As crunch moment draws ever closer, tempers are fraying both in Greece and all across the eurozone. This could signal the final shouting match which proves agreement is near, or it could demonstrate that agreement is now impossible. There is however a change in the political dynamics of the corners into which Germany and Greece are boxed. The loss of tens of billions German Euros will be hard for Merkel to explain to her taxpayers if Greece defaults and national bankruptcy was not what Tsipras promised his voters. This may just be enough to force both to cut a deal.
The trouble is the deal will be just that. It is unlikely to last and the crisis will return, so in some ways it might be better all round to bite the bullet and accept reality. This is that Greece is bust big time, it should never have been allowed into the Euro in the first place and having let it join it should never have been allowed to borrow so much. Because there was nobody in charge of this ungoverned currency and because the system of governance in Euroland generally suffers from an acute deficit of democratic legitimacy, one thing led to another with nobody calling the shots. When shots finally began to be called they all came from Berlin, which set out such strictures of fiscal puritanism that none of the measures which might have helped were applied in time.
What is now left if the day is to be saved and not just deferred, is a write off of 75% of Greece’s debt and a quantitative easing programme to reboot the Greek economy. The process would keep Greece in the euro and a side effect will be to devalue it. That would help re-energise the whole euro economic zone. Germany will never agree, so the alternative is for Greece to default and re-issue the drachma with the IMF supporting, together with the World Bank, the financial reconstruction of the Greek economy. Germany will not like that a lot either. What must not happen is a marginal haircut and tinkering around with repayment dates coupled with more loans. That will not work and to attempt it would be just plain silly.