What happens when Greece defaults

Read: http://blogs.telegraph.co.uk/finance/andrewlilico/100010332/what-happens-when-greece-defaults/

I'm not going to repost the whole thing but these points stand out:

"It is when, not if. Financial markets merely aren’t sure whether it’ll be tomorrow, a month’s time, a year’s time, or two years’ time (it won’t be longer than that)."

"Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting). The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting 0n 50 per cent or more of all Greek euro-denominated debts.

"The Irish will, within a few days, walk away from the debts of its banking system."

"The Portuguese government will wait to see whether there is chaos in Greece before deciding whether to default in turn."

"There will be carnage in the market for Spanish banking sector bonds, as bondholders anticipate imposed debt-equity swaps. This assumption will prove justified, as the Spaniards choose to over-ride the structure of current bond contracts in the Spanish banking sector, recapitalising a number of banks via debt-equity swaps."

So, at some point in the next 2 years, all of the PIGS, with the possible exception of Italy, will default.