The day of default is nearing, and it looks increasingly likely that the Greeks will not be able to pull out of this. A disorderly default in Greece would throw the entire euro-wide bailout system into chaos, and it is evident that this game of financial chicken is going to be played down to the very last second.
The Greeks are refusing to accept the demands that have been made by German and French leaders, who appear as dug-in as ever in their proposed conditions, as they assert the requirements are too draconian. Greek leaders, already unpopular with the masses for previous austerity cuts, have predicted that the German and French demands will condemn the nation to years of destitution and no growth.
Regardless, those with the bailout cash want an even more aggressive austerity plan and labor reforms, and they believe the Greeks will give in. The Greeks think the threat of euro zone collapse will be enough to make the austerity proponents back off.
Either way, the fear is that both sides will wait too long, and nothing will be able to stop and uncertainty-fueled financial meltdown in the EU.
Source: Chris Kuehl, PhD, NACM economist