Greece will collapse.
Right now Greeks are taking all their money out of Greek banks. Because of the way the ECB functions all of these withdraws are AUTOMATICALLY replaced with ECB funds (same for all EU countries).
What’s going to happen very soon is that Either Greek government imposes capital controls (won’t happen) or the ECB stops replenishing the Greek banks. This will be the zero hour or tipping point of the crisis.
Greek citizens are trying to lock in the value of their Euros now before Greece exits the Euro and capital is immediately frozen and converted to Drachmas becoming substantially devalued in the process.
If it becomes clear that this is a wholesale bank run (it is by the way), and not just a momentary panic that will subside, someone has to act. Either the Greek government imposes capital controls and freezes the movement of depositors cash out of Greece so the banks can continue to pay their debts. Or the ECB stops the automatic replenishment of withdrawn Euros to Greek banks and thus ensures the Complete collapse of the country.
This is such a precarious unprecedented situation because by imposing these capital controls the Greek government would be accepting a loss of sovereignty on the scale of losing a war and if the ECB stops this replenishment they will be taking responsibility for potentially knocking over the first domino in a sequence that no one knows the extent of. The leaders of the ECB are of the opinion that they don’t have the political authority to make that kind of decision. I woud agree.
But in the meantime Europe continues to pay for the Greek collapse by essentially funding a bank run.
The whole story is that the ECB can afford to do this. But the same account patterns in Greece that began the current money migration out of the country’s banks can be seen in data from Spain and Italy. That, the ECB obviously cannot afford.
People who actually hold anything in Greece are definitely panicking,and with good reason, but of course the group that caused all of this in the short term (although, as you say, this goes way back to the post WWII period) seems to be blissfully unaware. I don't know where they think Greece is going to get the money to support them in the lifestyles to which they have become accustomed.
One of the frustrating things about this is that there is such a level of denial and unreality that you really wonder how these people manage to get their shoes and socks on in the morning.
I don't think so, in either short- and long-term horizons.
Short-term, yeah Mario has Japan lined up, China in the background, but for how much and how long? And then who has the money to buy up the vaunted Euro phantombond once issued? And who would want it, even with German backing?
Then long-term, it is exactly as Nick Dewhurst said:
"The basic question is that a German has to increase working from 65 to 67, and that is to pay for Greeks retiring at 50. The 17th of June is the perfect opportunity to say either 'we’ll behave' or 'we’ll carry on cheating'." -- Nick Dewhirst