This is the only way in which it can become independent again and able eventually to introduce programs that the people desire rather than Greece's creditors. There is no doubt there would be considerable painful adjustments to be made but recovery could come rather quickly as the low value of the Greek drachma will encourage tourism and exports.

So far there is little sign the Tsipras or Varoufakis the finance minister, are planning to default and exit the euro zone. Tsipras appears to remain optimistic that a deal can be reached. However, with the flight of cash out of Greek banks and a horrendous 24.6 per cent fall in revenues in May it would seem that Greece might be so desperate to reach a deal that it will give up its few remaining "red lines" such as pension cuts and labor market reforms.

Nevertheless Tsipras said: "The blind insistence of cuts (in pensions) in a country with a 25 percent unemployment rate and where half of all the young people are unemployed will only cause a further worsening of the already dramatic social situation." Many economists would agree but that matters little. What counts are the demands of creditors. If they are not met, there will be no deal. The Greek government may think that the creditors will allow more leeway since they will end up losing billions if Greece defaults but that gamble may turn out to be quite wrong. 

Some think that Russia might come to the aid of Greece. However the Russian deputy finance minister said that there had been no request for funds from Greece and that in any event Russia lacked the resources to bail out Greece.

As with Tsipras, German chancellor Merkel thought a deal was still possible and said to German lawmakers: "I'm still convinced: where there's a will, there's a way. If those in charge in Greece can muster the will, an agreement ... is still possible." There is strong resistance in Germany to providing any further funds to Greece and a slim majority are in favor of Greece leaving the euro zone.

Saturday morning BBC News is reporting German Chancellor Angela Merkel has warned there must be a deal between Greece and its creditors ahead of Monday's emergency EU summit.

Additional Sources:
http://uk.reuters.com/article/2015/06/19/uk-eurozone-greece-idUKKBN0OW18Q20150619
http://www.nytimes.com/2015/06/19/business/international/greek-debt-talks-are-again-fruitless.html?_r=0
http://www.politico.eu/article/greece-must-leave-the-euro/

The EU creditors are also preparing for this as a possibility. A German newspaper claims that Eurozone leaders are drawing up plans for capital controls on Greece if there is no deal by this next weekend. Greece will be handed an ultimatum deal this week the paper claims.

Prime Minister Alexis Tsipras condemned the unrealistic demands of creditors especially demands for pension cuts when pensions have already been significantly reduced. At the same time he said that he was open to resuming talks at any time. The Troika has been insisting for days that time is running out and that Greece needs to decide if it is going to accept the demands of creditors. The time for negotiation is over some have said. Yet Greek negotiators appear to think that they can gain more concessions from the Troika or institutions since the IMF and the European Central Bank have a lot to lose if Greece defaults.

The increasing uncertainty over any solution to the Greek crisis was reflected even in US markets with the Dow Jones index continuing to fall but the declines were even steeper in European markets.

Tuesday - Markets suffer as Greece teeters on the edge of Grexit - live