While at first blush it doesn’t make sense, it does make sense for the right wing and left to have an “arrangement.”
Plainly put, Greece is hopelessly bankrupt.It’s not a question of “if” they repudiate their debt, its when and under what terms. Austerity is only a workable solution if there is some hope of coming out of it. There is none, and all this austerity over the past few years is just debtholders grabbing what they can as soon as they can.
The problem is that the EU nations and the ECB loaned to Greece (practically from the first time Greece adopted the euro) knowing full well that it would be unable to pay them back under the given conditions.
At this point, Greece really has no other feasible option but to repudiate their debt. This will cut off their access to further credit, but is that really a bad thing?