Greece accounts for just 2.3% of the Eurozone output and 0.4% of the Global total, but seems now to be the hair trigger for a disaster large enough to engulf the World's economy.
The upcoming parliamentary election on Sunday is expected to decide Greece's future in the Eurozone. Citing pre-election polls, Credit Suisse predicts a 40% chance each for the pro-euro and anti-bailout coalitions to win, with a 20% probability for a stalemate.
A victory by the anti-bailout alliance may lead to Greece's exit from the Euro bloc in the short term.
A win by Euro supporters stalls the so-called Greexit but, given the country's worsening debt and economic problems, the medium- and long-term prospects are unclear.
In the case of a political impasse, like the one that followed the previous vote in May and prompted this re-election, places Greece's Euro fate on the cliff's edge.
Now talking about Greexit is no longer a taboo. It is too early to tell whether Greece would leave and when.
It is time for the international community to act in advance and prevent the Greek turmoil from dragging down the World economy. And it is time that the EU faced up to the risks of Greece's EUR exit.
As I see it the EU finance officials have started making contingency plans, including introducing Eurozone capital controls, imposing border checks, suspending the Schengen agreement, and limiting ATM cash withdrawals.
The recent rescue lending to the Spanish banks was a step in the right direction, but the EU should devise stronger preventive measures, and it should put in place the comprehensive arrangements to align national fiscal policies and establishing a bank rescue mechanism.
The Greek crisis is not just a problem for the Greeks and the Eurozone because a Greek exit, if not handled correctly, impacts the global economy in terms of confidence, finance and trade.
So, the international community should do 2 things at the Group of 20 Summit scheduled for 18-19 June in Mexico.
1. it should exert more pressure on the Eurozone and demand the improvement of short-term contingency plans and work to speed up reforms.
2. the major world economies should establish a global macro-economic policy co-ordination network, as they did during the subprime mortgage crisis, and set up contingency plans based on the worst-case scenario of a Greek exit.
Developing economies vulnerable to external influence should be cautious.
As the World Bank warned Tuesday, they need to brace themselves for a possible global economic slump by creating more room for maneuver.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.