Greg Ip is the chief economics commentator for The Wall Street Journal and he joins me now.

　　So, Greg Ip, what do people believe is going to happen tomorrow?

　　GREG IP, The Wall Street Journal: Well, the actual default on the IMF loan is itself not a significant event, because the IMF is not about to fail or stop lending to other countries as a consequence of this.

　　It does mean that Greece is basically in arrears to its international obligations. And it can't really move forward in terms of acquire — getting new funds, so that it can reopen banks the banks and have its budget function normally, until it comes to some sort of agreement with the IMF.

　　The bigger question hanging over Greece and its future with respect to the IMF and its relations are what happens with this referendum next Sunday. How will the Greek people vote? If they reject the agreement, the terms of the bailout that the IMF and the rest of Europe offered last week, then it's very hard to see what the path is back to some sort of negotiated settlement and indeed it's hard to see how Greece stays in the Euro.

　　JUDY WOODRUFF: So, Greece in a holding pattern is what you're saying essentially until next weekend. What do people expect will happen at that point?

　　GREG IP: Well, nobody really knows, partly because the referendum question itself is very unclear.

　　Greeks are being asked to vote yes or no to essentially a very technical 40-page document that actually until recently wasn't even available in Greek. Moreover, the Greek government has been telling voters, this is not a referendum on staying in the euro. We're staying in the euro no matter what.

　　But the creditors on the other side, the European Commission and the IMF, are saying the opposite. They're saying, de facto, if you vote no, then you're also saying no to Europe. So, I think depending on how Greek voters interpret the question will largely depend — determine how that referendum is decided.

　　JUDY WOODRUFF: So, Greg, are you saying literally that this is completely up in the air at this point?

　　GREG IP: It completely is.

　　And I wouldn't even say that Greece is in a holding pattern, which would actually be a positive thing. I think the longer this uncertainty persists and the Greek banks stay closed, the worse it gets. Greece's economy is already in recession. In fact, it's the only major economy in the Eurozone right now to be shrinking, largely because of the uncertainty that has surrounded negotiations between Syriza, the government, and the creditor nations.

　　That's only going to get worse. And, moreover, even if they voted yes in the referendum, there is a lot of speculation that would force the Syriza government to resign, because how could they in good conscience carry out the reforms that the voters just agreed to, given how much they have opposed them?

　　And so you would still have weeks and weeks of uncertainty while waiting for a new government to form.

　　JUDY WOODRUFF: Well, we have seen the effects already on the U.S. markets today, the Dow dropping 350 points. What about in Europe? What do you see happening? What do people think is going to happen in Europe and the effect on the United States?

　　GREG IP: Well, the near-term effect is probably likely to be much less muted in Europe and the rest of the world than it was four or five years ago, when the Greek crisis first erupted.

　　The reason is that other countries that are vulnerable like Greece is now have other places to go if they need to borrow money. Europe has a bailout fund and the European Central Bank has made it clear that they will lend money to countries that need it, provided those countries adhere to whatever agreement on reforms they have already reached with the European Commission.

　　So, you don't need — it's unlikely you will get the money fleeing from banks and the bond market shutting down, as we did three or four years ago. The bigger risk there is, I think, essentially political.

　　What Greece has demonstrated is that people do have a limit to their ability to tolerate endless austerity and pain. And while the situation is not as bad in countries like Italy, and Greece and Spain, it is still quite bad, and people do have a breaking point.

　　And if the economy gets worse in Europe — and, by the way, it had actually been doing relatively well up until recently — then that could increase the intolerance of voters there for austerity, bring to power movements that are similar to Syriza in Greece, and I think once again raise questions about the future of the euro.

　　JUDY WOODRUFF: Well, there are many more questions about Greece, but we have a few seconds left, a minute.

　　I want to ask you about another financial crisis point, and that is Puerto Rico.

　　GREG IP: Yes.

　　JUDY WOODRUFF: The governor over the weekend saying his country — his territory is about to move into bankruptcy. What's the story there? How did this happen?

　　GREG IP: Puerto Rico's problems have been developing for many years and indeed they are very similar to Greece's.

　　It's a chronically uncompetitive economy. But because it's locked in basically a monetary union with the United States, it can't devalue its currency, the dollar, in order to regain competitiveness. As a result, they have accumulated significant debts. They have a shrinking population, a shrinking tax base. And I think today what the governor is going to say is that this debt cannot be repaid, it wants to restructure its debts with its creditors.

　　Exactly how, nobody really knows. Puerto Rico cannot go to bankruptcy court, the way a city or a county can in the United States, so there's a lot of uncertainty ahead for Puerto Rico.

　　I think, however, the parallels to Greece only go so far. Puerto Rico is certainly not about to exit the dollar, and there's no other state that looks like Puerto Rico that is about to follow suit. And, moreover, although this is going to be a very tough time for Puerto Rico, the federal government has a very large presence there.

　　The federal government, for example, pays for Social Security. That will cushion some of the hardship that would otherwise fall on the Puerto Rican people.

　　JUDY WOODRUFF: And, as I'm talking to you, I'm being told the wire services are reporting Puerto Rico's governor is saying that he is going to be asking for Chapter 9 bankruptcy.

　　So, we will be watching that. And thank you for bringing us up to date on both of these crises. Greg Ip, thanks.

　　GREG IP: Thank you.