Papandreou’s survival in Parliament last night was to be expected, and is almost certain to earn Greece the fifth €12bn tranche of last year’s EU-IMF bailout. EU leaders will come together in Brussels on July 3rd to decide whether Greece has made sufficient progress on reforms. Clearly, there will now be immense pressure on them to comply and release the money.

However, as the New York Times pointed out, this was just “the easy part”:

The payment of 12 billion euros will help Greece pay its debts coming due only until September. After that, Greece still faces obstacles to winning tens of billions more in a much bigger bailout package that is essential to its survival through next year.

To get an idea of the hurdles that still lie ahead, we have compiled a simple overview that we will try to update as regularly as possible (I’m going into the wild for a few days so I might not be able to do the June 23-28 updates in time):

• June 21 — Greece: vote of confidence in Papandreou government
• June 23 — EU: decision on releasing fifth €12bn tranche of 2010 bailout
• June 24? — IMF: decision on releasing its part of this fifth tranche
• June 28 — Greece: deadline to push through €28bn spending cuts package
• July 3 — EU: decision on second bailout worth €80-120bn
• July 15 — Greece: six-month Greek treasury bills worth €2.4bn mature
• July 22 — Greece: three-month Greek treasury bills worth €2bn mature
• Aug. 20 — Greece: five-year Greek government bond worth €5.9bn matures

Note that these hurdles are all linked in series, like an old-fashioned set of Christmas lights: when one fails, all the following ones will fail too. For example, had today’s vote of confidence failed, the EU would not have released its fifth tranche of the bailout, which was a precondition for the IMF to reduce its share.

This, in turn, would have compromised negotiations on the second round of austerity measures and the second bailout. Greece would have been forced to default by July 15 or July 22, when billions of euros worth in government loans mature and Greece will have to pay up.

At this point, both public debts and public sector salaries would go unpaid, triggering the collapse of Greek banks and very likely renewed violence. The bank failures would quickly cascade throughout Europe, with giant banks like Société Générale, BNP Paribas, Kommerzbank, Deutsche Bank and ING Bank at risk of insolvency.

By that time, cash-stricken Northern European governments would be forced to push through massive bank bailouts, re-injecting capital to prevent a 1930s-style financial collapse. Within no-time, Northern European governments will, just like Greece, become heavily indebted, forcing similar long-term austerity measures upon Northern populations.

Foreign investors will long have panicked by then, triggering massive capital flight out of the European periphery and sending borrowing costs for Ireland, Portugal, Spain, Belgium and Italy through the roof. It won’t be long before a combination of capital flight, soaring interest rates and cascading bank runs force these countries to require EU bailouts too.

Where is all this money going to come from?

No surprise then that the Guardian would write about a “multi-layered effort to stave off a Greek sovereign default that could plunge Europe into one of its worst ever crises.” Olli Rehn, the EU commissioner for monetary affairs, warned that “we’re at a critical point in the most serious crisis since WWII.”

Indeed, I would go even further and say that we are on the eve of the Third Depression, during which something truly unprecedented could transpire: the financial failure of the entire eurozone, including a break-up of the single currency area, the bankruptcy of several major banks and countries, and the collapse of the European Central Bank.

We have to remember that the ECB is currently exposed to Portuguese, Irish, Greek and Spanish bonds to the tune of €440bn, meaning it would only take a 4.25 percent loss in asset values for the ECB’s “entire capital base” to be wiped out, according to a recent report by the Open Europe think tank.

A Greek default would already chip off some 2.35 to 3.47 percent from the ECB’s capital base, meaning that even the smallest glitch on one of the above hurdles would come close to bankrupting the ECB. Add in the much-feared country-to-country contagion effect (e.g., a Portuguese or Irish default), and the very flagship of European capitalism could simply go bust — bankrupt.

Clearly, this would be a truly unprecedented disaster. European tax payers would have to jump to the aid of Trichet and bail out the ECB, along with the major private banks and the countries in the European periphery. Once again, where in Heaven’s name is all this money going to come from?

Sooner or later, we are going to have to face the fact that we are living in an entirely fictitious financial universe founded on hot air — and the hot air balloon we’re riding on will have to deflate at some point. The only question is whether it will do so before or after landing.

Even if all the hurdles are crossed successfully, the second bailout is passed and Greece survives the summer, the exact same problems are going to resurface at some point next year. Sooner or later, the economic and social consequences of austerity will force Greece to default, either through fiscal collapse or through political revolution.

Of course, the increasing likelihood of the former greatly increases the likelihood of the latter. And so, in a fascinating development that the mainstream media have almost entirely failed to pick up on so far, the EU’s neoliberal answer to the crisis has unexpectedly produced the greatest hurdle of all: Syntagma Square.

As I pointed out in an interview with Al Jazeera yesterday, the question that is rarely addressed by the Western media is what the Greek people are thinking. How much longer are they going to put up with these draconian austerity measures? How much longer can the political establishment continue to sideline their concerns and ignore these mass protests?

“Don’t be surprised if Athens goes up in flames,” said a 50-year old protester in Athens the other day. “And don’t be sad, either.” Indeed, if the Greek wildfire spreads, which it will, and if EU leaders force their taxpayers to start bailing out their banks, which they will, this whole thing could go down.