The [Greek] government has decided to stop tax returns and other obligation payments to enterprises, salary workers and pensioners as it sees the budget deficit soaring to over 10 percent of gross domestic product for 2011.
For all the supposed austerity, the budget situation is worse in Greece. Germany and other countries will soon have to accept they have poured tens of billions of euros down a rathole, and that they will have to do what they should have done over a year ago - let Greece move out of the Euro.
Government workers and pensioners simply will not accept any cuts without rioting in the street. And the banks will all go under with a default on government debt. And no one will pay any more taxes. And Germany is not going to keep funding a 10% of GDP deficit. The only way out seems to be to print money (to pay the debt) and devalue the currency (to effectively reduce fixed pensions and salaries). And the only way to do all that is outside of the Euro. From an economic standpoint, the inflation approach is probably not the best, but it is the politically easiest to implement.