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Greece’s Hideous Choice: More Austerity or Collapse

Greece is facing a hideous choice: a third massive international bailout with strict austerity attached,or economic collapse.

Greeks are preparing to vote Sunday in a referendum on whether to accept a bailout offer from Europe and the International Monetary Fund. Prime Minister Alexis Tsipras is urging people to reject the proposal, saying that would strengthen his hand in negotiations.

If Greece votes “no” it would almost certainly lead to its exit from the eurozone, the so-called “Grexit” scenario.That’s because Greece has almost run out of money, and only Europe can save it.

If Greece can’t get more bailout money from Europe soon, it will have to pay pensioners and public sector workers with IOUs — perhaps within weeks. Its banks would have to stay shut or get new funding from somewhere.That’s when Greece would be forced to start printing its own currency. The new drachma would be worth much less than the euro, making crucial imports much more expensive for ordinary Greeks.

A “yes” vote could provide a way out of the crisis but it won’t be easy or quick. Here’s why: The bailout offer the Greek government has put to its people expired on Tuesday. That means a completely new agreement has to be negotiated. Tsipras has hinted he will resign if there is a “yes” vote. Greece would need a new leader at least, and perhaps even a new government.