Even though it has long been obvious that non-default is not an option, the European leaders and institutions pursue a strategy of delay with no solution in sight. Then,
“for Europe ex-Greece, the costs of delay are whatever delay does to reduce the amount that Greece will eventually pay its creditors. I think there’s a good case to be made that at this point demands for even more austerity are counterproductive, even in terms of creditors’ interests: the Greek economy is suffering long-term damage, the Greek political scene is being radicalized, and the chances of Greece just telling its creditors to take a hike while it devalues the new drachma are rising.” (Krugman’s blog in the New York Times, here).
Economic common sense indeed.