What was once considered unthinkable has now happened. Having missed the
June 30th deadline for payment on its debt, the country of Greece has effectively defaulted. This is going to have a considerable effect on the
economy of the European Union, which Greece might now leave.
It's likely that this situation will get worse before it gets better. First, the basic facts.
Michael Birnbaum of the
Washington Post:
Greece fails to make key IMF debt payment
Greece lost its financial lifelines Tuesday, as the country missed a crucial payment to the International Monetary Fund amid growing questions about whether it would be able to remain in the euro zone.
Greek leaders had made a last-ditch attempt to come up with the necessary cash, asking European countries for a new bailout hours before its last ones were set to expire, but E.U. finance ministers rejected the request as unrealistic. The missed payment, confirmed by the IMF, was a landmark moment in Europe’s five-year battle to preserve its common currency.
The E.U. finance chiefs were set to reconvene Wednesday as Greece’s cash dwindles and its banks remain closed. The ministers’ decision to hold firm was a sign that they believed they had successfully put in place the defenses against instability in Europe if a country left the euro zone. But as Greece became the first developed nation to miss a payment to the IMF, E.U. leaders were confronting the prospect of a European country plunging into intense financial misery as it was forced to abandon the currency.
In the coming days, you're going to hear some quibbling about whether or not this was a default.