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"This Is A Sad Decision": Europe Responds To The Greek Referendum, Which Has One Massive Problem

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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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Sat, 06/27/2015 - 10:41 | 6241137 TheFreeLance
TheFreeLance's picture

Don't laugh. The US will be holding meaningless national referendums on "the future" soon enough.

Sat, 06/27/2015 - 10:43 | 6241145 q99x2
q99x2's picture

Why can't the US start over. This ain't fair. We have to have a revolution and they get to quit their government. No Way.

Sat, 06/27/2015 - 10:45 | 6241150 Chuck Knoblauch
Chuck Knoblauch's picture

We need a good war to kill all the oligarchs and their bankers.

Let's get to it already!

Sat, 06/27/2015 - 10:46 | 6241155 headhunt
headhunt's picture

...“provocative” demands of the country’s creditors.

Yes, very 'provocative'; you borrowed money and we want paid - terribly provocative.

Greece must think they are Barney Frank and the free shit mortgage crowd that caused the world-wide financial collapse.

Sat, 06/27/2015 - 10:48 | 6241167 Monetas
Monetas's picture

Greece is so fucked up .... Muslim boat people .... prefer Sicily and southern Italy !

Sat, 06/27/2015 - 10:53 | 6241186 nicxios
nicxios's picture

In 2012 the government had a secret SILVER DRACHMA plan for euro exit. http://greece.greekreporter.com/2015/06/27/greek-investigators-report-fi...

 

Sat, 06/27/2015 - 10:53 | 6241189 nicxios
nicxios's picture

In 2012 the government had a secret SILVER DRACHMA plan for euro exit. http://greece.greekreporter.com/2015/06/27/greek-investigators-report-fi...

 

Sat, 06/27/2015 - 10:58 | 6241206 rish
rish's picture

"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."

 

This must be the stupidest thing that zero hedge has ever said.  It just goes to show how clueless is zh. Not just for Blaming the average grecian for this predicament when the ptb directed and organized this whole circus, but also the fact that the vote is probably rigged in greece just like in usa.  Did zh learn anything from the rigged vote in ireland? I guess not......

Sat, 06/27/2015 - 11:01 | 6241219 JailBanksters
JailBanksters's picture

The International Mafia Fund just treats the people of greece that had nothing to do with the Banking Fraud and Political Corruption as their own personal ATM

Sat, 06/27/2015 - 11:02 | 6241223 Yancey Ward
Yancey Ward's picture

I think Syriza is going to lose the referendum if the votes are counted honestly.

Sat, 06/27/2015 - 12:22 | 6241526 SPAREPARTS
SPAREPARTS's picture

Now or Later, final outcome unchanged,broken systems eventually stop

Sat, 06/27/2015 - 11:04 | 6241233 M.B. Drapier
M.B. Drapier's picture

In any event, going forward the Greeks will only have themselves to blame for whatever the final outcome is.

Well, that might be the case if the ECB wasn't about to steal all their bank deposits on the way out.

Sat, 06/27/2015 - 11:06 | 6241242 Catalonia
Catalonia's picture

Wow, people actually voting and deciding things? What a sad day!

Sat, 06/27/2015 - 11:08 | 6241254 hotrod
hotrod's picture

officials seem to always be afraid of a DEMOCRATIC Vote.

Sat, 06/27/2015 - 11:11 | 6241267 jubber
jubber's picture

guess Gold will be limit down Sunday night?

Sat, 06/27/2015 - 12:25 | 6241535 SPAREPARTS
SPAREPARTS's picture

Yeah who wants gold, Euro,Dollars rule.

Sat, 06/27/2015 - 11:19 | 6241289 cwsuisse
cwsuisse's picture

This article is sort of strange. Greece is faced with the choice to live in debt slavery or to accept the uncertainties of independence. The creditors are faced with the choice of loosing their money deliberately (by write-off) or unvoluntarily (by GREXIT). The present situation seems to suggest that the creditors opted for the unvoluntary option. Tsipras had hoped to negotiate a reasonable deal. That has not happened. Greece has now the choice between pestilence and cholera and Tsipras wants the population to make that choice. The technical argument about the wording of the referendum is boring: The population needs to decide between an unconditional surrender to the Troika and the uncertainties related to the Drachme2. Freedom lovers will go for independence and the others for slavery. It is that simple. 

Sat, 06/27/2015 - 13:24 | 6241701 tangent
tangent's picture

I disagree that no pension cuts or even low pension cuts could be reasonable. Pensions should be the first* thing to be cut in a crisis like this, considering it takes decades of irresponsible spending to go bankrupt.

Make the people responsible for the mistakes pay for the mistakes. Teach the incompetent asshole beurocrats when they treat other people's money like their play money, they may just be "eating catfood and drinking recycled urine" after they retire from their job as another commentor put it.

And yes, government workers are always, always, always the very first people to vote to borrow more money to pay the bills rather than cut the budget. Its a recklessly irresponsible act of idiodicy. They should not be protected from the reprocusions of that! Not in Greece, not in Chicago where the same thing will happen, and not anywhere else.

Sat, 06/27/2015 - 11:29 | 6241317 tsuki
tsuki's picture

Check more recent polls.  The Greeks are no longer enamoured of the EU. 

Schäuble is to the Greek negotiation as Nuland is to the implementation of Minsk II.  You will obey my Nordic Highness is not a position of negotiation. 

I have a feeling that if Greece leaves the EU, she will become for the Russian Federation what Berlin was to the West in my youth, A Showcase For Democracy. 

 

Sat, 06/27/2015 - 11:30 | 6241321 williambanzai7
williambanzai7's picture

Bullish for nail guns

Sat, 06/27/2015 - 11:34 | 6241331 theyjustcantstop
theyjustcantstop's picture

to bad it's going to be a snap referendemn, unlike in usa, there's time for adding legalizing pot, student loan forgiveness, home mortage forgiveness, full federal, and state entitlements for anyone inside the us borders 24 hrs brefore polls open, a 10% increase to monthly ebc cards, the fsa always decide the us elections.

Sat, 06/27/2015 - 11:37 | 6241341 dogismycopilot
dogismycopilot's picture

Short of Vladimir Putin saving their ass, the Greeks are done for eitherway. 

Russia will become the 21st century haven for Capitalists, Christians, clean food, family and culture plus a 13% flat tax.  

Sat, 06/27/2015 - 11:42 | 6241356 Downtoolong
Downtoolong's picture

"we don’t have three weeks, but three days."

Sometimes the “Long Enough Time Line” isn’t that long.

Sat, 06/27/2015 - 11:56 | 6241370 henry chucho
henry chucho's picture

After a couple weeks of eating cat food,and drinking recycled urine,I suspect the Greeks will be lynching Mr Tsipras sometime in early July..

Sat, 06/27/2015 - 11:57 | 6241413 ChurchillToo
ChurchillToo's picture

The Greeks should decide. After all it's their country. They will survive.

Sat, 06/27/2015 - 12:27 | 6241542 SPAREPARTS
SPAREPARTS's picture

I am with you ,its not the end of the world. People go belly up all the time ,read the newspaper

Sat, 06/27/2015 - 12:11 | 6241474 kikk
kikk's picture

Europe Responds To The Greek Referendum, Which Has One Massive Problem

 

No-one in a position of authority in the EU, ECB or IMF respects what democracy is or understands how it works

Sat, 06/27/2015 - 12:31 | 6241557 TNTARG
TNTARG's picture

Oh, yes they know how it works and they respect it! That's precisely why they won't allow it to happen!

I bet there will be no referendum.... Again.

Sat, 06/27/2015 - 12:12 | 6241481 all-priced-in
all-priced-in's picture

Can someone please lay out the choices the Greeks will be voting on.

 

Looks like the classic choice between a

 

Turd sandwich or a bowl of turd soup

 

 

 

 

 

Sat, 06/27/2015 - 12:28 | 6241547 SPAREPARTS
SPAREPARTS's picture

Bankruptcy is a useful policy

Sat, 06/27/2015 - 13:31 | 6241726 all-priced-in
all-priced-in's picture

Just how does officially declaring bankruptcy change anything?

 

 

 

 

 

 

 

Sat, 06/27/2015 - 18:20 | 6242535 Faeriedust
Faeriedust's picture

It lets you zero out the account book and get on with your life, something that the Greeks desperately need.

Sat, 06/27/2015 - 12:23 | 6241529 TNTARG
TNTARG's picture

" If we follow Avishai Margalit, it is difficult to explain humiliating institutions as anything other than an aberration from the institutions that ought to pertain to a decent society".

 

 

Sat, 06/27/2015 - 14:46 | 6241615 SparticusUK
SparticusUK's picture

'As was to be expected, the Greek opposition parties, except for the Nazi-inspired Golden Dawn, expressed horror at the referendum.'

 

Democracy.. oh the horror!

 

When its the fascists who are defending demcratic right to decide the countries future, politicians have lost the moral high ground


Sat, 06/27/2015 - 12:59 | 6241640 Ethelred the Unready
Ethelred the Unready's picture

The Greeks already held their referendum when they voted in the current government.   What happens on July 5 will merely reconfirm that decision.

I suppose the only good thing of having dragged this out five years is that it gave the other PIIGS time to at least move in  the general direction of finanicial rectitude.  Plus the Greeks got five extra years worth of EU, ECB subsidies.  That seems to be about to end.   The only question now is the whether the rule stating that - if you leave the Euro you also get kicked out of the EU - is going to be enforced.    

 

 

Sat, 06/27/2015 - 13:06 | 6241653 Dominus Ludificatio
Dominus Ludificatio's picture

Both the EU and Greece are fucked up and do not know what to do next regardless of the infinite public statements. The pain will be shared by both sides when its finally over and both sides know it.

Sat, 06/27/2015 - 13:09 | 6241662 VWAndy
VWAndy's picture

This reminds me more and more about something said about the Berlin wall coming down. The people were holding it up. One night the guards stopped holding up that wall. In one night it was torn into pieces by hand. That very night.

Humpty dumpty had a great fall.

Let them vote for perp walks.

Sat, 06/27/2015 - 13:11 | 6241670 VWAndy
VWAndy's picture

Getting the guards to stand down is the key. The Greek people have three days to convince the guards. Gods speed!

Sat, 06/27/2015 - 13:31 | 6241724 grunk
grunk's picture

I stopped reading this article after a while.

There is no middle ground.

Greece defaults; they're fucked.

Greece defaults; the EU starts the trip down Rue de Fuck.

Sat, 06/27/2015 - 13:35 | 6241737 VWAndy
VWAndy's picture

I disagree. If the Greek people take off thier chains who knows how far they can go.

Sat, 06/27/2015 - 13:42 | 6241759 grunk
grunk's picture

Then let me re-phrase:

Greece defaults and they are on their own. Tough go when you suck at the socialism teat.

They may be looking at a 12 step program of austerity.

Sat, 06/27/2015 - 13:51 | 6241777 VWAndy
VWAndy's picture

Just think about being in a market without any imports to compete agianst the real producers. Not so easy to throw them under the bus when they are driving it.

Sat, 06/27/2015 - 13:42 | 6241760 Evil Franklin
Evil Franklin's picture

Greece needs to take a lesson from Iceland.  Tell the banks, "hell no" and then arrest, try, convict and sentence every last one of them.

Sat, 06/27/2015 - 18:11 | 6242510 Faeriedust
Faeriedust's picture

Unfortunately, Greece failed to do this when the banks that first lent them the money still held the debt. Now that's been socialized by the EU, ECB, EFSF, and IMF, so the taxpayers of the entire world are on the line for the money and the organizations responsible can't be jailed. Meanwhile, the only buyers for recent Greek debt have been the local Greek banks, which can't exactly be arrested and charged for keeping their own government afloat.

Sat, 06/27/2015 - 14:30 | 6241895 mendigo
mendigo's picture

Funny that putting to a vote by the people is a "sad decision".

Wish this were done for tpp.

Tspiras understands what it is to think outside the expectaions of the status quo protectors. He put his position on the bloock for the public to decide. Leaving the EU is something that requires the mandate of the people. He embodies the best of democracy. He kept his promises - how sad indeed

Sat, 06/27/2015 - 15:06 | 6242000 European on my ...
European on my shoe Jimmy's picture

If you 'live your life in fear' whether personally or collectively you will make very poor 'life choices' the Greek people are living that 'fear' as we speak.

The Greek people collectively don't know which way to jump!.
It's simple for me I refuse to live in fear. I believe the Greeks will vote to remain in the 'EU' simply because they feel akin to a lost child seeking the parent that is the EU 'HIVE.

If I were Tsiparis, I would go to any court and state. That like that 'parent' they 'Mis sold' the Greek people those loans. How could a lender 'lend to a economy, at the the same interest rates that Germany were paying. It beggars belief That an economy such as Greece competes with Germany

You the Greek people have been 'mis sold' those loans. Your elites in Athens took those loans and waved goodbye. These elites should be hunted down akin to hitlers hit list that conceded to World War 1 reparations.

Be the 'Spartan' that saw off the Persian threat. Go your own way. Consider the burden that is placed upon your children. You have it in your power to set your children free of a debt burden that was not of your making. Fuck the European community. The stick that beats you with this debt will only go on giving.......more interest more austerity more pain

My point is.....you were 'Miss sold' those loans and the PPI that came with it
Show the world that the seat of democracy can once again uphold that ideal.

Sat, 06/27/2015 - 17:58 | 6242465 Faeriedust
Faeriedust's picture

We seem to be assuming that Syriza really wanted a deal.  I'm not so sure of that.  Given that a sizeable chunk of the party wanted to walk away from Europe the day they were elected, and that Varoufakis is on record as having said that Greece should have defaulted in 2010, it's entirely possible that they were simply giving themselves political cover, and the people time, to make that open default possible.  They had to pretend to negotiate because the populace wasn't yet ready to accept that their only hope of ending austerity is to exit the Euro.

Similarly, who said that the EU and ECB wanted a deal, either?  The papers were full of them indicating uncertainty as to whether they wanted to continue with Greek bailouts past this point; that Germans didn't want to provide any more money to Greece, that other nations such as Ireland, Spain, and Portugal resented paying into the rescue funds when they were in severe pain themselves.  And then there were all the ruminations about how the "contamination" was now "contained", and Europe could survive a Grexit.  So if they thought they could survive and didn't want to keep paying . . .

This suggests that the entire last five months of posturing and pronouncements has been little more than Kabuki, designed to convince the populace on all sides that their leaders "tried", the other side was "unreasonable", and therefore they can exit a losing proposition with honor.  Twenty to fifty of the most highly-paid civil servants in the world have spent five months of travel time, work time, expensive government-reimbursed meals, wear and tear on computers, and reams of paper at an expense that could have fed at least some of Greece's hungry, to put on all this theater so that the peasants didn't have to face the facts head on.  Such is politics.

Well, it made good circus for those of us who are entertained by such things.

 

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