Greece's debt crisis odyssey

Greece and its lenders are locked in discussion. The "Troika" of lenders - the European Union, International Monetary Fund and European Central Bank - say Greece must take more painful steps to cut its borrowing. But Greece faces riots and mass protests on the streets of Athens. The government could lose its grip on parliament - only 155 of 300 MPs backed the last round of austerity in June. At stake is the next 8bn euro tranche of bailout money, which Greece desperately needs to avoid total crisis. Starting from the top, follow the decision tree to decide what happens next.

• Does Greece meet the Troika's austerity demands?
  YES or NO
• Recession deepens: Greece has to cut its borrowing to a target set by the Troika. But austerity deepens Greece's recession. Along with mass tax evasion and strikes by tax collectors, this has already made Greece over-shoot its target twice.
  Does Greece miss its borrowing target again?
  NO YES
• Impasse: Greece has failed to deliver promised austerity and the Troika has threatened to stop releasing bailout loans. But without the cash, Greece faces a crisis.
  Does the Troika release the bailout money?
  YES NO
• Greece has a funding shortfall: Despite the austerity, Greece still needs more cash. The Troika can lend it, or else Greece has to make more cuts.
  Should the Troika...
  demand more austerity?
  or give another bailout?
• Greece has a cash crisis: The government does not have enough money to pay for public services and must choose which payments to skip.
  Does Greece stop repaying its debts?
  YES NO
• Austerity succeeds: After years of painful cuts Greece does not need to borrow any more to fund government spending. But Greece still has huge debts to repay.
  Does Greece renegotiate its debts?
  YES NO
• The Troika blinked: Greece has won the stand-off. The Troika is evidently too afraid of the conse- quences to let Greece go bust.
  Does Greece continue with austerity?
  YES or NO
• Banking crisis: Default leaves Greek banks bust and risks a Europe-wide banking crisis.
  Does the Troika bail Greece out?
  YES or NO
• Severe cash crisis: The government cannot make basic payments like employee wages, benefits and public services, and risks major civil unrest.
• Greek banks collapse. Even after halting debt repayments, the government still can not pay all its bills.
• Economic collapse:Speculation may rise that Greece will leave the euro, prompting a run on the Greek banks.
  Does Greece exit euro?
  NO YES

• PYRRHIC VICTORY
  Greece forces its lenders to write off most of its debts, which probably bankrupts the Greek banks (its biggest lenders), meaning they must be nationalised. Greece still may face years of low growth as its economy is uncompetitive inside the euro.
• DEPRESSION
  Greece may face years of grindingly low growth as its economy is uncompetitive inside the euro. In addition, the government probably has to pass even more growth-sapping austerity to cover the cost of its debt repayments.
• MORAL HAZARD
  Greece has its lenders over a barrel, earning kudos with the Greek public, and allowing it to slow down painful austerity. But Italy and other high-debt countries may copy Greek tactics. Germany - which is now seen as on the hook for bailing out the entire eurozone - may find it much more expensive to borrow, and may consider leaving the euro.
• POLITICAL TURMOIL
  The Greek economy may face total collapse, with banks closed and the government unable to pay for basic public services. This is likely to cause massive civil unrest and a collapse of the government. Greece has already seen rioting and the takeover of government offices. The CIA has warned of a possible military coup.
• GLOBAL MELTDOWN
  Switching back to the drachma leads to a huge financial and legal mess. Italy and Spain may be unable to borrow and face a run on their banks amid fears they may also leave the euro. Major European banks could collapse sparking another global financial crisis. In Greece the drachma is likely to plummet in value, boosting the economy, but causing painfully high inflation.

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