Greece must repay 1.6 billion euros to the International Monetary Fund Tuesday and lacks the cash.  That country’s central bank has closed its banks for six days and is limiting ATM withdrawals to 60 euros a day.  In essence, Greece is running out of cash and requires further infusions of loans in order to be able to pay its bills.

There is nothing new about this pattern, except for the fact that the European Central Bank and IMF have grown weary of shipping billions of euros belonging to solvent nations (in large part, Germany), which actually earn more than they spend and save the excess, to the Greeks, who spend more than they make.

Unless Greece adopts severe austerity measures (higher taxes, spending cuts, pension cuts – all of which are unpopular), there is no prospect of Greece ever being able to pay back the foreign lenders.  The current left-wing government of Greece does not support the bank closing or the austerity measures and has adopted the rhetoric of victimization:

Mr Tsipras appealed for calm, insisting that Greeks’ savings and pensions were safe.

“In these critical hours, we must remember that the only thing to fear is fear itself,” he said. “The dignity of the Greek people in the face of blackmail and injustice will send a message of hope and pride to all of Europe.”

He added: “He said: "The recent decisions of the Eurogroup and ECB have only one objective: to attempt to stifle the will of the Greek people.

"They will not succeed. The very opposite will occur: the Greek people will stand firm with even greater wilfulness.

Tsipras has called for a referendum on austerity measures July 5, a vote he is hoping will be negative, strengthening his hand in demanding that those nasty foreigners stop insisting on being repaid and continue coughing up money they have no reason to expect will be repaid in the future.

After announcing the referendum, Tsipras asked for an extension of Greece's existing bailout until after the July 5th vote. Euro zone officials refused, and in his televised address Tsipras bemoaned the refusal as an "unprecedented act".

In essence, a game of chicken is underway, with the left-wing government of Greece demanding that it be allowed to continue living in never-never land, where money magically flows in from overseas in return for Greece agreeing to stay in the eurozone.  The signs are that the foreign governments underwriting never-never land are getting sick of underwriting the leisure and prosperity of the Greeks.

The outcome of the referendum is far from certain.  Reuters reports:

Tsipras faces growing political pressure with opinion polls suggesting a majority of Greeks could turn their back on his call to reject the bailout and instead decide to support the lenders' package in next Sunday's referendum.

If they do, he would face pressure to resign, leaving the way open for new elections.

Former conservative Prime Minister Antonis Samaras, who on Sunday met Greek head of state President Prokopis Pavlopoulos, said Tsipras should drop the referendum plans and return to the negotiations or make way for a government of national unity.

Meanwhile, global financial markets are reacting very negatively, with stocks down low single digits this morning across the world.