It’s been the biggest week of the year so far for the global economy, and the chances are the worst is yet to come.

• Why Putin and Obama are key to a ‘Greek solution’
• Chinese sharemarkets plummet
• Confused about Greece? Here’s what it all means
• Carnage on global sharemarkets

Here are the four things you need to know about the unfolding mess.

Greece is imploding

No prizes for guessing the number one story of the week: Greece’s momentous failure to pay a $US1.7 billion loan from the International Monetary Fund.

While the ‘default’ itself was a drop in the ocean for the IMF, the consequences could be massive.

Greece has many more loan repayments looming, and if lenders see that it isn’t repaying its debts, they are not going to lend to it. That will mean the government won’t be able to meet its spending obligations, such as public service salaries and welfare payments. Greek banks will also struggle to get anyone to lend to them, meaning the supply of money will dry up.

Was this Alexis Tsipras’ last week as Greek PM? Photo: Getty

The only solution will be for Greece to drop the euro and start printing its own currency, the drachma. The big risk of that in the short-term will be hyper-inflation, as the resurrected drachma will be seen to represent very little value. In the long-term, though, it may give the Greek economy its best chance to rebuild from the ground up.

But at present, it is unlikely to come to that. A referendum on Sunday over whether to accept a bailout deal has come to be seen as a referendum on whether or not to stay in the Eurozone.

The Greek prime minister Alexis Tsipras has urged the people to vote ‘no’, but polls suggest a ‘yes’ vote is more likely, in which case many expect Tsipras to resign. That could be the end of his left-wing Syriza government, opening the way for more austerity in exchange for more bailouts.

But there may be another factor at play. As The New Daily’s George Lekakis wrote on Thursday, there is a geopolitical angle to the whole story which is getting very little air-time.

A ‘Grexit’ would push Greece under the influence of Russia and China, away from the US. The US is unlikely to accept this, and may step in at the eleventh hour with a more generous bailout offer.

Sharemarkets tumble … then rebound … then fall again

When it became clear that Greece would default, the Australian sharemarket, thanks to its time zone, was the first to react. And it tumbled.

During the day it lost a massive $35 billion in value as investors panicked. When other sharemarkets around the world opened, the same thing happened.

Why did they panic? Because at times of financial crisis the most risky place to have your money is in shares. When financial markets go belly-up and businesses go bust, shareholders get no compensation. Their money is lost.

Over the next couple of days the Australian sharemarket rebounded somewhat as investors decided the thing they were afraid of – a Grexit – looked unlikely. But the initial effect on global financial markets was massive, and suggests that, if a Grexit does eventuate, we could be looking at the next global financial crisis. It’s seven years since the last one, and history tells us we’re due another one about now.

China’s economy looks shaky

The Chinese sharemarket has had a disastrous week. Photo: Getty

Which brings us neatly on to China.

China’s insatiable appetite for Australian iron ore saved us from the last GFC. But if the Greek situation somehow morphs into another global financial crisis, Australia will not be immune.

China increasingly looks like it’s in trouble. Having built more apartment blocks than it can fill, its demand for iron ore has fallen.

To make matters worse, many economists believe the economy will grow slower than expected, failing to hit its projected seven per cent growth over the next year. This week Chinese authorities gave a sign they are concerned when they cut the cash rate.

Meanwhile, the Chinese sharemarket has had a disastrous week. Sharemarkets are volatile, irrational places at the best of times; but China’s sharemarket is particularly so, given the majority of investors are ‘mums and dads’ who treat it like a casino.

This week’s ‘correction’ was so worrying it led the World Bank to issue a stern warning to China to reform its financial system.

A weaker Chinese economy means a weaker Australian economy, and the possibility of recession.

Trans-Pacific Partnership Agreement

The Trans-Pacific Partnership Agreement (TPP) – a trade agreement between 12 Pacific Rim nations including Australia that is currently in its final stages of negotiation – has received a lot of negative attention from consumer advocates, unions and left-wing activists.

They have three central objections: it will give multi-national corporations power to sue governments over policy changes (e.g. cigarette plain packaging); it will increase the cost of some medication thanks to stricter intellectual property provisions; and it is all being conducted in secret.

On Thursday, however, a high-profile member of the business community – RBA board member and AustralianSuper chair Heather Ridout – added her voice to the ‘no’ camp.

“I’m probably an outlier here, but mark my words, we will regret it if we sign away our rights,” she said.

“Governments have a right to tax, a right to do a whole lot of stuff. Why would you take that away from them?”

Another negative from the business point of view is that the Australian sugar cane industry’s efforts to gain better access to the US market look unlikely to succeed.