So after we've given billions to greece, Ireland and Portugal, we find greece are even deeper in the shit than before and our end is estimated to be between 4 and 11 billion. How much further is this going to go and is the Eurozone a failed experiment that should be broken up now. How can it survive, I always thought it was a none started given the vastly differing economic models of member countries and yet the surged forwards, bending the entry criteria and snapping up countries like a smackhead left alone with a room full of credit cards. Should these countries be allowed to leave and to reinstate their original currencies, whereby the have the ability to devalue it. The have no legroom to do this as part of the Euro. The EU and IMF are going to start releasing money and you have to look a bit deeper to find out why. German and French banks arent very cash rich at the moment and they are into greek bonds for an amount that would probably wipe a few of them out and have another lehmann situation. The knock on effect would pull down spain and italy immediately. Where is the money coming from though, because we certainly dont have it, all we do is borrow more to leverage our situation. Where will it end, personally I think the only way forward is the breakup of the Euro as a single currency, but that wont be the end, the piper has to be paid.

How does each of these options affect us then Steeley?

I saw the German's suggesting that they'd bail out Greece for a second time but that some of the banks should be prepared to accept a loss of some of their money. I see the financial markets haven't responded very well to that suggestion although I sympathise hugely with the Germans. I should say I sympathise with the Greeks too because the Greek people never caused this mess.

After the cuts Greece has had to make does it not prove that cutting the economy just does not work?

Like a slow-motion car crash, all eyes are fixed in horror on the political chaos into which Greece is descending.

So desperate has the nation’s plight become that even economic suicide seems preferable to the austerity European neighbours seem minded, brutally, to impose upon it.

For the birthplace of European civilisation and modern democracy to boot, there could hardly be a more ignominious descent.

If the tax rises, spending cuts and state sell-offs of the ruling government’s medium term financial strategy (MTFS) aren’t approved, then assuming international policymakers are as good as their word, all future IMF/eurozone loans will cease.

In such circumstances, sovereign debt default would follow within days, and government, unable to pay its bills, would grind to a halt.
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Given Greece’s comparatively recent history of junta rule, it would surely only be a matter of time before the military stepped into the ensuing political vacuum.

Unthinkable for an apparently advanced economy? Well, perhaps, but the unthinkable has had a nasty habit of becoming true these past four years.

Whatever the eventual outcome, we are now well past the point where matters are capable of happy resolution. What’s happening is plainly a tragedy for Greece, but just how serious is it for the rest of the eurozone?

In terms of the big numbers, it might scarcely seem to matter. Greece accounts for under 3pc of eurozone output.

If Greece were to vanish into a black hole tomorrow, the European economy as a whole would hardly notice. The same goes for the other peripheral eurozone nations that have availed themselves of the bail-out funds – Ireland and Portugal. The three countries combined account for less than 7pc of eurozone GDP.

Their troubles would be nobody’s but their own if these nations had sovereign currencies and monetary policies. As everyone knows, sadly that’s not the case.

That all three are joined at the hip through the single currency to the rest of the eurozone makes the tragedy of the periphery very much everyone else’s, too. The periphery has come to threaten the core.

Against this wider, existential threat to the single currency, the "will they, won’t they?" see-saw over giving Greece more bail-out money, and the interminable debate over whether private creditors might be required to take haircuts in return, make up something of a sideshow.

You’d have thought that Athens has virtually no cards left to play, yet the threat its travails pose to the eurozone as a whole gives Greece something of a whip hand. In the game of brinkmanship currently being played out in Athens and Brussels, Greece is not entirely without negotiating power.

Give us the money, the Greeks can say, or we’ll pull the whole house down with us. As Europe’s policy elite is only too painfully aware, the cost of refusing is likely to be infinitely greater than that of coughing up, however politically unpalatable it might seem to the solvent north. Neither the IMF nor the eurozone can afford to let Greece go.

Yet disingenuously, the pretence is maintained that the crisis is no more than a bit of fiscal ill-discipline in the profligate fringe that corrective austerity can easily eradicate.

Unfortunately, it’s much more serious than that, for the fiscal crisis now manifesting itself in sky-high sovereign bond yields is just part of an ongoing and European-wide banking crisis.

Let’s for the moment forget the bit of the crisis that grabs all the headlines right now – the meltdown in the periphery’s public finances – and instead focus on what’s happening in the banking system. Here we are seeing a continued "run" on the banks of vulnerable countries not unlike that which befell the UK at the height of the credit crunch.

This is an entirely rational response by depositors. Any country condemned to years of austerity and economic contraction is likely to experience a massive bad debt problem in its domestic lending, rendering much of the banking system insolvent.

On top of that, there’s the risk of sovereign debt default and/or enforced departure from the euro and consequent steep currency depreciation. No one in their right mind would keep their money in a Greek or Irish bank right now.

Fear of capital controls and/or the re-establishment of national currencies to stem the outflow and restore competitiveness has naturally served to exaggerate the phenomenon. The mentality is fast becoming one of get out now while you still can. It scarcely needs saying that the moment capital controls are imposed, it’s game over. The country that does so is effectively out of the euro.

With high dependence on foreign funding, the Irish banking system is particularly vulnerable to this capital flight. As deposits flee the country, the banks are forced back on to the lender-of-last-resort facilities operated by their central banks.

These central banks will in turn use the collateral to borrow from other eurozone central banks, the chief lender being the Bundesbank.

The whole system has become hopelessly enmeshed. It’s almost impossible to disentangle it in a cost-free way. Greece, Ireland and Portugal are one thing, but if they are joined by Spain, then that’s a different story.

At that point, the proportion of GDP accounted for by the troubled periphery rises to 26pc, and you might want to think seriously about getting your money out of the German banking system, too.

In so far as it is possible to discern a rationale behind repeated sovereign debt bail-outs, it seems to be that of buying time.

This time can be used by the banking system to rebuild solvency through earnings retention and, where necessary, recapitalisation. Yet so far, it’s failed to correct the underlying problem in the European periphery, which is one of excessive external indebtedness, both public as well as private.

Unfortunately, the current account imbalances that feed this indebtedness remain as large as ever. Without the natural stabiliser of currency adjustment, there’s nothing to relieve them other than years of grinding deflation.

There are only two ways this can end. Either the surplus core has to accept that it must continue to bail out the periphery on a virtually permanent basis – a transfer union – or the single currency must lose its outer fringe.

Both solutions carry significant cost to the core, the first through gift aid, the second through the crystalisation of bad debt.

The Eurozone wasn't the problem, the ECB was.

They were the ones recklessly lending to the PIGS Countries. Now in Ireland's case this debt has been sovereignised and loaded onto the taxpayer, and crippling a generation to penury, emigration, mass unemployment, and austerity measures. I really wish I was exaggerating with that last sentence but I'm not.

The problem now is as it always was, "Germany needs to hide her strength, and France needs to hide her weaknesses". The Eurozone should not be a socio-economic experiment, yet this is what is being attempting at the moment. Letting the PIGS and Ireland fall into bankruptancy and punishing the lowest in the chain for the excesses of the senior bondholders, and in Irelands case, unguaranteed bondholders.

I used to mock England for not getting into the Eurozone; now I wish Ireland had never joined. At least we would still have the option of devaluation.

On another note, Ireland had the option to pull the whole house of cards down; and we never took it. Instead we signed away the country and any assetts we have to be stripped off in a fire sale to pay off the Rothschilds, JP Morgans and Rockefellers of the world.

I honestly cry when I think what has happened to my country.

CBA reading all the above cos I'm bladdered now but Greece are right, tell them to fuck off if they think they're getting paid. Goldman Sachs have organised the rip off of Greece so their investors should get whats comming to them. I hope we have people on the streets like Greece do come the warm summer nights.