On February 12 , the greek government failed to reach a deal with eurozone ministers on renegotiating the bailout.

Athens proposed to overhaul 30 percent of its reform commitments. It also wanted a debt swap that will free up funds for economic growth, a bridging loan until September to buy time to hammer out new reforms, and to reverse austerity measures demanded of previous governments.

Today, on February 19,  the Greek authorities sent a request for a six-month extension to their EU loan programme, but austerity-fond Germany rejected the plan.


 Greece’s bailout is due to expire on the 28 th of  February and failure to agree an extension would see Greece default on its giant debts, almost inevitably meaning that it would crash out of the euro.

This would be raising the risk to having Greece becoming the first member of the euro currency union to leave.

The situation has become so heated in recent weeks that some prominent economists now believe the time is right for the country to leave the euro zone.

Greece, meanwhile, has suggested that it could turn to Russia or China for help if its talks on debt relief and a rollback of austerity measures break down.
US officials have expressed concern about the implications of any breakdown in the discussions, since that could propel Greece further away from Europe.
Rampant inflation, political unrest, debt defaults and a possible « contagion » within Europe’s financial sector — that’s what Greece’s new government might trigger if it does not get its way in its negotiations with the rest of Europe’s finance ministers right now.
Money has been streaming out of Greek accounts — Moody’s estimates about €12 billion has been withdrawn since early December meaning here that it’s the commercial banks that represent the biggest immediate threat to Greece’s future.

The ECB may have no choice but to cut off emergency funding if Greece doesn’t get a deal with creditors before the existing bailout program expires at the end of this month. That could force Greece out of the euro.

The probability of a Greek exit is clearly now higher than at any time in 2012.