In an odd escalation over the Grexit fiasco, where Greece is now expected to provide yet another detailed reform proposal today by midnight at the very latest, it was the one man whose decision will make or break the Eurozone when (if) he decides to impose even more ELA collateral haircuts (or yank ELA entirely) forcing Greece to Grexit by imposing its own currency (since there is no legal mechanism to kick a nation out of the new Berlin Wall [15]) that made some surprisingly candid comments on the fate of the Greek negotiations.
According to Reuters [16], ECB president Mario Draghi voiced "unprecedented doubts about the chances of rescuing Greece from bankruptcy as Greek Prime Minister Alexis Tsipras was due to put forward last-ditch reform proposals on Thursday."
Citing Italian daily Il Sole 24 Ore, Reuters reports that Draghi said "he was not sure a solution would be found for Greece and he did not believe Russia would come to Athens' rescue."
Asked if a deal to save Greece could be wrapped up, Draghi told the paper as he was boarding a plane in Brussels on Wednesday: "I don't know, this time it's really difficult."
Asked if he expected Russian President Vladimir Putin to help Greece, Draghi said: "I don't believe so, I don't see it as a real risk ... and then, they don't have money themselves."
What is surprising is that these quite conclusive statements come from a person who rarely speaks in definitive terms (unless it is July 2012). "The usually discreet central banker was speaking after an emergency euro zone summit on Tuesday gave Greece five days to come up with a credible plan to repair its public finances and reform its economy or face an economic meltdown and possible exit from Europe's common currency."
What is just as surprising, is that just like the Troika has now split, perhaps terminally, between the IMF as an international "public" creditor and Germany as the dominant power of Europe, so the ECB is now also caught in the crossfire with this time the Bundesbank accusing the ECB of keeping Greek banks on artificial life support and who said earlier today that "it was up to governments, not the central bank, to provide any aid to Athens."
"Central banks need to show where their limits lie," he told an audience in Frankfurt. "It needs to be crystal clear that responsibility for further developments in Greece ... lies with the Greek government and the countries providing assistance – not the ECB Governing Council."
So the axes are becoming even more clear: US/IMF/Italy/France and now the ECB against... Germany. Suddenly we are hit by a distinct wave of deja vu.
* * *
So with this latent conflict getting stronger, here are some other key Greece-related events that have taken place overnight as we await the Greek government's official proposal of this Sunday's "final, final, final" deadline.
While hardly notable, it is worth noting that the man who had already exiled Greece from the Eurozone in 2011 only to recant, just did it all over again, when overnight Citi's Willem "gold-expert" Buiter piggybacked on JPM's call and made Grexit his base case: "We are changing our view and now believe that Grexit – Greece’s exit from the Eurozone – is the most likely outcome, either via a short-term exit (next few months) or over the next 1-3 years. The proximate drivers of our change of view are the announcement of the referendum, the imposition of capital controls and the emphatic NO outcome in the referendum. Background factors are the weakness of the economy, and the seeming inability of Greece and the creditors to reach a deal that contains both the substantial structural reforms and debt relief that Greece needs to stay in the euro."
Precisely as laid out in this post yesterday [17].
[18]
Also we learned that as the government was negotiating, the Greek economy was, expectedly, collapsing: Greek consumer prices fell by 2.2 percent year-on-year in June, with the annual pace of deflation accelerating from the previous month, data from the country's statistics service showed on Thursday. Greece's EU-harmonised deflation rate slowed, showing prices fell by 1.1 percent in June from a 1.4 percent decline in May. Analysts polled by Reuters were projecting a decline of 1.6 percent.
There was an amusing diversion, however, when the Greek statistics agency ELSTAT said on Thursday that Greece's jobless rate fell to 25.6 percent in April from an upwardly revised 25.8 percent rate in the previous month. Perhaps they too figured out how the US Bureau of Labor Statistics "does it."
But as noted previously, it will be all about the Greek proposal which is due by midnight: good luck to Tsipras to come up with something that makes both the Troika and the Greek population, which voted 60% against the last, less harsh one, happy.
Just spoke to PM @tsipras_eu [19]. Hope to receive concrete, realistic reform proposals today #Greece [20]
— Donald Tusk (@eucopresident) July 9, 2015 [21]
And here is the rest of the key events that have taken place in the past few hours via Reuters:
- 1014 - European Commission President Jean-Claude Juncker will meet members of Greece's opposition parties on Thursday and Friday in Brussels as all sides seek a weekend deal to avert a Greek bankruptcy, a Commission spokesman says.
- 1009 - The head of the European Council, Donald Tusk, says the EU's national parliaments have to be persuaded to vote in favour of helping Greece if European leaders reach a good agreement on Sunday. Tusk says a deal on debt should be part of the agreement.
- 1005 - Bulgarian Economy Minister Bozhidar Lukarski is quoted as saying Greek-owned banks in the Balkan country are "under controls" to prevent funds being sent to Greece. More than a fifth of Bulgaria's banks are Greek-owned.
- 0944 - Irish Finance Minister Michael Noonan says he sees a better than 50 percent chance of Greece reaching a deal with its creditors by a weekend deadline following a "distinct change of mood" in recent days.
- 0852 - Eurogroup chief Jeroen Dijsselbloem has no plans to withdraw his re-election bid, his spokesman says. Dijsselbloem, who is also the Dutch finance minister, is seeking another 2.5 year term in a race against Spaniard Luis de Guindos. He represents European creditors in the negotiations with Greece.
- 0830 - The chief executive officer of Greece's natural gas company, DEPA, says the utility can guarantee the unobstructed supply of gas supplies in the country.
- 0745 - Greek Energy Minister Panagiotis Lafazanis, leader of the far-left flank of the ruling Syriza party, says he expects an aid deal with creditors "soon" but he opposes a third bailout with tough austerity measures that would stifle growth.
