Will Greece go bankrupt?
"I strongly believe that Greece needs to restructure its debt. The sums don't work. We can't grow our way out of this monstrous amount of debt, and we can't cut our way out of it without Mad-Max levels of civil unrest.
Some of my rationale can be found here.
On the other hand, if we do give our creditors a substantial haircut, it will set off a chain reaction that could bankrupt a number of banks around Europe, and in fact WILL send the entire continent into depression. Already, interbank lending in Europe is frozen. It won't take much to send the system into meltdown.
Clearly, the EU will not allow that to happen even if it means that France has to annex Greece (Germany won't do for obvious reasons, plus much of our elite would secretly enjoy that). This may sound like a joke but a massive loss of sovereignty can come about in very simple ways - a Eurozone country without a vote in the Council (an idea that has been mooted by some), and with its budgets subject to Eurozone finance ministers' approval, will have no say on most of the legislation it is subject to.
So what is going to happen is that Europe will keep us high on cheap debt until they think it's safe to let us go. We will only be sovereign in the most trivial sense for the next 10 years, during which time we will give our creditors one or two minor haircuts.
This could of course change radically if Spain, or Italy or anyone else starts to need this kind of help. Putting the entire periphery of Europe on subsidised probation will really bring the whole thing to the boil. The EU will do all it can to contain this type of mechanism to one or at most two minor Eurozone countries.
And then there are some massive wildcards still to be played. As power is transferred from the Greek government and parliament to the EU institutions, the crosshair for our "known-unknowns" will move from Athens to Brussels, Strasbourg and Frankfurt. And then it's really going to hit the fan.
What happens when it's not our Minister of the Interior but an EU Commissioner that gets their office bombed? What happens when the older generation of our urban guerillas finally decide to shack up with their posh yuppie girlfriends in Brussels and start firebombing Belgian coppers? What happens if our demonstrators occupy the Berlaymont instead of the Acropolis, or if the mayor of Strasbourg should wake up to the entire town spray painted with "No job, no church, nothing to do man! - Let's sh*t on the grave of Schuman!"?
I don't have the answers to that."