What are the repercussions now for Greece, the EU, and the World at large?


The biggest lenders to Greece were Germany and its bankers who championed austerity measures. [1] These measures required Greece to improve how it managed its public finances, lower trade barriers, and reform its pension system. [1] Half of Greek households relied on pension income and workers weren't thrilled about paying more contributions so that the seniors can receive higher pensions. [2] The austerity measures forced the government to cut spending and increase taxes. [2] As a result of the measures, Greece's economy shrank 25%, unemployment rose 25%, and youth unemployment hit 50%. [2] In 2017, Greece ran a budget surplus of 0.8%, and its economy grew 1.4%, but unemployment was still 22%. [3] One-third of the population lived below the poverty line. [3] The EU and IMF gave Greece 240 billion euros in emergency funds, but the loans only allowed Greece to pay interest on its existing debt and keep banks capitalized. [4]
Greece's emergency lending from the ECB is due July 20, and Greece does not have the money to pay [1]. If the ECB decides to cut off lending and Greece runs out of money, Greece would be forced to abandon the euro and print its own currency [1]. Some economists see a long-term upside to this, as Greece could devalue its currency and begin an export-based recovery [2]. However, European creditors would lose out on payments they would get if Greece remained in the eurozone [2]. There is also concern about default spreading via a domino effect of sorts: Markets in weak eurozone economies would be spooked by the ECB letting Greece default, resulting in bank runs in nations like Portugal, Ireland and Italy [3]. However, the EU has set up the European Stability Mechanism rescue vehicle to provide a bulwark for these nations [4].