First, you can forget about any real reform in Greece. The pressure will be off. Greece has learned how to evade and deny and the Tsipras government has already shown its ability to flip-flop at will. So, Greece fiscal behavior will be guaranteed to be worse than ever. Keep in mind that under the previous two bailouts of nearly $ 250 billion, exactly zero interest is owed over the next five years. You have to wonder what further "debt forgiveness" means in this context.
Second, you are guaranteed that Spain, Italy, and Ireland will now expect increased bailouts with sweetheart terms. Simple arithmetic pushes the short term bailout dollars to well over $ 1 trillion and rising. Also, expect Spain, Italy and Ireland to push back on austerity and reform and to learn the Greek practice of evasion and denial.
Third, France will now expect to not be required to play by the Eurozone fiscal rules. France is already violating Eurozone rules (as is Germany). France will begin to lean on the European Central Bank to continue to fund its bloated welfare state.
The real question is how long bond buyers will continue to purchase sovereign debt from the Eurozone. Absent any fiscal sanity, the sovereign debt numbers are now positioned to explode to ridiculous levels. Meanwhile, GDP will remain stagnant. There has been no change in the absurd labor laws, oppressive taxes, and byzantine business regulation that characterizes virtually every European country.
It won't go on forever. The future for Europe is perpetual economic stagnation leading to an eventual economic collapse. That will be the legacy of Angela Merkel, Francoise Hollande, Alexis Tsipras, Mario Draghi, etal. Easily predictable.
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