"Greece Is Rescued", Economy Minister Tells BBC

While we have seen countless such reports in recent weeks and months, and take each and every one with a mine of salt, the reason ES algos just took out overnight highs was due to a BBC interview - which will be broadcast "shortly" - in which BBC economic editor Robert Peston was told by the Greek economic minister George Stathakis that "he believes Greece's new proposals to balance the government's books have broken the deadlock with its creditors."

He said he expects eurozone government heads to issue a communique later today that will say there is now a basis for a formal agreement with Athens to complete the current bailout programme and release €7.2bn of vital funds.

Peston also reports that according to the Greek minister, "technical work would need to be done in the coming days to formalise the agreement. But he was hopeful that Greece would be able to make its €1.5bn payment to the IMF on its due date of June 30 - and therefore avoid a devastating default."

According to the latest and greatest proposal to raise money, there will be:

  1. A new tax on businesses
  2. A new tax on the wealthy
  3. Some increases in the VAT rate on selected items.

Most importantly he said that his Syriza government, led by Alexis Tsipras, had avoided crossing its red lines.

Which is curious considering the IMF has repeatedly said no deal can be struck without a haircut of Greek pensions and wages, which comprise 75% of primary government spending according to Olivier Blanchard.

In any event, that's where the Greek proposal is right now: "there would be no further reductions in pensions or public-sector wages. And there would be no increase in VAT on electricity."

In other words, if this indeed holds and the Troika agrees, or perhaps Dvoika without the IMF, Greece can indeed claim victory.

More from the BBC:

He also said that the government had agreed with the IMF and eurozone governments that the targeted budget surplus would be 1% of GDP or national income this year, 2% next year and 3% the year after.


There will be no agreement with creditors to cut Greece's massive burden of debt, despite Syriza's earlier insistence on this. But Mr Stathakis told me the government heads' communique would say that debt relief will be on the agenda for negotiation in coming months.


He anticipates some criticism for the agreement from the left of his party. But believes his government can ride this out.


Crucially he believes Mr Tsipras has done enough to prevent the European Central Bank ending its emergency support for the Greek banking system.


Mr Stathakis also said that the government will be able to re-introduce collective bargaining by trade unions, which is of vital importance to his party.

How difficult would it be to get a party agreement on the latest proposal?

Will the Troika agree to this proposal which refutes earlier WSJ reports of a modest trim to pensions, remains to be seen. If there is one thing we have learned in the past 5 years it is that the Greek version of reality differs, often times vastly, from that of the Eurogroup but one thing everyone can agree on: leak, spread and distribute whatever news is sufficient and necessary to spike stocks to fresh highs; after all subsequent denials always fail to push them back lower.


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