I think the EU may have just seen its Borodino or Stalingrad depending if you take Sarkozy or Merkel's view of history. It looks like the Germans have decided not to rescue the Greeks. The German voters wont wear it. They have had enough bailing out the bankrupt Prussia and Saxony. Their old time allies the Italians are now in one of their many reverse gears with the lira dropping that an IMF rescue will cost them less. The French of course would much rather someone else did the fighting and used their money so Greece will just have to go cap in hand to the IMF a hated Anglo Saxon institution set up by J M Keynes at Bretton Woods.
Eurogroup chairman Jean Paul Juncker said recourse to the IMF would shatter the credibility of monetary union. This crisis will force a radical rethink of the great EU project in the capitals of Europe. Its the moment of truth. Time for the French to break out the cheese. The long retreat from Moscow has begun.
Frau Merkel, in her latest speech to the Bundestag has announced that henceforth Germany would pursue its national interest and called for treaty changes to allow EMU rule breakers to be kicked out. The Bundesbank's Herr Sarrazin has said that if Greece cannot pay its bills then, "it should do what every other debtor has to do and file for insolvency. This would encourage the others". This means Greece defaults on her sovereign debt. A default bigger than the recent Russian and Argentinian defaults combined. The Russian debt default of 97 almost produced melt down in the banking sector. Now we have much weaker banks and a much bigger potential default! Its a huge potential catastrophe for the EU.
The maximum the IMF can lend Greece is €15bn which is not enough to get them through without swingeing cuts in public expenditure. Its not the Greek peoples fault but the fault lies with the ego driven European politicians. Remember, the great French hero and soldier crossed the Polish border into Russia with his Grande Armee of 500,000. Thanks to his military genius it staggered back 6 months later with 10,000. The Germans lost a similar number of men at Stalingrad. Merkel does not intend to repeat that mistake.