With last-ditch efforts continuing (as I write) to assemble a Greek government that will keep the country committed to the terms of the existing bailout arrangements, it’s anyone’s guess as to what happens next. Writing in the Daily Telegraph, Roger Bootle looks at what happens if there is a fresh election, and the new government then tries to rewrite the deal with the rest of the euro zone:

At that point, the other eurozone members would face an awkward choice. Doubtless there would be voices in favour of providing the money, willy nilly. That might well be the French position. But if the eurozone gives way on this, what chance would there be of painful austerity being continued, not just in Greece but also in Portugal, Spain, Italy and Ireland? The northern countries would face the prospect of pouring money into a bottomless pit.
Accordingly, it is likely, I think, that they would say: “It’s your choice: we want you to stay in the euro (which isn’t true yet has to be said) but you cannot do so on your own terms.”
If the Greeks did not yield, then they would be out. For if they don’t get the money, it isn’t simply a matter of not being able to honour their debt obligations (i.e. defaulting); they would not be able to meet their obligations to pay wages and pensions. Moreover, if they could not get ECB funding for their banks, then their banking system would face implosion. At that stage, the only way out would be to move to a system where they can get funding from their own central bank – in other words, to come out of the euro.

All this, of course, assumes that matters can hold together for the duration of a new election campaign. Forget for a moment the neo-nazis of Golden Dawn. As unpleasant as they are, they do appear to be slipping back in the polls (they scored 7 percent at the election) as Greeks learn more about what it is they actually stand for. Much more relevant will be the dramatic rise of the alarmingly far-left (and anti-bailout, as it currently stands) Syriza, gently (surprise!) profiled here by the BBC. It’s all too easy easy to see how the prospect of a Syriza triumph could trigger a fresh wave of flight capital out of Greece before the election.

And then what happens?