What happens now? This isn’t 2010. European banks, governments and financial markets have had years to develop contingency plans for what will happen if Greece exits the euro. There may be a middle ground, too, in which Greece semi-exits the euro: Imagine keeping the currency but with such strict and permanent capital controls that Greek’s euros are actually a different currency from the one used in Paris or Rome.
Expect the E.C.B. and European institutions to deploy enormous financial firepower to prevent a Greek exit from spilling over to Portugal and Italy and Spain. But saying that this won’t be a Lehman Brothers-style economic catastrophe isn’t the same as saying it would be a good thing. In geopolitical terms it would push Greece closer to a hostile Russia. It would set a precedent that the European currency, and the European Union more broadly, is more fragile than its leaders would like the world to think.
The world should be rooting for a happy outcome to this Greek tragedy. It’s just not at all clear what a happy outcome would look like at this point.