The failure of the troika (European Union Commission, European Central Bank and International Monetary Fund) to obtain agreement from the Greek political classes for further austerity measures was not an unpredictable outcome. The exasperation of the German government with obdurate Greek civil servants and politicians led to demands for an abrogation of their sovereignty last weekend. The proposal received a raspberry that echoed wider than the Aegean.
When we look back on the development of this crisis, Germany's ability to influence the policy of indebted countries may well have reached a peak in January. The demands for a Fiscal Union embedding balanced budgets and austerity are being eroded by the loss of competitiveness in the peripheral countries and the ever Greater Depression. Electorates will not welcome their living standards sacrificed upon the altar of austerity.
It is not easy to predict the denouement of this crisis, though politics has come centre stage. The first defeat of German influence was the redlines of sovereignty that they demanded last week. Without this control, the Fiscal Union is detached from reality: its only chance of success depends upon a shared perspective amongst all of the political elites that signed up to the treaty.
The treaty now faces a number of challenges before it is finally accepted: a French presidential election with a revisionist candidate from the Socialist party; demands for referenda across a number of countries; and, an increasing chorus of critics that blames Germany and the 'Bruning pruning' for the immolation of the Eurozone.
Since Greek political parties are not willing to accede to demands for cuts to their solidarity, a default appears to be on the cards. This is accentuated by German unwillingess to provide further funds, thank God!
If welfare states have to adjust to new measures under the cosh of debt and default, better that it be done now without the additional whimsy of zombie banks living off the ECB teat.