By Tim Worstall, Forbes

It’s possible to feel like the boy who cried wolf once too often in this seemingly never-ending story about Greece’s debt burden and who will relieve it. 

But the point of that story is that eventually the wolf really does arrive to gobble him up. And so it is with this saga (perhaps epic is a better word to use in something about Greece) over whether anyone is going to bail out the Greeks or will there instead be a default and then exit from the euro: that Grexit. For we really are getting to the point where no more can-kicking can be done, something or other is going to happen. Either Athens gets more money, presumably some or all of the €7 billion odd still due under the second bailout, or it doesn’t and Greece simply runs out of cash. At which point the banks crumble, the only way of recapitalising them would be to introduce the drachma again and that’s it, Greece is then out of the euro.

On which we’ve Draghi, at the European Central Bank, saying that there’s really just not that much time left:

Eurozone leaders have reportedly begun drawing up plans to impose capital controls in Greece such as withdrawal limits and forced bank holidays as European Central Bank president Mario Draghi warns that time is fast running out to resolve the country’s debt crisis.

There’s two different time limits here. The first is that any changes to that second bailout (the only place Greece is going to get any money) require approval in several of the national parliaments of the other eurozone states. This takes time to organise. And Greece really will be out of money by the end of the month: there’s an IMF payment due that it most certainly cannot meet without release of those bailout funds. So, there’s that as one technical limitation. The other problem is the solvency and or liquidity of the Greek banks. This doesn’t have a technical limit: it just depends upon how quickly people take their money out of them. There’s been a slow motion run been going on for months now. An acceleration of it would bump up against the limits of the ECB financing for them (through the ELA) at which point said ECB has to decide. Are they simply illiquid, in which case raise the limits or are they insolvent? If there’s to be a default by the Greek state, then they’re insolvent and the limits should be lowered, not raised.

And that run is continuing:

Amid suggestions that Greek banks suffered outflows of about €400 million ($580 million) on Monday, German newspaper Süddeutsche Zeitung is reporting that eurozone leaders and the ECB are drafting plans to impose capital controls if the deadlock cannot be broken by the pending weekend.

That report (in German) is here. It’s ever so slightly odd because it would be theBank of Greece that imposed capital controls and bank holidays, not the European authorities themselves. However, that this is being openly talked about does show how far the situation has got. The report does say that they will be quite tough though:

The paper says Greece will be handed an ultimatum deal and be faced with draconian measures if it doesn’t get closer to a deal during a eurozone finance ministers meeting this week.

There are those, such as the Irish Times (and myself) who think that leaving the euro is the solution anyway:

Why Greece should choose euro zone exit rather than dependence

Essentially, the eurozone handling of the entire situation has, for years, been so dire that being outside the influence of those eurozone authorities is a thoroughly good idea.

While I do think that’s right, and that leaving the euro is the best thing that could happen to Greece and the Greek economy (while, of course, defaulting on that unpayable debt and renegotiating it down to something achievable) there’s two caveats here. The transition process isn’t going to be easy or fun. And it will be much worse the less prepared for it everyone is. It’s possible that the Greeks are preparing that new drachma already: I would call them in deriliction of their duty if they’re not at least planning for it. But it could be that they simply don’t believe that it will ever come to that and that will make the process that much more difficult if it does.