Here we go again. A year after Greece was handed €110bn (£96bn) in soft loans by the European Union and the IMF, Athens needs more. The big idea 12 months ago was that, by now, investors would be applauding Greece's austerity measures and would be rushing to lend. Nothing of the sort has happened. Deficit-reduction targets have been missed and the economy is a mess.

The obvious conclusion is that the bailout is not working and that Greece's debts, which are forecast to peak at 160% of GDP, are too high to allow the country's economy to recover. In that case, eurozone leaders should stop pretending that more budget cuts and more calls for the Greeks to privatise state assets will make the numbers add up eventually. They should instead start talking about ways to reduce Greece's debts and think about how to contain the knock-on damage to eurozone banks that hold Greek bonds.

But reality, it seems, is still too hard to contemplate in Berlin and Brussels. Another fudge is on the cards. More money, perhaps €25bn to €30bn, looks likely to be dispatched to Athens and repayment terms for last year's bailout package could be loosened. The pretence will be maintained that one day Greece will repay every euro it owes.

In theory, €25bn and a soft-shoe shuffle on repayment terms (please don't call it a mini-default) might keep the Greek show on the road for another year. In practice, it seems just as likely the eurozone leaders will provoke the broader crisis they seek to avoid.

Why? Well, the market views a Greek default as inevitable eventually. Investors also know that one day politicians, fearful of losing votes, will accept this fact and stop dispatching emergency funds. A collision is coming. The trick is to contain the damage by strengthening the buffers of the eurozone's banks. But they're not talking that language in Brussels – they should.