Athens is convulsing with protests and riots, the Greek ruling coalition is coming unglued, and EU leaders appear to be rejecting even Greece's best efforts at economic reform.

(Just check out our live coverage of what's going on.)

Greek citizens are railing against the harsh new austerity measures the government would like to impose, and everyone's wondering whether they'll be able to endure another decade of recession—the probable consequence of continued austerity and return to fiscal health.

Earlier this week, Citigroup economists Willem Buiter and Ebrahim Rabhari revised their predictions of a Greek exit from the eurozone—or "Grexit"—in the next 18 months up to 50 percent from 25-30 percent in November.

That's not only because Greece's failure to meet spending and austerity goals has angered the rest of the euro area and made other countries less willing to extend aid, but because the risks to the rest of the eurozone have been moderated as investors priced in this possibility.

Still, Grexit is not Citigroup's baseline scenario—Buiter and Rabhari expect that a Greek default will indeed provoke a credit event, and that future debt restructuring will have to happen, but that it will stay in the eurozone.

Grexit will only happen when Greece publicly flouts troika recommendations and has no chance of receiving aid.

"Grexit would likely take place in a context where Greece is no longer willing to make the minimum efforts necessary to be judged to be in compliance with the fiscal and structural reform demands of the Troika. Greece would not just have to fail to comply in substance, but would have to be sufficiently blatantly non-compliant to deprive the Troika of the fig-leaf of an ‘honest-albeit-insufficient effort to comply’."

Source: Citigroup Global Markets

Greece will pass a currency law setting exchange rates and limiting those who can file suits against the Greek government in foreign courts.

"Grexit would effectively start with the urgent passage of a currency law through an emergency decree by the Greek government of the day. This law would stipulate one or more conversion rates between the old and the new Greek currency (which we will call the ‘New Drachma’)...

Besides one or more rate(s) of conversion, the currency law would likely also specify that the new currency is legal tender for payment and settlement of debt in the ‘relevant country’, i.e. Greece, including for the payment of public and private debt obligations (including bank loans, deposits, and securities) and other contracts, including wage and pension contracts."

Source: Citigroup Global Markets

It will simultaneously impose strict capital controls to prevent capital flight.

"In our view, it is highly likely that Grexit would be accompanied by the imposition of strict capital controls. True, the Treaty (Art. 63) forbids any restrictions on capital or payment flows between EU member states, but we think that an exiting country, facing massive disruptions in its international capital account transactions would need to impose strict capital and foreign exchange controls following exit if some semblance of financial order is to be maintained."

Source: Citigroup Global Markets

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See Also:

• EL-ERIAN: Even EU Leaders Know This Greek Deal 'Will Only Last A Few Months At Best'
• LIVE: Violence Breaks Out In Greece, Police Union Threatens To Issue Warrants For EU/IMF Officials
• LIVE: The Greek Government Is Falling Apart