Or so it seems to me. From what I'm seeing from the big banks, etc, the baseline assumption is now a Grexit. I still think there's a nontrivial chance because-it's just not in the interests of Germany or hte rest of the EU and the Greeks really are very nervous about leaving.
"Donald Tusk, the European Council president who has been among the toughest critics of Athens’s prevarication in recent weeks, said he had spoken to Greek prime minsiter Alexis Tsipras on Thursday and agreed that any bailout deal should include debt relief for Greece."
“I hope that today we will receive concrete and realistic proposals of reforms from Athens,” Mr Tusk said. “The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors. Only then will we have a win-win situation.”
"Mr Weidmann’s comments came as France’s finance minister Michel Sapin, who is pushing for a deal that would allow Greece to stay in the eurozone, took a softer line emphasising the greater cost of a “Grexit.”
“What’s costlier? That Greece exits the eurozone and defaults on all its debt? Asking the question is answering it,” Mr Sapin told Radio Classique on Thursday. “A deal is the best solution for Greece and Europe.”
http://www.ft.com/cms/s/0/2230b2ec-260b-11e5-9c4e-a775d2b173ca.html#ixzz3fQkxhkLz
I actually question this from the Greeks' standpoint. Both Krugman and Lars Christensen make compelling cases for Grexit as the only hope of the Greeks actually achieving growth again.
http://diaryofarepublicanhater.blogspot.com/2015/07/lars-christensen-grexit-will-restart.html
It seems like for the EU and Germany though this is a no-brainer. I'm as puzzled as Delong that it isn't.
http://equitablegrowth.org/2015/07/06/non-post-greek-crisis-eurozone/
Yet everything seems to suggest that the Germans don't agree with Sapin that a deal is the solution for Greece and Europe. The Bundesbank seems absolutely giddy with the prospect of a Grexit.
The Greeks have now handed in their proposal to the EU. This is really the ballgame here. It needs to get outside of the vetting process with the EU finance minister before you can even talk about the bug EU meeting with all 28 heads on Sunday.
"In many ways, this is a more critical day than Sunday’s summit. Under the ESM treaty, it is the ESM’s board of governors — the eurozone’s 19 finance ministers — who decide whether formal negotiations should begin. Under the timetable agreed by eurozone leaders on Tuesday night, eurozone finance ministers will meet on Saturday to make this very determination."
Again, Germany seems to not agree that it's in their interests to avoid a Grexit.
.
"Angela Merkel, the German chancellor, went out of her way on Tuesday to highlight the issues the commission must consider in its evaluation — including whether there is a “risk to the financial stability of the euro area as a whole”, a line Berlin insisted on during the debate over the ESM treaty. Germany has long argued that bailouts should only be forthcoming if the entire eurozone is threatened."
http://www.ft.com/cms/s/0/b7b3d6a2-2573-11e5-9c4e-a775d2b173ca.html#ixzz3fQoWU7HZ
So Greece's proposal is in and it's hard to be too optimistic:
"Stay tuned for analysis on Greece after euro zone officials received a reform proposal."
"Bundesbank Chief Jens Weidmann, meanwhile, said that central banks have no mandate to safeguard the solvency of banks or governments, and stressed that emergency liquidity to Greece should not be increased. We'll keep you updated."
There is a Franco-American push for getting a deal with Greece and talk of debt forgiveness. But the EU overall seems to be right with Germany not France or the US.
"The Franco-American push is backed by Italy's Matteo Renzi, who said the eurozone has to go back to the drawing board and rethink its whole austerity doctrine after the democratic revolt in Greece. He too now backs debt relief."
"Yet 15 of the 18 governments now sitting in judgment on Greece either back Germany's uncompromising stand, or are leaning towards Grexit in one form or another. The Germans are already thinking beyond Grexit, discussing plans for humanitarian aide and balance of payments support for the drachma."
http://diaryofarepublicanhater.blogspot.com/2015/07/us-again-having-to-deal-with-fall-out.html
So the chance of a deal is maybe 40% or even 35%. The main reason to think there still will be a deal is because you can't believe the EU will be this stupid. Yet every piece of empirical fact over the last 5 years tells us the truth-that they are.
"Donald Tusk, the European Council president who has been among the toughest critics of Athens’s prevarication in recent weeks, said he had spoken to Greek prime minsiter Alexis Tsipras on Thursday and agreed that any bailout deal should include debt relief for Greece."
“I hope that today we will receive concrete and realistic proposals of reforms from Athens,” Mr Tusk said. “The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors. Only then will we have a win-win situation.”
"Mr Weidmann’s comments came as France’s finance minister Michel Sapin, who is pushing for a deal that would allow Greece to stay in the eurozone, took a softer line emphasising the greater cost of a “Grexit.”
“What’s costlier? That Greece exits the eurozone and defaults on all its debt? Asking the question is answering it,” Mr Sapin told Radio Classique on Thursday. “A deal is the best solution for Greece and Europe.”
http://www.ft.com/cms/s/0/2230b2ec-260b-11e5-9c4e-a775d2b173ca.html#ixzz3fQkxhkLz
I actually question this from the Greeks' standpoint. Both Krugman and Lars Christensen make compelling cases for Grexit as the only hope of the Greeks actually achieving growth again.
http://diaryofarepublicanhater.blogspot.com/2015/07/lars-christensen-grexit-will-restart.html
It seems like for the EU and Germany though this is a no-brainer. I'm as puzzled as Delong that it isn't.
http://equitablegrowth.org/2015/07/06/non-post-greek-crisis-eurozone/
Yet everything seems to suggest that the Germans don't agree with Sapin that a deal is the solution for Greece and Europe. The Bundesbank seems absolutely giddy with the prospect of a Grexit.
The Greeks have now handed in their proposal to the EU. This is really the ballgame here. It needs to get outside of the vetting process with the EU finance minister before you can even talk about the bug EU meeting with all 28 heads on Sunday.
"In many ways, this is a more critical day than Sunday’s summit. Under the ESM treaty, it is the ESM’s board of governors — the eurozone’s 19 finance ministers — who decide whether formal negotiations should begin. Under the timetable agreed by eurozone leaders on Tuesday night, eurozone finance ministers will meet on Saturday to make this very determination."
Again, Germany seems to not agree that it's in their interests to avoid a Grexit.
.
"Angela Merkel, the German chancellor, went out of her way on Tuesday to highlight the issues the commission must consider in its evaluation — including whether there is a “risk to the financial stability of the euro area as a whole”, a line Berlin insisted on during the debate over the ESM treaty. Germany has long argued that bailouts should only be forthcoming if the entire eurozone is threatened."
http://www.ft.com/cms/s/0/b7b3d6a2-2573-11e5-9c4e-a775d2b173ca.html#ixzz3fQoWU7HZ
So Greece's proposal is in and it's hard to be too optimistic:
"Stay tuned for analysis on Greece after euro zone officials received a reform proposal."
"Bundesbank Chief Jens Weidmann, meanwhile, said that central banks have no mandate to safeguard the solvency of banks or governments, and stressed that emergency liquidity to Greece should not be increased. We'll keep you updated."
There is a Franco-American push for getting a deal with Greece and talk of debt forgiveness. But the EU overall seems to be right with Germany not France or the US.
"The Franco-American push is backed by Italy's Matteo Renzi, who said the eurozone has to go back to the drawing board and rethink its whole austerity doctrine after the democratic revolt in Greece. He too now backs debt relief."
"Yet 15 of the 18 governments now sitting in judgment on Greece either back Germany's uncompromising stand, or are leaning towards Grexit in one form or another. The Germans are already thinking beyond Grexit, discussing plans for humanitarian aide and balance of payments support for the drachma."
http://diaryofarepublicanhater.blogspot.com/2015/07/us-again-having-to-deal-with-fall-out.html
So the chance of a deal is maybe 40% or even 35%. The main reason to think there still will be a deal is because you can't believe the EU will be this stupid. Yet every piece of empirical fact over the last 5 years tells us the truth-that they are.
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