Greece, the risks and ramifications…

The U.S. is a long way from being where Greece is, but the developed world has been living beyond its means and is now being called to account.
Byron Wien, vice chairman, Blackstone Advisory Partners.
“Greek Debt Woes Ripple Outward, From Asia to U.S,” The New York Times
A major write-down of Greece’s $400 billion sovereign debt would deal a serious blow to an already enfeebled European banking system, which holds the majority of that debt. Indeed, if Greece’s debt does need to be written down by anywhere near the Standard and Poor’s estimate, one could see the IMF having to revise up by at least 20 percent its present estimate of the European banks’ likely loan losses from the 2008–2009 global economic crisis.
Desmond Lachman, resident fellow, American Enterprise Institute
“Greek Tragedy Could Have Multiple Acts,” The American
At some stage, the euro area would have had to come to a fork in the decision-making road. This may be that fork. The euro area needs to decide whether it wants political union. The nations which accept a political union will have to go down one route – and those that don’t will have to leave the euro.
History shows that monetary unions of large sovereign nations cannot survive unless they become a political union. Monetary union requires labour mobility and fiscal flexibility in the form of a single treasury. Rich regions need to bail out poor areas when needed. This is easier to implement if they are part of the same country and much harder to justify across a monetary union.
The basic problem with the euro was that one interest rate does not suit all the countries. In economic jargon, the euro is not an “optimal currency area”. In other terms, the economies are so different they need their own interest rates. One size does not fit all.”
Gerard Lyons, chief economist, Standard Chartered
“Europe’s future in the balance as eurozone faces its toughest test,” The Observer
Greek lawmakers voted 172 to 121 to approve the austerity measures — worth about $38.18 billion through 2012 — which will reduce pensions and civil servants’ pay and raise taxes. Opposition parties lambasted the government for imposing measures that they deemed too harsh.
“The dose of the medicine you are administering is in danger of killing the patient,” conservative opposition leader Antonis Samaras said.
“Greece agrees to austerity plan to secure European Union, IMF rescue loans,” Associated Press