Tomorrow they are holding a referendum to decide if they will accept their creditors' final offer. Except the creditors have withdrawn the offer, so they are voting on whether or not to accept a deal that doesn't exist. Which is pretty much the degree of reality with which Greece has been conducting itself throughout this whole thing.
Anyway, as we await the results of the Greek psuedo-referendum, Foreign Policy has a look at what might happen if Grexit were combined with an implosion of the Chinese stock market.
If Greece defaults and eventually has to abandon the euro, the currency’s sheen of invulnerability will disappear. The impossible will have become possible, and investors will be forced to consider the fact that other countries — Portugal may be next in line — might someday exit the eurozone as well.
Uncertainty about the underlying value of the euro will increase dramatically. There will be no way to know what the euro or euro-denominated securities ought to be worth if the makeup of the eurozone itself is unpredictable. Central banks built up euros as a counterweight to dollars in their reserves for years; that trend, already in reverse, could turn into a swan dive.And then there's China.
Now throw in the bursting stock-market bubble in China. Companies there have used high stock prices to pay off debt through new public offerings. But investors have borrowed hundreds of billions to finance their portfolios, pushing prices still higher. If the markets crash — and even a loosening of rules on margin trading hasn’t been able to stop their recent slide — free-spending companies will have garnered an undeserved measure of solidity at the expense of millions of Chinese households. Billions in private saving will have financed a raft of pointless projects, destroying wealth and distorting incentives at the same time.
The global implications will be equally bad. Many financial institutions have undoubtedly bet against the Chinese markets, but those that held onto Chinese securities will be forced to pull back the riskier assets in their portfolios. Any contagion of Greece’s problems in other less-creditworthy countries will be magnified. Meanwhile, Chinese investors will have to sell their holdings abroad to cover their margins and losses at home. Major markets will drop, except for the beneficiaries of the usual flight to safety.In addition, FP goes on, China will cut way back on imports, impacting numerous countries (China buys ¼ of Australia's and South Korea's exports).
Read the whole thing, it's interesting, and a bit scary. How likely?:”This week, analysts gave Greece up to a 50 percent chance of leaving the eurozone. The Shanghai Composite has already plunged by 20 percent since June 12.”