Most Greeks understand that calling in the EU and the IMF is embarrassing, but there seems to be a sense in Athens that the crisis is now coming to an end. This illusion is likely to be shattered once the IMF in particular makes clear the size of the stick that will accompany the aid carrot.
The austerity plan is likely to be substantial in its scope and will see the Greek economy pushed firmly into depression for the next few years. Without the ability to devalue their currency the Greeks will struggle to generate any sustained growth. The debt spiral will consequently get worse and will lead to further aid packages before an eventual default as the solvency crisis comes to a head.
In the mean time investors will continue to charge Athens a high price for taking its debt. Not least because they are likely to find the paper they are buying is subordinate to the debt that is created as part of the aid packages.
Leaving the euro does not look like an option for the Greeks at the moment. The country has the bulk of its debt denominated in the single currency, which means that readopting its own currency would send costs soaring to crippling levels.
The single currency will continue to suffer. Greece is not alone in this mess and the message that austerity is essential has been heard in many other capitals from Dublin to Madrid to Rome. As these economies contract, the ECB will struggle to find any reason to raise rates.
While the Fed will also have to worry about deflation for a little while longer, the balance of probability is that the US economy will deliver far stronger growth over the next few years than Europe will.
Guy Johnson anchors European Closing Bell weekdays on CNBC. http://europe.cnbc.com