Greek megaphone negotiation hoped to blackmail EuroZone members and Eurocrats into surrender but has just left Greece with nowhere to go in the short term. The result is that the level of pain for Greece has just been increased.
It now seems inevitable that Greek will default. Part of the problem has been that the Greek Government has adopted the Scottish Nazi Party approach to campaigning – refusing to take any notice of the other parties to negotiation and assuming that if they continue in this way the reality will match the fantasy – the outcome is guaranteed to end in disaster.
The ECB has been quietly forcing billions of Euros into Greek Banks although the banks are technically bankrupt and ECB rules do not permit lending to bankrupt banks or countries. This massive influx of loans is now likely to be written off as part of Greek bankruptcy and raises the question of whether the ECB management must now resign en mass.
Tomorrow is likely to see the Greek Government bring in controls to prevent a dramatic run on Greek banks that have been seeing a billion Euros a day being withdrawn by customers desperate to hold their money as cash or invest in banks outside Greece.
The proposed Greek referendum on the bailout terms is now set for a date beyond the bailout terms. This means that Greek voters will have to vote on nothing because a Greek default on Tuesday will mean that there are no bailout terms on the table.
The Greek opposition Parties have combined against the Government and a snap election is likely to produce a new and very different Government for Greece.
It appears that a majority of the Greek electorate no longer wish the current Government to be negotiating anything with anyone and there are rumours that the Greek military are reluctantly considering whether to stage a coup before civil war breaks out.
Whatever happens in Greece this year, it is difficult to see any happy outcome. It is now just a matter of how much pain Greece will suffer.
Sadly, the situation has grown so much worse because the successive Greek Governments and the Eurocrats have clung to their political dream of a USSR tied together by the Euro and missed opportunity after opportunity to take a new course and mitigate the pain for Greece.
Lets hope that Greece will emerge from the wreckage of failed politics and begin a recovery.