The consensus seems to be that we're way passed the world of If. When Greece leaves the euro zone, this is how the Europe's worst nightmares come true:
Interest rates skyrocket Michael Arghyrou, senior economics lecturer at Cardiff Business School, has bad news for Greeks in need of a loan. "Interest rates will have to double and all mortgages, business loans and other borrowing will become much more expensive," he says. "There will be no credit for Greek banks or the Greek state. That could mean a shortage of basic commodities, like oil or medicine or even foodstuffs." Of course, that's not even the worst of it. "The worst case scenario would be a social and economic breakdown, perhaps even leading to a totalitarian regime," he says.
Bank runs spread to other countries. Bloomberg's Donahue says the threat to other European countries is very real. "A Greek departure from the euro could trigger a default-inducing surge in bond yields, capital flight that might spread to other indebted states and a resultant series of bank runs," he writes. "Although Greece accounts for 2 percent of the euro-area's economic output, its exit would fragment a system of monetary union designed to be irreversible and might cause investors to raise the threat of withdrawal by other states."
Greek citizens migrate en masse. In a chain of events, The Observer's Julia Kollewe sees Greek skilled labor exiting the country. "The depreciation of the new currency will make imported goods more expensive and drive up inflation," she writes. Mass unemployment is likely, as is an exodus of young skilled workers. If tens of thousands of Greeks headed to the borders, they might even be closed. Greek soldiers patrolling the roads and ports to keep their fellow citizens in? It is not impossible."
Read the full story at The Atlantic Wire.