The Greek debt crisis, largely ignored in the United States, is about to go viral. The government of  Prime Minister Alex Tsipras just rearranged the deck chairs on the Titanic by reshuffling his team that is negotiating with the European Union to release more than $7 billion in aid.  The money is tied up because Greece is refusing to stick with its deal to reform its finances and cut its massive welfare state. 

The role of the confrontational and delusional leftist finance minister Yanis Varoufakis has been downsized.  The day-to-day negotiations will now be headed up by Deputy Foreign Minister Euclid Tsakalotos, while the hapless Varoufakis will be limited to political negotiations with EU member-states.

Varoufakis's sneering statements about Germany and Chancellor Merkel, as well as his insistence that the EU recognize that the Greek far-left party that took power recently, Syriza, can't go back to responsible spending by government because that's not what they were elected to do, have made him a pariah at these negotiations, so Tsipras had little choice but to can him.

I can tell your eyes are glazing over reading this, but there is a very good reason why we should pay much closer attention to what is happening in Europe.

Greece is on the edge of defaulting on its debt.  The reasons aren't as important as what a "Grexit" might do to the American economy. 

Thankfully, American banks have very little direct exposure to a Greek default.  But the wild uncertainty of what would happen to the rest of Europe in the case of a Grexit is extremely worrisome to American financial institutions. 

Europe has taken steps since the original 2011 Greek bailout to shield member-nations with their own debt problems – Ireland, Spain, Portugal, Cyprus, and Italy – from the worst of the disaster.  They have fortified the banking systems in those countries with huge cash reserves, courtesy of the European Central Bank.  The ECB now has a program where it will directly purchase some sovereign debt if countries get in trouble, thus heading off a collapse in the bond markets.  There is also an emergency fund that member-states can draw on if trouble arises.

But no one in Europe is sure if these measures are enough.  That's because managing expecations following a Grexit cannot possibly take into account the panic factor.  And as swiftly as crisis can move in these days of instantaneous news reporting and speed-of-light transfer of funds, it is more than a distant possibility that panic could overwhelm the system and start a domino effect of collapsing banks in every corner of Europe.

In an afternoon, the international banking system could collapse.

Likely?  No.  But the very possibility of such an outcome has American policymakers and bankers breaking out into a cold sweat.  "Too big to fail" would become meaningless in this scenario, and we would have our own banking crisis to address. 

Needless to say, loans would dry up as they did in 2008, and the economy would near-collapse once again.  The U.S. economy cannot function at a sustainable level without an international banking system.  The entire financial edifice built up since the end of World War II would become obsolete overnight.

Most international observers believe that a Greek default is inevitable – so much so that nations are manuevering to avoid blame for a Greek collapse.

The headline in Reuters says it all: "If Greece falls, no one wants their prints on the murder weapon":

The game of chicken between Greece and its international creditors is turning into a vicious blame game as Athens lurches closer to bankruptcy with no cash-for-reform agreement in sight.

Europe's political leaders and central bankers and Greek politicians agree on only one thing: if Greece goes down, they don't want their fingerprints on the murder weapon.

If Athens runs out of cash and defaults in the coming weeks, as seems increasingly possible, no one wants to be accused of having pushed it over the edge or failed to try to save it.

Greece's leftist government has already identified its culprit of choice - Germany, Europe's main paymaster, accused of having inflicted toxic austerity policies on Greeks, causing a "humanitarian crisis".

Euro zone governments are preparing the ground to blame the novice government of Prime Minister Alexis Tsipras for having blustered, obstructed, failed to meet commitments and evaded hard choices while Athens burned.

"We are doing everything we can to save Greece from itself, but in the end, it's up to them," is the message pouring out of Berlin, Brussels and IMF headquarters in Washington.

The writing is on the wall if the Germans and the rest of the EU are already trying to avoid blame for a catastrophe.  And that means less energy will go into trying to solve the crisis and save the world economy from the enormous uncertainty of what would happen with a Grexit.