We already know the outline of Greece's comprehensive proposal for a debt swap. The growth-linked bonds they want to issue will constitute a selective default in the eyes of credit rating agencies. Private sector portfolio managers will then be reluctant to add Greek credit risk to their European debt holdings. Hedge fund managers who have already loaded up on Greek bonds will watch their valuations crater. The ECB would ordinarily be buyer of last resort, if the troika cares more about systemic stability than it does about saving face.
The hushed conversations in recent days between Greek ministers and their European counterparts made for fascinating lip-reading. European leaders admitted in unguarded public moments that they knew Greece was destroying the euro. The Greeks just smirked. Every statement coming out of Athens is the equivalent of a big smirk at the world.
Full disclosure: Long put position against FXE.