Counting down...More on Greece 07/10/2015

This explained a lot to me and seems quite credible to me

The Inevitable Grexit and Banking Collapse

Dimitri Lascaris Report: while the credibility of Prime Minister Alexis Tsipras hangs by a thread, 15 out of 18 European governments support ousting Greece from the Eurozone - July 9, 2015

Over To You Merkel: Greek Govt Approves Bill The Greek People Soundly Rejected

Zero Hedge,

10 July, 2015

The Greek parliament has approved the proposal Alexis Tsipras submitted to creditors on Thursday. The ball is now in Europe's court with a Eurogroup meeting scheduled for Saturday. 

• GREEK LAWMAKERS APPROVE GOVERNMENT'S BAILOUT PROPOSAL: TALLY

As expected, Energy Minister and Left Platform leader Panagiotis Lafazanis voted against the proposal as did Parliament speaker Zoi Konstantopoulou and Deputy Minister of Social Security Dimitris Stratoulis.

If new FinMin Euclid Tsakalotos can secure the support of his EU counterparts tomorrow, the path will be cleared for Greece to remain in the EU under a new program.

• GREEK PM TSIPRAS SAYS GOVT AVERTING A POLITICAL GREXIT
• GREEK PM TSIPRAS SAYS PEOPLE DIDN'T GIVE GOVT RUPTURE MANDATE
• TSIPRAS: AGREEMENT WITH CREDITORS ISN'T CERTAIN, JUST POSSIBLE
• CREDITORS MAKE POSITIVE EVALUATION OF GREEK DEBT PROPOSALS: AP
• TSIPRAS: GREECE WILL MANAGE TO STAY IN EU, AS EQUAL PARTNER
• GREECE BAILOUT TO BE 74B EUROS BASED ON CREDITORS' EVAL: AFP

It remains to be seen how Greeks will respond to the decision. Given the similarities between the "new" proposal and the proposal that 61% of Greeks voted against last Sunday, there may well be pushback from voters and a generalized sense of betrayal among Syriza's core constituency. 

Underscoring the contentious nature of the vote is the following from Bloomberg:

Fifteen governing Syriza party lawmakers who voted “yes” in parliament vote on Greek govt’s bailout proposals to creditors say they oppose the plan, according to statement distributed to journalists.

 Lawmakers say proposal shouldn’t have been approved by Greek parliament; they backed it only because they didn’t want the govt’s parliamentary majority to be put into question.

 Lawmakers say their “yes” vote shouldn’t be interpreted as acceptance of implementation of austerity measures.

Greek Businesses Accept Lira, Lev As Grexit Looms

Zero Hedge,

10 July, 2015

With the Greek drama headed into its final act and Alexis Tsipras stuck between an obstinate Germany and a recalcitrant Left Platform, many wonder if the introduction of an alternative currency in Greece is now a foregone conclusion.

Even if Athens and Brussels manage to strike a deal over the weekend, the country still faces an acute cash shortage and a severe credit crunch that threatens to create a scarcity of critical imported goods. 

Amid the chaos, the Greek Drachma has made two mysterious appearances this week (see here and here), suggesting that the EU is on the verge of forcing the Greek economy into the adoption of a parallel currency and while this week’s Drachma “sightings” might properly be called anecdotal, a report from Kathimerini and comments from deposed FinMin Yanis Varoufakis suggest redenomination rumors are not entirely unfounded. 

Now, with the ECB set to cut Greek banks off from the ELA lifeline on Monday morning in the absence of a deal, some businesses are mitigating the liquidity shortage by accepting foreign currency. FT has more:

Like many Bulgarians, Kostadin Dobrev, is a regular visitor to the beaches and bars of northern Greece. But this week, the holidaying firefighter immediately noticed things were different. First, the shops were half-empty. Then, even more surprising, he found Greek hotels and restaurants were happy to accept the Bulgarian lev.

As Europe’s politicians prepare for a weekend summit to decide whether Greece can stay in the eurozone, Mr Dobrev’s experience highlights how the old certainties are collapsing. By early next week Greeks could be preparing for life outside the euro and a possible return to the drachma.

Many Greeks in the retail and leisure industry say it makes increasing sense to accept Bulgarian and Turkish money at a time when tourism, the country’s economic lifeblood, is under threat. The tourism confederation said last-minute bookings plummeted 30-40 per cent, compared with the same period in 2014, after Greece imposed capital controls last week.

Athanasos Kritsinis, who runs the Krita chain of supermarkets, said Bulgarians visiting his shops in the northern cities of Xanthi and Komotini were paying in leva.

“There is nothing bad in accepting Bulgarian leva because it is stable and pegged to the euro so why not accept to do business with it? It is legal. There is no reason not to accept,”he said. 

Yes, "no reason not to accept." There are however, quite a few reasons for Germany "not to accept" Tsipras' latest proposal and for Greeks "not to accept" a deal that flies in the face of a referendum outcome that's not even a week old. 

And so as we kick off yet another weekend where all eyes turn nervously to Brussels on Saturday and to Athens on Sunday, the million dollar question seems to be this: what will the preferred payment method be in Greece this time next week? Lira, lev, drachma, or euro?

From yesterday -
Note the gas deal with Russia. I noticed the energy minister was one of those that voted against the Bill in parliament today. Is Russia still the wildcard??

Greece Connects with Russia, Unveils €2 Billion Gas Deal; Germans in Rift with Eurozone; Did France Save Europe?

Mish’s Global Economic Analysis,

9 July, 2015

Yesterday, US treasury Secretary Jack Lew and International Monetary Fund managing director Christine Lagarde Pressured Eurozone Ministers to Grant Debt Relief to Greece.

Today, the Telegraph reports Germans in Rift with the Rest of Europe Over Debt Relief as Greek Reforms Ready 'Within Hours'.Did France Save Europe? 

The Telegraph has no details, just a catchy headline. The subtitle is interesting though.

 The day France saved Europe?

Today has been a day for the French. In fact, most of this week has seen the French make concerted diplomatic efforts to ensure Greece gets a deal to stay in the eurozone. PM Valls, economy minister Macron, finance minister Sapin, and former finance minister Moscovici have all pitched in to various degrees to pull the European project back from the brink.

IMF Won't Give Debt Relief

I am curious as to how France could save anything by itself. Here are a couple more snips:

 IMF's chief economist, Olivier Blanchard, delivered his final press conference at the head of the Fund's reseach department earlier today.

Mr Blanchard, who has advocated for debt relief for Greece, is pressed on why the IMF is not willing to take a haircut on the €22bn they have loaned to Greece, despite urging the rest of Europe to do so.

"The IMF has rules and in general we should question rules, but the rules are good ones," said the Frenchman.

Merkel Moves

Is Merkel making a move on Greek debt?<

 Angela Merkel has been in Kosovo today. She said that a classic "haircut" on loans to Greece was out of the question. Ms Merkel faces a fight to pass through a new bail-out for Greece through her parliament, which as the ESM's largest creditor, holds a blocking minority vote.

But, Ms Merkel today did not take as hard a stance as we've heard from her finance ministry. She said:

"In 2012 we dealt with the issue of debt sustainability. We stretched out the maturities, we pushed back the repayment requirement for EFSF loans out to 2020. So we are not dealing with debt sustainability for the first time," Merkel said when asked about differences with the International Monetary Fund (IMF) over a debt writedown for Greece, report Reuters.

"I have said that a classic haircut is out of the question for me and that hasn't changed between yesterday and today."

The reference to a "classic" haircut suggests Berlin will not mandate any debt forgiveness which would immediately write-off a portion of Greece's €330bn debt mountain. But, her comments on extending maturities - or "reprofiling" in the jargon - are softer. As she says, the Germans have been here before and signed up to such relief measures only three years ago...

Rumor Mill

I am unconvinced of anything above. All I see is rumors and fear.

If there is "debt relief", loan extensions, and another bailout, then Germany will have to sign off on it.

Recall that another €60 billion or so is needed. Will the German parliament approve?

And if Greece gets relief, Portugal and Ireland will want a better deal too.Russia the Concern

If there is a deal, it will be for one reason only: Fear of driving Greece into the hands of Russia.

Just today, Greek Energy Minister Unveils Plan for €2bn Gas Deal with Russia.

 Greece has mapped out details of a planned landmark €2bn gas project with Russia in a move that could stir tensions with Brussels just as Athens is seeking a third bailout.Panayotis Lafazanis, the firebrand leftist energy minister, presented preliminary plans for the project to Greek energy executives in Athens on Thursday in a defiant speech, vowing the government would not be pushed around by EU institutions.

The promised deal with Russia is a sharp rebuke to Brussels, which wants to reduce EU dependence on Gazprom and argues that southeastern Europe should diversify its supply by prioritising gas from Azerbaijan.

Opening his remarks with pugnacious references to the eurozone crisis, Mr Lafazanis said Greece was aiming to secure a deal with Brussels as quickly as possible. But he warned EU institutions that Athens was not about to roll over.

“Greece is no one’s hostage,” he said. “The Greek people’s No vote, and I am referring to all of the people, is not going to become a humiliating Yes. Greece is not, under threat of execution, ready to accept any fait accompli.”

No One's Hostage

If another deal is signed, Greece will remain a hostage. It's as clear as that.

"A Hostage Situation": Greece Yields to Austerity Demands Just Days After Historic "No" Vote

Greek Prime Minister Alexis Tsipras has submitted a bailout proposal which includes harsh austerity measures, just days after the Greek people overwhelmingly rejected such measures in a historic referendum. 

The proposal submitted to Greece’s creditors reportedly includes tax increases, pension cuts, a reduction in military spending, and the privatization of public assets. 

It comes after Tsipras himself had urged the Greek people to reject creditors’ demands for further austerity. In exchange for the reforms, Greece would receive a three-year, $59 billion bailout package. Germany, meanwhile, appears to be yielding to demands to provide at least some measure of debt relief to Greece. 

European officials have expressed approval for the Greek offer ahead of a key meeting of European finance ministers on Saturday. The Greek Parliament is expected to vote on the bailout proposal today, just five days after an overwhelming 61 percent of Greek voters rejected similar terms. 

We speak to Mark Weisbrot, co-director of the Center for Economic and Policy Research. He is the author of forthcoming book, "Failed: What the Experts Got Wrong About the Global Economy."

Greeks resigned to bailout plan despite voting against austerity

 A pensioner sits outside a bank in Athens. Photograph: Spyros Tsakiris/AP

On the subdued streets of Athens, Greeks accept that their PM Alexis Tsipras had little choice but to make €13bn offering to creditors

Greeks who turned out in their millions to reject austerity last week seemed more resigned than angry on Friday about the government’s punishing last-minute offer to its creditors of €13bn of cuts and savings.

Athens parliament has given Alexis Tsipras the authority to negotiate a new bailout by 250 votes to 32, but 17 government MPs didn’t back it

Many of those who backed him in Sunday’s referendum said the prime minister, Alexis Tsipras, had had little choice if he wanted to avoid presiding over his country’s painful exit from the euro. The strong no vote, they said, may at least have paved the way for some debt relief.