Greece Has Three Days to Deliver… Or Else

The lenders are unhappy with progress Greece has made towards reforming its public sector, a senior euro zone official involved in the negotiations said, while another said they might suspend an inspection visit they resumed on Monday.

Methinks this is all quacking and posing. Greece will successfully obtain new concessions.

The EU and the US (through the IMF) will pick up the tab as usual, while doing their best to communicate that they kept their head up. But behind the curtain, they’ll have bent over and coped.

There’s a lot more at stake here than avoiding a hypothetical Greek default. Or a Eurozone breakup, or the EU’s effort to demonstrate solidarity between its members, for that matter. Or the potential for a fiscal union. I expect that the Eurozone will stick to paying lip service to the latter until a major country (try Spain, Italy or France for size) is against the wall.

The more immediate matter is that bank losses would domino their way through the system, as occurred with Greek bonds in the hands of Cyprus banks. At the very end of the food chain, there are French, German, UK and ultimately US banks blowing up en masse and taking their respective economies down with them. And that’s not happening — not in three days, anyway.