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Greece’s parliament failed to elect a new president in Tuesday’s second-round vote, increasing the chances of an early general election in February that could bring the anti-bailout Syriza party to power.

Stavros Dimas, the governing coalition’s candidate, won 168 votes, eight more than in last week’s first-round ballot, following a last-ditch appeal for consensus by Antonis Samaras, the prime minister.

But the former European environment commissioner now appears unlikely to capture the 180 votes needed in the third and final ballot on December 29. Lawmakers from two small opposition parties that could make up the shortfall are expected to abstain.

“This is all about the third round. That is when parliamentarians will have maximum leverage to extract as much as they can from the government in exchange for their support,” said Mujtaba Rahman, head of European analysis at the Eurasia Group risk consultancy.

The additional support for Mr Dimas came only from independent MPs, while the moderate Democratic Left and rightwing Independent Greeks resisted the appeal for consensus to complete talks on leaving Greece’s four-year bailout and securing a new credit line from international borrowers.

Both parties have reportedly been in contact with Syriza with a view to co-operating with a future leftwing government although no details of a specific agreement have emerged.

Syriza has kept a steady lead in opinion polls over the governing centre-right New Democracy party since coming first in European parliamentary elections held in May.

Alexis Tsipras, its leader, has vows that, if elected, he will demand a sizeable write-off of Greece’s sovereign debt and revive the economy through increased public spending — putting Athens on a collision course with its international creditors.

“Markets are seeing right through this presidential process to early elections next year and the implications of a Syriza-led government,” Mr Rahman said.
In depth

Greece struggles on with drastic austerity as eurozone leaders continue to argue over how to help the country cope with its debt mountain

Greece has already lost access to borrowing on international capital markets amid fears of mounting political instability, while its fragile economic recovery this year would be at risk if a leftwing government chose to confront the EU and International Monetary Fund over economic reforms voted for under the Samaras government.

Greek 10-year bonds moved fractionally higher after the result but remain below 10 per cent.

Mr Samaras on Sunday offered to bring forward a general election to late 2015 and open up his coalition government to smaller parties as a way of persuading recalcitrant MPs to back Mr Dimas for the presidency.

In an unscheduled television address on Sunday, Mr Samaras called for a “consensus” vote for Mr Dimas, urging MPs to “listen to the voice of conscience, national interest and common sense”.

Only a successful presidential election would restore stability, enabling Greece to end its unpopular bailout and negotiate a credit line from international borrowers on less onerous terms, Mr Samaras said.

Some analysts argued the prime minister needed to notch up at least 170 votes in Tuesday’s second-round vote to give him a reasonable chance of winning the final ballot on Monday.

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Originally posted by 1kiki:
Why should anyone pay attention to anything a perv and liar like you posts?

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It's not a question of what's good for me or New Democracy. It's best for the country that there are not snap elections.- Samaras

Translation: you don't need no stinking democracy, trust us - your benevolent rulers - to do what's best for the Greek people.

*SNAP ELECTIONS WILL THROW GREECE INTO TURMOIL, SAMARAS SAYS (and the ECB)
*GREECE'S BIGGEST PROBLEM IS POLITICAL UNCERTAINTY: SAMARAS (not record youth unemployment, povrty, and suicide rates, and surging youth emigration)
*SAMARAS SAYS NOW IS TIME FOR LAWMAKERS TO DO THEIR DUTY (ignore the people's pleas and pain, vote for EU bureaucrats)

And with Greece's (anti-EU) Syriza party now leading by 2.5pts in the latest polls, it is hardly surprising Samaras is pulling out all the 'turmoil' threats.

"Greek people don't want elections," he chides.

By 'Greek people', we assume he means 'unelected European bureaucrats'.

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The meeting between Greek finance minister Yanis Varoufakis and eurogroup finance chief Jeroen Dijsselbloem ended in a tense press conference (coverage of the conference starts from here). Varoufakis rejected any extension to the country’s bailout and refused to co-operate with the troika of lenders (the ECB, EU and IMF).

Dijsselbloem criticised “unilateral” moves and said a decision on Greece’s 28 February deadline with its lenders would be reached before then.

Helena Smith was at the press conference and reports:
Dijsselbloem and Varoufakis. Dijsselbloem and Varoufakis.

The battle lines between Greece and its creditors were drawn in Athens as the Greek finance minister Yanis Varoufakis announced that the new government would refuse to engage with officials representing the country’s hated “troika” of lenders.

Standing his ground after talks in the capital with the euro group chief Jeroen Dijsselbloem, the finance minister said Greece would not be pursuing further discourse “with that committee.” Nor would it be rowing back on the promises that had got it into power by asking for an extension to its €240bn bailout programme. “This platform enabled us to win the confidence of the Greek people,” Varoufakis told a press conference, insisting that the “logic” of austerity had been repudiated by voters when the far left Syriza party stormed to victory in Sunday’s election.

Meanwhile German finance minister Wolfgang Schaeuble said Germany was open for talks with the new Greek government but would not be blackmailed.

Which drew a predictable response from a Greek government spokesman.

The tensions between Greece and the rest of the eurozone sent the Athens market lower again and hit shorter dated Greek bonds.

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There was one reaction by the Eurogroup following the (delayed) submission of the Greek 7-point reform proposal - which includes the brilliant idea to use foreign tourists as wired, part-time tax spies - in advance of the latest Monday finmin meeting: laughter.

Financial Times reports that the reaction from eurozone officials to the tourist plan was received with humor. They thought the proposal was hilarious and even laughed when they read it. “It’s quite hilarious, if it were not so tragic, that this is what a government in an industrialised country comes up with,” said one eurozone official involved in the talks.

There will be little laughter in cash-strapped Greece, however, if the Sunday Times is correct in its report that the "Eurogroup finance ministers are to reject radical reform proposals from Greece at a meeting in Brussels tomorrow."

The Greek finance minister Yanis Varoufakis will present a seven-point plan in a desperate attempt to unlock a €7.2bn (£5.2bn) cash injection — the final payment under a bailout plan agreed three years ago. According to a source close to the discussions, European officials believe Greece needs to do more “on the ground”.

As the Times concluded, Greece is hoping for a favorable response because unless the cash injection is approved, Greece faces a "full-scale default."

Unfortunately for Greece, moments ago Germany's Frankfurter Allgemeine Zeitung confirmed the bad news, when it said that the EU commission has rejected the Greek request for speedy aid payments, cites Valdis Dombrovskis, EU commissioner for the euro. The commissioner adds that the Varoufakis letter "lacks specific enough action plan and that the reform steps must be approved by Greek parliament and be implemented." In other words, as we reported before, Greece is back to square minus one, where first Europe will send the dreaded Troika inspectors "on the ground" in Athens to catch up to everything they have missed in the months they have been absent and then, and only then, does Greece have any chance of even being seriously considered for more aid.

The problem is that this will come far too late to satisfy not only the upcoming IMF payments (as a reminder these are due as follows: €350 million on March 13, €580 million on March 16 and another €350 million on March 20), but now that Greece no longer has access to the various pension and social security funding "swaps" it may even be unable to rollover its next T-Bill maturity.

Recall Greece has a total of €2 billion in debt-servicing payments, including T-bill redemptions and IMF obligations coming due on Friday.

Bloomberg adds:

In the absence of bailout funds, Tsipras said in an interview with Der Spiegel magazine that he planned to use short-term treasury bills to cover any cash shortfall in the coming weeks. The ability of Greek banks to buy these securities is constrained by a deposit outflow and the ECB’s refusal to accept more so-called T-bills as collateral for financing the country’s lenders. ECB President Mario Draghi poured cold water on Greek lobbying for the government to be allowed to issue more short-term debt, and for Greek banks to be permitted to buy it.

“The ECB is a rules-based, not a political institution,” and can’t provide monetary financing to governments, either directly or indirectly, [UNLESS WE ARE DOING QUANTITATIVE EASING, WHICH WE WILL EXTEND TO EVERY NATION EXCEPT GREECE- SIGNY] “when banks bring collateral in order to buy that debt,” Draghi said on Thursday.

So with its back against the wall, and with its funds lower than ever, Greece had no choice but to resort to warnings/threats that either Europe steps up or the government will directly to the people, with another referendum. Which led to the latest "lost in translation" fiasco involving Greece (the latest of very many in the past few weeks), in which Italy’s Il Corriere della Sera quoted Varoufakis as saying Greece may call new elections, and hold referendum on the euro if European finance ministers reject reform proposals.

Greece, without any leverage left, was then quick to point out that it wasn't trying to give Europe merely another ultimatum, and a Greek government official said in e-mail to reporters that Varoufakis "never said that referendum would be held on country’s euro membership." Instead, the referendum would be on the government's policy. As Bloomberg adds, "Varoufakis never said or meant that the country’s membership in the euro area would be the subject of a hypothetical referendum in his interview with Corriere, the country’s finance ministry said in an e-mailed statement. Implementation an agreement extending the country’s bailout loans proceeds normally, and Greece will repay all financial obligations on time and in full, the ministry said."

With what money? Quote the NYT:

Jens Bastian, a financial consultant based in Athens and a former member of the European Commission’s task force on Greece, [said] “The situation is dire, and this government is finding out in real time how difficult it is to meet its multiple obligations,” he said. “It tells you something about the sheer level of desperation they face to identify any funding resources wherever they can pinch pennies.”

Reuters add:
Former Prime Minister Antonis Samaras, who is now head of the main opposition party, said a referendum would be "a very bad development" and allow the government to shrug off its responsibilities.
The now much-diminished Greek Socialist PASOK party, also in the opposition to Tsipras' radical left alliance, said in a statement that Varoufakis's statement was "irresponsible, thoughtless and contradictory".

As for the semantics of the referendum, they all boil down to the same thing: Syriza would be asking the voters to resolve two contradictory ideals: either the Greeks concede to austerity, or they agree to exiting the Eurozone. Because for Greece there no longer is a compromise, middle ground.
Sadly, there is no money either.
“I can only say that we have money to pay salaries and pensions of public employees,” Varoufakis told Corriere. “For the rest we will see.”

Still, despite all the posturing and the return of quasi-threats on both sides, the fate of Greece may now be sealed:
ECB Governing Council member Luc Coene said some comments by the Greek government have left him wondering whether the country belongs in the European economic and monetary union.
“When I hear certain declarations of the Greek government, I ask myself: ‘what are they still doing in this mechanism?’” he is quoted as saying in an interview with Belgian newspaper Le Soir.

Right about now, as the Greek deposit flight is almost certain to resume on this latest escalation in rhetoric is set to resume, Greeks are likely asking themselves the same question. As for Syriza, its days may indeed be numbered if the following graffiti are indicative of the rapidly shifting popular mood, whose brief infatuation with the new ultra-left and "reformist" government is now only a distant memory. And if indeed Syriza's days are numbered, is the neo-nazi Golden Dawn up next to rule the battered Eurozone member?

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The rhetoric, threats, and promises continue to increase as Greece, its international creditors (i.e. Troika), and its potential pivot partners from Russia to China to Iran all vie for attention.

Greek FinMin Varoufakis 'promised' Christine Lagarde this morning that Greece will repay the IMF loan on April 9th (though was unable to explain how)...


Though it is unclear where he will get the cash from...

Even as energy minister Panagiotis Lafazanis denounced Greece’s international creditors for treating the country with "unbelievable prejudice and as a colony." As The Guardian reports,

With Greece's cashflow problem deteriorating with every passing day, rumours of Athens' overtures towards the unlikeliest of sources have the sprung up. The latest comes from the country's former prime minister, Atonis Samaras.
Mr Samaras has accused the current incumbent of “sending his cousin to Iran to ask the Tehran government to buy Greek bonds”.
"When you are in Europe and ask Chinese, Iranians, Russians to finance your deficit, don’t you send a signal to the rest of Europe that you are not really a serious pro-European?," was the refrain of the leader of the much diminished New Democracy party.
The rumours remain unsubstantiated for now. An official Greek visit to Tehran is not yet in the pipeline, but the search for foreign bondholders is likely to continue. The European Central Bank has banned domestic banks from increasing their holdings of government debt - a stance that pushed Athens to seek out alternative willing investors.
With the clock ticking on its cash crunch, both sides will be hoping for a denouement to the saga before Mr Tsipras returns to Moscow in May. The Greek premier will be marking Russian Victory Day - a celebration of the capitulation of Nazi Germany to the Soviet Union in the Second World War.

EU officials have suggested privately that Greek prime minister Tsipras should jettison the far left of his governing Syriza party to make a bailout agreement possible with one senior official exclaiming "this government cannot survive." As The FT reports,

Eurozone authorities’ frustration with Greece has grown so intense that a change in the current Athens government’s make-up, however far-fetched, has become a frequent topic of conversation on the sidelines of bailout talks.
Many officials — up to and including some eurozone finance ministers — have suggested privately that only a decision by Alexis Tsipras, Greek prime minister, to jettison the far left of his governing Syriza party can make a bailout agreement possible.
The idea would be for Mr Tsipras to forge a new coalition with Greece’s traditional centre-left party, the beleaguered Pasok, and To Potami (The River), a new centre-left party that fought its first general election in January.
“Tsipras has to decide whether he wants to be prime minister or the leader of Syriza,” said one European official.
A senior official in a eurozone finance ministry added: “This government cannot survive.”
Members of Syriza’s moderate wing admit there is a problem with the Left Platform, the official internal opposition that represents about a third of the party and controls enough MPs to bring down the government if it were to rebel in a parliamentary vote.

With 68% of Europeans seeing Greece as a drag on the EU economy...


Perhaps Greece's last best hope is the pivot to an increasingly interested Russia or China (or even Iran) because even the rost case scenario inside the EU could make Brussels very uncomfortable...

One person briefed on the EU’s negotiating stance said concern was rising in Brussels that if the continued stalemate forced Greece to impose capital controls to prevent a bank run, this could strengthen Syriza’s populist appeal rather than sparking disillusionment among voters.

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Another week came and went with no breakthrough in negotiations between Greece and its creditors. The IMF is now fed up and has reportedly refused to be a part of any new bailout program for Greece, after Athens drew down its SDR reserves to makes its latest payment to the Fund. That money will now need to be repaid and in a move that surely marks the new gold standard for absurd circular funding schemes, Greece will likely look to use the next tranche of IMF money to payback its IMF SDR reserve which it tapped to pay the IMF. The country’s public sector employees live in limbo, not knowing from one week to the next whether they will be paid and commuters are now subjected to a 50 second looped highlight reel of the Nazi occupation meant to rally the country behind the government’s quarter trillion euro war reparations claim (they might as well just ask for a 'gagillion') on Germany which has now become the symbol of tyranny and debt servitude for many Greek citizens.

Given the situation, one would be inclined to think that Alexis Tsipras would be falling all over himself to cut a deal with creditors because while giving up on campaign promises to voters isn’t ideal, it’s better than going down in history as the PM who sent the country careening into a drachma death spiral, and besides, giving up on campaign promises is something most politicians do all the time (it’s a job requirement for the US presidency). Alas we were back to the now ubiquitous ‘red line’ rhetoric on Friday as Tsipras continued to employ the “tell EU officials one thing behind close doors and tell the public the exact opposite a day later” negotiating technique. Here’s more from Bloomberg:

Greece won’t cross its red lines in negotiations with international creditors just because time is pressing to close a deal, Prime Minister Alexis Tsipras said.

“Those who think that our red lines will fade as time goes on would do well to forget it,” Tsipras said at a conference in Athens late Friday. “I want to assure the Greek people that there’s no way the government will back down on the issue of pension and wage cuts,” he said. “A deal must be reached but it must be mutually beneficial.”

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Greece and its creditors stuck to their positions on Monday after the collapse of talks aimed at preventing a default and possible euro exit, while Germany's EU commissioner said it was time to prepare for a "state of emergency"

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Germany and other major creditor countries demanded that the Athens government come to its senses and offer new proposals.

"It won't work that Greece sets the terms and says 'everyone has to dance to our tune'. Greece needs to get back to reality," Volker Kauder, parliamentary floor leader of Chancellor Angela Merkel's conservatives, told ARD television.

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Despite the deepening crisis, Sakellaridis said Tsipras was going ahead with a planned visit to Russia from Thursday, the day euro zone finance ministers hold a crucial meeting in Luxembourg to review the standoff with Greece. He is due to stay till Saturday, attend an economic forum in Saint Petersburg and meet President Vladimir Putin.

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With just under 24 hours until Monday's final summit after which even JPMorgan now agrees the ECB will be forced to use a nuclear option and limit or cut Greek ELA thus imposing capital controls as a "negotiating tactic", earlier today both France and Germany told Greece it must have a reform deal agreement with the Troika finalized and delivered before a crucial leaders’ summit between Athens and its creditors on Monday; in other words before trading opens on Monday.

According to the FT, with the Greek cabinet meeting on Sunday to consider compromise proposals, François Hollande and Angela Merkel both telephoned Alexis Tsipras, the prime minister, to remind him he needed a “staff level” agreement with the European Commission, IMF and ECB ahead of the summit.

They told him the summit was not for “negotiations” — which anyway would be all but impossible in a forum including all 19 eurozone members — and urged him to reach a deal with the institutions.... If a deal is reached, the two leaders said the parties could then start discussing a third bailout at the summit. France is believed to be open to discussing debt relief and restructuring for Athens, a top priority for Mr Tsipras, whose radical leftwing government won office in January setting Greece on a collision course with its creditors.

As a result, the Greek cabinet has been summoned to a meeting at Tsipras’ Maximos Mansion residence on Sunday morning for a last-ditch meeting to hash out the government’s strategy. Here they are expected to discuss how Mr Tsipras can bridge his two seemingly intractable electoral mandates: to end austerity and block further cuts in spending while also satisfying creditors’ demands for reform to keep Greece in the Eurozone.

And while the Greek negotiating position is one where any spending-cut compromise will be seen as a defeat for Tsipras - just yesterday the Minister of State Nikos Pappas used an interview with the country’s Ethnos newspaper to reiterate the government’s firm opposition to cuts to pension plans or wages - moments ago the Greek Prime Minister presented Greece's proposal for a deal during phone talks on Sunday with German Chancellor Angela Merkel, French President Francois Hollande and EU Commission President Jean-Claude Juncker, according to Reuters.

"The prime minister presented the three leaders Greece's proposal for a mutually beneficial agreement that will give a definitive solution and not postpone addressing the problem," it said in a statement.

Bloomberg has the bulk of the proposed details:

> Greek plan to unlock bailout funds includes proposal to eliminate early retirement options starting from Jan. 1, 2016, a Greek government official says, asking not to be named.
> Plan includes levy on companies with more than €500,000 in annual profits
> Plan includes increase in “solidarity levy” for individuals earning more than €30,000/yr
> Creditors ask permanent fiscal measures equal to 2.5% of GDP, Greece proposes measures equal to 2%/GDP; proposes to cover difference of 0.5%/GDP with “administrative measures”
> Greek govt would agree to target demanded by creditors for 1%/GDP primary budget surplus
> Greek govt insists on 3 bands for VAT rates; creditors want 2 bands; Greek govt proposes to move more products to higher band of 23%, in order to cover fiscal gap
> Greek govt has proposed zero deficit clause, debt break for Greek budget; clause would include automatic spending cuts in case threshold is breached
> Greek govt would be willing to adopt additional fiscal measures, if agreement with creditors includes commitment to debt relief

...

For Tsipras pension cuts are clearly a non-starter because as we said last week "he would almost certainly be promptly swept from power as Syriza renegs on its most solemn pre-election vow."

This is what else we said:

With Greek tax revenues imploding and the hope of even a 1% primary surplus long gone as a result of the Greek economy grinding to a halt. Which in turn means that in order to be sustainable (and whatever happened to the IMF's "sustainable" 2022 Greek debt/GDP forecast anyway), Greece has no choice but to cut both wages and pensions.

Only the Greek government knows that such a move would be the start of the endgame, and will lead to either another technocratic government, a puppet of the Troika, or to an even more extremist government, this time from the ideological right.

Overnight, Germany's FAZ agreed with that assessment, noting that Greece creditors estimate country’s budget gap of €2b to €3.6b this month. The shortage won’t allow Greek government to repay IMF (even with a new injection of cash by the IMF) unless it cuts pensions, salaries as expenses amount to €2.2b by end of June.

Based on the "final final" Tsipras proposal, these cuts are still missing,which in turn is a basis for a "non-starter" response by the Troika.

As a result, Greece just played its final bluff. And now, as Yanis Varoufakis also wrote in in Germany's Frankfurter Allgemeine Zeitung, Angela Merkel faces "a stark choice" ahead of the crucial summit of European leaders in Brussels on Monday.

In other words the Greek parliament has washed its hands of the Greek fate, and a Grexit - if it happens - will be blamed on Merkel, if only in Greece.

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In the aftermath of yesterday's "nuclear option" announcement by Greece, when in a dramatic after-midnight speech Greek PM Tsipras announced that Greece would hold a referendum next Sunday, the day after the US independence day, the same Greek government made it very clear how it wants the Greeks to vote.

First, it was the Greek Energy Minister Panagiotis Lafazanis, head of the Left Platform movement of Syriza, who said in comments broadcast on state-run ERT TV that a no vote by the Greek people in July 5 referendum “will open the road for a new future for the country" adding that "the dilemma facing Greeks is “whether to live better or not. Greek people are aware of difficulties of a new starting point, they’re ready to support new national effort."

Then the alternate health and social security minister Dimitris Stratoulis doubled down telling ERT-TV that Greeks are being given the opportunity to decide the way forward and “I’m optimistic” that they will give a “resounding” no to the “provocative” demands of the country’s creditors. The only issue is the question being put to the people in the referendum." It got better when he said that "Greeks are being asked to vote whether the country should be a colony, or not, of creditors."

Well, if that's how the referendum question is indeed phrased then yes, it is clear how the Greeks will vote.

As was to be expected, the Greek opposition parties, except for the Nazi-inspired Golden Dawn, expressed horror at the referendum. Conservative main opposition leader Antonis Samaras accused Tsipras' radical left government of advocating an exit from the eurozone and the European Union. "Mr Tsipras has led the country to an absolute impasse," he said. "Between an unacceptable agreement and leaving Europe."

Why? Because they know that despite the referendum move, which is clearly just a last ditch attempt by Tsipras to save his political career by punting the decision straight to the people, if there is a "Yes" vote to the proposed bailout, then Syriza is out and new elections have to follow.

As for the reason why Tsipras had to punt, it is a simple one: at the core of the ongoing Greek negotiation debacle is the inability of the local people to decide what they want: according to various recent polls 80% of Greeks want to stay in the Eurozone and keep the Euro currency, the problem is that 80% also want an end to austerity. Two conditions which are mutually exclusive. It is no surprise then that Tsipras had no clue how to proceed based on his mandate.

So with all that in place, the question was how would Europe respond to this shocking after-midnight (both literally and metaphorically as July 5 comes after the June 30th deadline by which Greece needs to have a deal in place) announcement. Conveniently we had just the soundbite venue today when the European finance minister met once more in Brussels to finalize the Greek deal, which is now clearly moot, and instead were asked for their reactions to the referendum proposal.

Here are some of the key responses:

First, the take of Finnish finance minister Alexander Stubb who said "we’re basically closing the door for any further negotiations,” Stubb says to reporters in Brussels before a meeting of euro-area finance ministers adding that most of the Eurogroup opposes a program extension adding the ominous: "Plan B is fast unraveling and becoming plan A. We cannot extend the program as it stands. There is nothing else on the table. We will have to see what the next step entails for Greece."

When asked if Europe will impose capital controls on Greece after last night's dramatic footage of long ATM lines following Tsipras' announcement he said that "We are in no position to announce bank holidays in Greece nor are we in any position to announce capital controls in Greece"

Then it was the turn of Varoufakis' old nemesis, Dijsselbloem, who said that the Greeks "seem to have taken a negative stand on the last proposal by the three institutions, and basically reject those proposals."

"That is a very sad decision, because the door in our mind was still open to finalize talks,” Dijsselbloem also said to reporters in Brussels before a meeting of euro-area finance ministers. "And now, given their decision, they are now proposing to hold a referendum, again with the negative advice to the Greek people, and that is a very sad situation."

"We will hear from the Greek minister today whether all of this is correct, whether we understand that correct, and then we will talk about the consequences that will have."

Of course, no response would be possible without the German finmin Schauble pouring the usual glass of cold water on the face of Greece and he did so promptly when he said that "we no longer have a basis for negotiation."

“We actually came today to try to negotiate a unified position with Greece, but the Greek government, if I understand it correctly, has unilaterally ended the negotiations. We have to look at what the situation is. The program ends on June 30. We know the situation with the Greek banks. That’s an issue of talks between Greece and the ECB. But we’ll also discuss that. But right now we have to discuss everything, that’s why we’ve agreed to meet this afternoon."

On the question of Plan B: “What does Plan B mean? The negotiations have been abandonded by Greece, the negotiating table. So we’re in a situation in which the program ends Tuesday, because there’s no other negotiations on anything else."

There was a brief comic interlude when the Slovenian finmin Peter Kazimir responded to what he expects from Yanis Varoufakis saying "more lecturing" before making it also clear that if the Greek government rejects the proposal, which it effectively has done with the referendum, then the "programme is over."

But the biggest problem for Greece was phrased as follows by an unnamed EU official cited by Bloomberg who said that Euro-area finance ministers are unlikely to extend Greece’s aid program while Prime Minister Alexis Tsipras considers a referendum adding that "some nations won’t accept such an extension."

Belgian finmin Van Overtveldt confirmed as much saying that "we don’t have three weeks, but three days. So that is something that everybody and the Greek government should be aware of. They have wasted so much time in the last weeks and now we have come to the point that we have just three days left. We can no longer prolong whatever action we want to take, because June 30 is there, it is very much there. June 30 is the end of the program. We will have to decide on issues today." Alas, that is now impossible as per the events Greece has set in motion.

When asked about a possible extension of the Greek program beyond June 30, Van Overtveldt says: “I don’t think so.”

And so we reach the massive problem facing the Greek people and the way the referendum is proposed: because it takes place 5 days after the June 30 expiration of the extended bailout program, there won't be an actual program to "refer" on, especially once Europe makes it clear today that unless a deal is reached today, which now appears impossible, then there won't even be the offer of a program on July 5.

As a reminder, this is what the Greeks would be voting for: according to the cabinet proposal, posted on the parliament’s website, voters will be asked to respond to the following question:

Greek people are hereby asked to decide whether they accept a draft agreement document submitted by the European Commission, the European Central Bank and the International Monetary Fund, at the Eurogroup meeting held on June 25 and which consists of two documents:

The first document is called ‘‘Reforms for the Completion of the Current Program and Beyond’’ and the second document is called ‘‘Preliminary Debt Sustainability Analysis.’’

- Those citizens who reject the institutions’ proposal vote Not Approved / NO

- Those citizens who accept the institutions’ proposal vote Approved / YES.



Sure enough moments ago Varoufakis was quoted as saying he would ask the Eurogroup for a bailout extension of a few weeks to accommodate the referendum.

And the punchline: if the Eurogroup says "Oxi", then the entire Greek gambit, which has been a bet that to Europe the opportunity cost of a Grexit is higher than folding to Greek demands, collapses.

If the Eurogroup declines Varoufakis' request, there simply can not be a referendum, as the "institutions proposal" will no longer be on the table. As such, the only question is whether the ECB will also end the ELA at midnight on June 30, adding insult to injury, and causing the collapse of the Greek banking system days ahead of a referendum whose purpose would now be moot.

But that would be suicide to the European project, as it sets the Grexit in play and with that the "European Union" becomes nothing more than Disunion and moving the crisis away from Greece to Italy, Spain and Portugal, the Greek game theorists would say, claiming that to the ECB this is the worst possible outcome?

After all even the former Greek prime minister, George Papandreou, who lost his job threatening to do just the referendum which Tsipras announced yesterday, came to twitter to blast the decision and saying it is irreversible.

Well, not really.

Recall what we said last week in "Goldman's "Conspiracy Theory" Stunner: A Greek Default Is Precisely What The ECB Wants" which we urge everyone to reread, especially those who think that the ECB and thus Troika, will cave to any last minute Greek demands. Because a Grexit, at least according to Goldman, may be just what Mario Draghi wanted all along, and the only question is who ends up getting the blame for Grexident. Conveniently, with the referendum announcement, Greece blinked in the game of blame, and now Europe can legitimately say it was the Greek's fault and they kicked themselves out of the Eurozone, which will then be a green light for the ECB to expand its QE, crush the Euro, and - supposedly - lead to even more growth for Europe as Greece is left to fend for itself outside of the monetary union.

All this, of course, assuming the Greeks do vote No on the referendum. And even if they vote Yes, which is a distinct possibility based on recent polls, it may already be too late, as it will unleash a political crisis even more delays and gridlock, new elections, and even more misery from inside the Eurozone. Assuming, of course, that the Troika will agree to have Greece back, without Syriza in power of course.

In any event, going forward the Greeks will only have themselves to blame for whatever the final outcome is. That, and the Greek tragicomedy which has now lasted for over 5 years, may finally be over.

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You can't build a nation with bombs. You can't create a society with guns.

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Sir,

Memory. No memory of life before the financial crisis; politics has dominated it ever since. But now I can hardly remember life before Friday night.

Fear. I am terrified of tomorrow, all I now see is black. Uncertainty, leading us through our days, every remainder of hope for a brighter future being destroyed by the minute. I look at my three-year-old niece, I envy her ignorance, I envy her age. I am 21 years old and the past few days I feel tired by life. A referendum that supposedly gives me the right to define my future, seems to have taken it away.

There are hundreds of people queueing at the ATMs and petrol stations, there is silence in the streets, people’s faces are frozen. This is the reality since Friday night. There are, and have been for a long time, people literally starving. However, it seems that instead of their situation improving, the rest of us will have no different a fate.

Families and friends divide in Yes and No camps. We are called to exercise our democratic right by voting on a referendum while having no tangible explanation of what will follow each decision. I see everyone I know ready to take this huge responsibility without even being prepared to do so. I notice us, arguing endlessly, everyone supporting their stance fervently, ego dominating minds and words, while having no clue as to what is really at stake.

We all want the crisis to end, we all crave growth and happiness. I do not remember my parents being free of stress and anxiety in the past years. I do not remember not noticing shops closing every month, or the rapid increase of beggars in the streets. People that, before the financial crisis, never had to beg for anything. However, the past five days have been worse than all that has been so far. They say that all we hear is propaganda; but we have lost our trust in all sides, now everything seems to be lies.

It feels like an end. The end of our lives as we knew them. Yes, the lives that, before Friday, we already thought could be better; now we realise they were better then. The only thing we truly wish for is that the worst is not yet to come.

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Euro zone countries tried in vain to stop the IMF publishing a gloomy analysis of Greece's debt burden which the leftist government says vindicates its call to voters to reject bailout terms, sources familiar with the situation said on Friday.

The document released in Washington on Thursday said Greece's public finances will not be sustainable without substantial debt relief, possibly including write-offs by European partners of loans guaranteed by taxpayers.

It also said Greece will need at least 50 billion euros in additional aid over the next three years to keep itself afloat.

Publication of the draft Debt Sustainability Analysis laid bare a dispute between Brussels and the Washington-based global lender that has been simmering behind closed doors for months. ...

t a meeting on the International Monetary Fund's board on Wednesday, European members questioned the timing of the report which IMF management proposed at short notice releasing three days before Sunday's crucial referendum that may determine the country's future in the euro zone, the sources said.

There was no vote but the Europeans were heavily outnumbered and the United States, the strongest voice in the IMF, was in favor of publication, the sources said.

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told German daily Handelsblatt that the elected Syriza government should be replaced by “technocrat” government until stability is restored.

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“Without new money, salaries won’t be paid, the health system will stop functioning, the power network and public transport will break down and they won’t be able to import vital goods because nobody can pay”

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Theoretically if not all Greeks, at least these above mentioned could file a lawsuit against the President of the EP for violating his post’s “neutrality”, “for blatant intervention in internal political and fiscal affairs of a sovereign country” – how much more as the EP is not part for the creditors’ three-institutions – and for “causing moral damage and psychological distress” to at least several million Greek citizens.

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"We got a mandate to bring a better deal than the ultimatum that the Eurogroup gave us, but certainly not given a mandate to take Greece out of the eurozone,” Greek PM Alexis Tsipras reportedly told Syriza lawmakers on Friday, underscoring the fact that his government’s mandate is, for all intents and purposes, impossible to achieve.

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Early on Saturday morning, the Tsipras government passed the Greek bailout proposal which it told the Greek people to reject - which they did - less than a week earlier. The grotesque farce continued until the very end when 15 Syriza lawmakers who voted yes said they nonetheless are against the reform package and expressed their opposition to the government’s proposal in a joint statement issued immediately after the vote in parliament.

Seemingly unclear how this "democracy" thing works in the country that supposedly invented it only to spawn its biggest mutant yet, the "dissenters" added that they voted for the proposal in order not to give an excuse for the undermining of Alexis Tsipras government. What they really meant is what the angry people finally crack down on yet another government, they hope to have a get out of jail card. Literally.

Other were far more vocal in their condemnation of the capitulation: Energy Minister Panagiotis Lafazanis, Deputy Labour Minister Dimitris Stratoulis as well as the speaker of parliament, Zoe Constantopoulou, all called "Present", in effect abstaining from the vote and withholding their support from the government. "The government is being totally blackmailed to acquiesce to something which does not reflect what it represents," Constantopoulou said.

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... the Troika told Eurozone governments that proposals from Greece for a bailout loan are a basis for negotiation, an EU official said on Saturday...
Of course, nobody doubted that the proposal which falls back to what the Troika itself submitted two weeks ago, would be the "basis" for talks. The question is what the final draft will look like.

And it is here that the Troika will surely make Greek life a living hell as it returns with demands that force the government to shortly vote on a "deal" that has far greater austerity embedded in it.

First, Germany's Frankfurter Allgemeine Sonntagszeitung reported that Greece’s international creditors view the country’s reform proposals as insufficient to meet agreed budget surplus targets, citing assessment paper provided to euro-area finance ministers by the Troika. FAS adds that the "new plan insufficient in light of "significant deterioration of macro economic and financial conditions" in Greece. As a reminder, Greece hopes to achieve a 2015 surplus target of 1% in 2015 rising to 3.5% by 2018. This is not going to happen and everyone in Europe knows this.

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Considering that as part of its Third bailout proposal [2011, 2012, and ... 2015?] Greece promised to implement reforms pledged in 2010, one can see why Europe is skeptical this isn't just another ploy by the Greeks to have the banks reopened so the depositors can withdraw the remaining money and then pull the plug on Europe once more.

And then, moments ago Irish Finance Minister Michael Noonan said the Greece’s bailout request probably needs extra measures and proof that it can be implemented, adding
most importantly that "the Greek paper was silent on banking" which as we noted yesterday will require another €10-20 billion bailout.

But the most interesting narrative is developing within Germany itself where Bild repeated what we said about the view split between Merkel and Schauble, reporting that "a power struggle is brewing between German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble" over how to proceed with Greece. Bild said that it was Merkel who out of consideration for EU partners, especially France, backs new talks with Greece, while Schaeuble regards Greek reform proposals as "inadequate" and opposes further negotiations. ...

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But one thing that is certain: according to Dow Jones, as part of its Bailout Number 3, Greece will need €74 billion in fresh funding (i.e. debt), citing the Troika, of which €16 billion would come from the IMF.

Which means that Greek debt, already at 175% of GDP...

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In a rare convergence of Greek and German viewpoints, overnight former Greek finance minister Yanis Varoufakis told the BBC that "economic reforms imposed on his country by creditors are "going to fail", ahead of talks on a huge bailout. At the same time, Germany's most noted Eurosceptic, Hans-Werner Sinn, in an interview with the newspaper "Passauer Neue Presse" also earlier today warned that any new aid would be "totally worthless" and "would never come back."

In what was practically a race who can find harsher terms to describe the Greek bailout, Varoufakis said that Greece was subject to a programme that will "go down in history as the greatest disaster of macroeconomic management ever".

As reported yesterday, the German parliament approved the opening of negotiations of Greece's third €86 billion bailout when it rushed to vote through a bridge loan to Greece so the insolvent nation had some funds to repay the ECB's Monday debt maturity, as well as repay the roughly €2 billion for Greece is in default to the IMF. Of note was the jump in German MPs who voted "no" to 119 from just 32 in the February vote to extend the Greek bailout.

In a damning assessment, Varoufakis told the BBC's Mark Lobel: "This programme is going to fail whoever undertakes its implementation."

Asked how long that would take, he replied: "It has failed already."

He also said Greek Prime Minister Alexis Tsipras, who has admitted that he does not believe in the bailout, had little option but to sign. "We were given a choice between being executed and capitulating. And he decided that capitulation was the ultimate strategy."

Which also happens to be Varoufakis' biggest failure: his strategy was accurate and his math was correct that to Europe a Grexit would be far more expensive than keeping Greece in the Euro, however Europe was just as accurate in realizing Greece has no Plan B for its banking system as Greece had never prepared either a plan for a parallel currency nor how to obtain Debtor in Possession funding, which is what a bankrupt Greece would need - ostensibly either from China or Russia - to fund it in the interim period in which it was ending its tumultuous relationship with Europe.

Understandably Greece did not want to push the Grexit line too hard for obvious reasons - it was all part of the "blame game" - however now that Germany itself has opened a Pandora's box it can't close ever again when it brought up the possibility of a temporary Grexit, Greece should most certainly prepare for the worst case the next time it has to rerun the entire bailout tragedy in 6-9 months, or perhaps sooner.

However, none of this will be Varoufakis' problem any more - instead we hope his successor learns from Yanis' mistakes. And speaking of his successors, late yesterday Tsipras has announced a cabinet reshuffle, sacking several ministers who voted against the reforms in parliament this week. But he opted not to bring in technocrats or opposition politicians as replacements.

As a result, it now seems that Tsipras will preside over ministers who, like himself, harbor serious doubts about the reform program. Which is why we truly hope they are prepared to implement the missing Plan B when the time comes next.

Finally, in what is perhaps the best anecdote about Greece right now, AFP reported that "embattled Greek Prime Minister Alexis Tsipras eats and sleeps poorly and rarely manages to see his family, his mother told a tabloid on Saturday."

"Alexis lately does not eat, does not sleep, but he has no choice -- he has a debt to the people who put their faith in him," Aristi Tsipras, 73, told Parapolitika weekly.

"I rarely see him any more. He goes from the airport straight to parliament. He has no time to see his children, how can he see me?" Aristi Tsipras said.

"When we speak, I tell him to do the best for the country and take care of himself. He tells me not to worry, and that everything will be fine," she said.

Unfortunately it won't be, however that will only be revealed when not only the PM can "no longer eat or sleep", but the entire country of Greece, too.

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Greece crisis: Syriza rebels form new party

Rebels from Greece's governing left-wing Syriza are to break away and form a new party.

Prime Minister and Syriza leader Alexis Tsipras stood down on Thursday, paving the way for new elections. The move came after he lost the support of many of his own MPs in a vote on the country's new bailout with European creditors earlier this month.

Greek media reports say 25 rebel Syriza MPs will join the new party, called Laiki Enotita (Popular Unity). The party will be led by former energy minister Panagiotis Lafazanis, who was strongly opposed to the bailout deal. At a press conference in Athens, Mr Lafazanis said he was ready to respect the result of a referendum held in July, in which 61% of Greeks said they would not support the terms of the bailout.

"If it is necessary for us to cancel the memorandum, we will follow the course of exiting the euro," he is quoted by Kathimerini newspaper as saying.
'Eurozone dictatorship'

Syriza won 149 seats in Greece's 300-seat parliament in the last election in January. The conservative New Democracy party came second, with 76 seats. The new Popular Unity party becomes the third largest in parliament.

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In exchange for a new €86bn ($95bn; £61bn) from European partners, Mr Tsipras had to agree to painful state sector cuts, including far-reaching pension reforms - and keep Greece in the eurozone.

Close to a third of Syriza's MPs abstained or voted against the terms of the new deal last week. At the time, Mr Lafazanis said he was determined to "smash the eurozone dictatorship".

What is Laiki Enotita (Popular Unity)? The new left-wing party has 25 rebel Syriza MPs, who object to Mr Tsipras's acceptance of more austerity. Its leader, Panagiotis Lafazanis, argues that Greece would be better off leaving the euro and going back to the drachma.

What are Mr Tsipras's chances of re-election? Despite his dramatic policy reversal over austerity - an opinion poll last month gave him a 61% approval rating.

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If elections are set for 20 September that deadline gives the new rival left-wing party very little time to organise and rally support to fight Mr Tsipras. Many observers expect him to be re-elected, with a stronger mandate to push through the reforms demanded by the creditors.

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How are people reacting to the latest developments?
Greece's eurozone lenders are being cautious. The chair of the Eurogroup (the eurozone finance ministers), Jeroen Dijsselbloem, said "it's crucial that Greece maintain its commitments to the eurozone".

Voters are also worried. One Athens resident told Reuters: "We will go through a period of insecurity and this is, of course, not the best thing to happen right now."

What next for Greece?
On Friday morning, the head of conservative New Democracy party, Vangelis Meimarakis, met Greece's president and he will now have three days to form a government.

Observers say he does not have enough support and elections will be called. Reports suggest the election - the fifth in six years - will be called for 20 September. If Mr Meimarakis fails to form a government, the chance will be given to the new party, analysts say, and then the far-right Golden Dawn party. They, too, are unlikely to be able to gain enough allies to establish a government. All parties can waive the right to negotiate and allow the president to approve a snap election. Mr Meimarakis, however, has said he will try and use his mandate to form a government in the next few days.

Dimitris Stratoulis, one of the new members of Popular Unity, told Reuters that his party would also try to use the mandate and put a government together.

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Greece will avoid default after bailout deal – but faces more austerity

Unions vow strike action after leftist-led government agrees to further slash pensions and cut tax breaks...

The breakthrough [in talks with the Troika] after marathon 12-hour talks, became apparent only when the Greek finance minister, Euclid Tsakalotos, announced in the small hours that “white smoke” had been achieved. “There is white smoke … The negotiation is finished with agreement on all the issues,” he said. “We now have a decision that the Greek government will be called to enforce with laws and decisions. [AND POLICE AND MILITARY- SIGNY]”

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Greek Ex-Prime Minister Hurt as Letter Bomb Explodes in Car
Former Greek Prime Minister Lucas Papademos was injured after a letter bomb exploded inside his car in a central Athens, an attack that also left two Bank of Greece employees wounded.

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The only difference is that international banks are not able to exploit third world countries any more, and so they are working their way in from the periphery.

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