Why Greece's spillover across euro area will probably be contained this time

[swakoo]

It is educating to view a negotiation between parties, who none has option to walk away. The Greek gov team, has fully leveraged on the "no-option"...

From It’s Time for Greece to Leave the Euro

A big part of the blame for this mess rests on the shoulders of the chancellor of Germany, Angela Merkel herself. Her statement that “if the euro fails, Europe fails” was understood by Athens as a carte blanche: Greece’s euro membership is obviously priceless to Europe’s most powerful leader. From then on, all credit negotiations between Athens and the eurozone resembled a poker game with the German cards in the open. The fail-fail sentence was easily the most stupid public statement that the usually cautious Ms. Merkel had ever made.

Blame falls on Greece too:

There was a point when things looked promising. After the European Union and the International Monetary Fund stepped in with their first two bailout programs, Greece made considerable progress on closing its deficits. Between 2010 and 2014 it implemented spending cuts virtually unprecedented in a developed country. Those cuts meant hardship to many in Greece. But they began to pay off: By the end of 2014, Greece was spending less than it was collecting in taxes (if you leave aside interest payments).

But the cuts to social-welfare programs and public-employee salaries also drove up support for the radical left Syriza government, which took over earlier this year. It stopped the reforms and blurrily demanded other, bigger changes, including a “new deal” for all of Europe — whatever this is supposed to mean.