On Monday, June 29, global stock markets were reeling from the news out of Greece. Dow Jones was down by 350 points. With many global crises like Ukraine, ISIS, Syria, Iran nuclear deal already threatening to tip the world into chaos, the one crisis that could undermine not only the Eurozone itself but international financial structure is Greece and its monstrous debt crisis.

While the Wall Street collapse of 2008 is supposed to have impacted many economies driving them into recession, the main reason for the Greece debt is the structural imbalance in the Greek economy in the form of high debt to GDP ratio.

The implosion of the Greek economy in 2009 led to the fear that the Greek government would not be able to service its high debt obligations thus leading to sovereign debt crisis. As a result, Greece was unable to borrow on the international markets and had to turn to International Monetary Fund, European Central Bank and the European Commission to seek the bailout to avoid the impending financial crisis.

But the bailouts did not come cheaply. Too many strings were attached to it. The Greek government was required to carry out numerous painful reforms: pensions were supposed to be reduced, tax receipts were to be streamlined by curbing tax evasions, steep tax hikes were required to be implemented to generate more revenue, and deep budget cuts were to be put in place.

The result of all these attached conditions was the absolute impoverishment of the population which was already reeling under the hardships due to ongoing recession.

This caused resentment among the population and resulted in the resounding victory of anti-austerity Syriza party in January which campaigned on the promise of ending painful bailout agreement.

The two sides – EU and Syriza – are now at loggerheads. Syriza wants significant reduction in debt and more leeway in how it raises its tax revenues while protecting the pensions and other public obligations while EU is demanding significant reduction in pensions and steep VAT tax hike to increase the revenue. This has led to an impasse.

The deadline for the loan repayment program that was extended in February has expired on June 30th, and given the fact that Greece is already on the verge of bankruptcy, missing the deadline means Greece would be held in default of IMF loan – a first developed nation to do so. How the dominoes would fall as a result of its default, nobody knows.

And, this is driving the markets and the central banks all over the world nervous: How to prevent the contagion from spreading if Greek economy and banking system collapses?

On top of it, Syriza has decided to seek referendum of the people – which will be held on July 5th – whether to accept the bailout agreement or leave euro. As of now, the mood of both Syriza and EU towards each other has become more hardened.

Even though Greek Prime Minister Tsipras has now sent another letter to EU accepting lenders’ conditions but with modifications, given the fact that the deadline for agreeing to the new debt program has already expired, the letter seems to be too little, too late.

Since there is no debt deal to talk about, July 5th’s referendum has become moot. It would be seen as nothing but a referendum on whether to stay in EU or not. EU has taken note of the letter submitted by the Greek government but has decided to stick to its guns and is waiting for the outcome of July 5th referendum before commenting on the contents of the letter.

As of now, the “No” vote to the “troika” proposed bailout deal is in majority. And, if “No” vote wins in the referendum, then it would be anybody’s guess how the resulting scenario would unfold for Eurozone and its banking system.

Quite a mess and a very big dark cloud over Eurozone and its economy.