Since Athens agreed to budget cuts approaching 11% of GDP, local governments have seen a sharp decline in funding. Yesterday, the cut-off caused the city of Piraeus to announce a stop payment on $275 million of debt.

Mayor Panagiotis Fasoulas demanded immediate payment of three years of owed funding or his city would abandon its own debt.

Kathimerini:

Addressing a press conference, Fasoulas requested a meeting with government officials to find a solution that will allow the municipality to make good on its obligations - to citizens, employees and creditors. The mayor did not rule out the possibility of strike action - without determining what form this would take - to demand the monthly disbursement of some 1.6 million euros.

Piraeus City Hall currently owes some 210 million euros in debts amassed over the past 20 years. Over the past three years, the government has withheld state grants from Piraeus municipal authorities. Fasoulas yesterday described the government's stance as «provocative,» noting that a total of 44 million euros had been spent on paying off municipal debts during his three years as mayor, while only 12 million euros had been spent during the eight years that his predecessor, Christos Agrapidis, had held the post. Fasoulas said his municipality was not seeking privileged treatment but wanted to renegotiate the payment of its debts, paying larger installments at a lower interest rate.

Needless to say, Athens doesn't have the money for a bailout. So what happens if when Piraeus defaults -- Elliniko won't be far behind -- and great swaths of local government abandon their debts. And then...