Currently there is no Government in Greece, as they head off to the polls for the second time in as many months. The Acting Prime Minister is Judge Panagiotis Pikrammenos. Ironically one of his more famous judgements in Greece was that it is illegal to imprison people for debt. The entire country is facing debtor prison.
And what may happen:
There are three possibilities for the next election. The first is that SYRIZA gains even more support and forms a Government that will then default on its debt. The second is that ND and PASOK gain enough support to clearly govern and continue the austerity programme. The third is another hung Parliament and a third set of elections.
No matter what happens, there is a reasonable chance that Greece will end in default (technically it has been already). Some, such as the new executive director of the NZ Initiative Dr Oliver Hartwich, say it is a matter of when, not if. The Bank of England has already started contingency plans for Greece departing the Euro and possibly the EU.
And what could this mean for Greece:
The Euro is likely to decline in value as Greece, and possible Portugal and Ireland, revert to their old currencies. This means that exports to Europe from New Zealand are likely to decline. In Greece it will be even worse. Their new/old currency of the drachma will probably be worth half a Euro, which means high inflation and a big drop in the standard of living. One expert predicts interest rates for home owners and businesses will double, and a lack of credit may lead to shortages in basic commodities like oil, medicine and food.
I don’t think one can even rule out a military coup if this happens, and you get widespread rioting. I hope I am wrong, but time will tell.