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Greece: "The odds of default get shorter and shorter"

The game of financial chicken that the cash-strapped Greek government and its international creditors have played for years has reached a critical juncture.

Athens and European officials remain stuck in a negotiating bind over the country's debt obligations and how it can avoid defaulting on payments due later this month to the International Monetary Fund (IMF) and next month to the European Central Bank. If Greece defaults, the ramifications would be huge. The country would likely be forced to leave the eurozone after declaring bankruptcy, and it would raise the possibility that the "contagion" in Greece would spread to other countries.

"The odds of default get shorter and shorter," Spyros Economides, an associate professor in international relations and European politics at The London School of Economics and Political Science, told CBS MoneyWatch in an email.

Greece desperate for deal as bankruptcy looms... 01:18

"The Greek government is retrenching its position," he wrote, "and is only willing to reach agreement on its terms without compromise. This maximalist policy is extremely high risk, especially as it is constantly alienating European friends and partners who have increasingly lost any trust they may have had in the Greek government. It seems that if no agreement can be reached by early next week, then no agreement will be reached at all."

Worries about Greece are weighing on U.S. stocks because of those contagion fears, according to Roberto Rigobo, a professor at MIT's Sloan School of Management.

"In the same way that the tiny market of subprime mortgages (that before the crisis was $850 billion versus $25 trillion of the whole banking sector) had a massive impact in the U.S. economy, the crisis in Greece could propagate," he wrote in an email to CBS MoneyWatch.

Further complicating the situation is Greek Prime Minister Alexis Tsipras, who was elected on an anti-austerity platform. He has repeatedly castigated the country's creditors for demanding payment terms that his government considers overly stringent.

In a speech on Tuesday to members of his leftist Syriza party, Tsipras accused the IMF of having "criminal responsibility" for the country's economic predicament, according to The Wall Street Journal. He is scheduled to meet Friday with Russian President Vladimir Putin.

Indeed, Greece remains a basket case economically even though it has shown signs of improvement. Unemployment is expected to tick down to 25.6 percent this year from 26.5 percent in 2014, according to a European Commission forecast.

Greek government debt equals 180.2 percent of its GDP. That's higher than the 101.5 percent seen in the U.S., which is a much larger and more dynamic economy. Although Greek GDP grew by 0.8 percent in 2014 -- its first growth in seven years -- forecasters expect it to moderate to 0.5 percent in 2015.

Patience is wearing thin regarding Greece in both rich countries such as Germany and in Greece's neighbors in Southern Europe such as Spain and Portugal, which have made "adjustments" to their economic policies that Athens hasn't, according to Mauro Guillen, director of the Lauder Institute at the Wharton School of the University of Pennsylvania.

"Europe is in deep trouble ... because it's divided," Guillen told CBS MoneyWatch. "The divisions and the tensions are much worse today than they were five years ago, 10 years ago, 15 years ago. This is why I think one has to be very pessimistic about what's going on there."

One reason for the region's woes is the euro, the single currency that unites 19 countries. Guillen argues the idea was "bad" because it includes countries such as Germany and Finland alongside nations that are not as fiscally disciplined, such as Greece.

Indeed, tax evasion has been rampant in Greece for decades and continues to be a problem. According to Michael Czinkota, an associate professor at Georgetown's McDonough School of Business, many high-end Greek homes have holes in their roofs because under the country's tax law, they aren't subject to tax because technically they aren't finished.

Greece has gone to the brink before. A default was avoided in May, but it warned that a future cash crunch was coming. It faced similar crises twice in 2012. Economists are worried that a new deal will only kick the can further down the road.

"We have had various situations where, for example, the IMF and particularly Germany have made strenuous representations, as in if you don't do X -- which typically refers to domestic policies within Greece -- than we will stop you from getting new debt and your country will be in a terrible position," Czinkota said in an interview. "But whenever the Greeks played for time on that, the time was given and additional monies were provided."

That familiar scenario may soon end differently.

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