Greece’s debt crisis has hit a flashpoint. As European and Greek leaders struggle over whether we’ll see a default and/or a bailout, shockwaves are flowing through European markets and beyond. Since yesterday, protesters have laid siege to Athens’ central Syntagma square and the adjoining parliament buildings, with numbers being quoted in the tens and hundreds of thousands.

The crisis in Greece is not unlike what faces many if not most countries right now – their debts have grown out of control, and the economy is struggling to keep up. Similar debt crises are looming in Spain, Ireland and Portugal, as well as simmering nearly everywhere else in the industrialized world (see America’s debt-ceiling battle), and fears are widespread that one way or the other, this could have drastic consequences for the European Union.

The question is whether to default on a large chunk of this debt (known in the financial world as a “bondholder haircut”) or seek a bailout from the EU’s central banks. The first option would spread pain quickly across European banks, many of whom have billions invested in Greece, and the second would see them take on even more debt on its behalf. The EU and IMF have now offered a new bailout deal, but it’s still depending on the ability of the government to pass controversial austerity measures.

Like all good debt crises, especially those where the IMF is involved, the immediate solutions involve gutting workers rights, public services and the national economy in general. These “austerity” proposals have once again infuriated the public and enormous protests and a general strike have erupted, with crowds measured in the tens or hundreds of thousands. Police have attempted to clear crowds, but have been confronted with rioters throwing everything from food to molotov cocktails.

Demands are coming in for the resignation of Papandreou, who has fired his cabinet. Defiantly, he’s pledging to press on with austerity measures, but as he’s getting little support from the conservative side parliament, it seems very likely he may have to make good on his offer to resign.

Once again, we’re seeing dramatic evidence that the world’s economy is walking a tightrope right now. Most big markets are now hitting their lowest points in many months or even a year. The bailouts managed to put off a total meltdown, but only by making the fundamental problem much worse. We’re now seeing the costs of this explosion of public debt, and the political fallout as they’re spread around. This system is not sustainable, and never has been, but only now are we beginning to see it really hit limits. Behind all of this debt-based spending is a much larger crisis looming, which is already taking a huge toll on balance sheets. As I write this, many markets are in freefall, and that’s something we may need to get used to for a while.

Brace yerselves folks, we’re in for a very bumpy summer.