problem of Greece is that public expenditure is higher than tax revenues, and the government cannot finance the gap in the markets. So the Greeks have four options.

1. Raise taxes. The population seems to be against that, with the property tax being particularly unpopular. The man on the Athens omnibus might well be in favour of raising taxes on the rich, or on companies, but it does not seem as if this strategy will be pursued with sufficient vigour, or will raise enough money.

2. Cut public spending. Public-sector workers are against that option.

3. Borrow money from their EU neighbours. The neighbours are willing to hand over the money but only on condition of further austerity. This the Greeks also dislike.

4. Default outright. The result will probably be even more painful austerity. Cut off from the financial markets, the Greeks will have to balance the budget overnight. They may also need to rescue their banks, a capital-intensive process. Leaving the euro might also involve a rescue of the corporate sector, which would find its revenues in (devalued) drachma and its debts in euros.

Although there is a risk that voters will reject option 3, it may be that politicians will use fear of option 4 to pull opinion around. If the Greeks designed their own menu, one would guess that it would be for the EU to lend them money, without imposing the austerity conditions. But the Germans have to satisfy their own voters; democracy cuts both ways.