As we say in my last post, Krugman thinks Grexit may be the answer and it's not clear where we go from here. If Greece doesn't get more euros soon it will be a de facto Grexit.
However, Tsipras and the Greek government are not talking about Grexit but getting a better deal than what was rejected by voters yesterday.
http://diaryofarepublicanhater.blogspot.com/2015/07/with-euro-can-you-ever-really-leave.html
Tsipras gave up his colorful finance minister as a sacrificial lamb and is now according to Fortune going for the oldest trick in modern Europe-fanning a Franco-German rift.
"Controversial finance minister is sacrificed as Greece prepares to renew its requests for help on improved terms. Meanwhile, France speaks up against rushing to push Greece out of the Eurozone."
http://fortune.com/2015/07/06/varoufakis-quits-as-greece-moves-to-exploit-franco-german-split/
It's a peace offering of a kind. Some argue that it won't make much difference as there wasn't any real daylight between Varoufakis and Tsipras but it's all the EU is going to get.
The most promising avenue is that France could be a buffer against Germany. In early returns there is a clear difference between Germany and France post no vote.
"All eyes are focused now on Paris, where French President Francois Hollande is due to receive German Chancellor Angela Merkel for talks. Neither leader has commented yet, but there are clear rifts between the Eurozone’s two largest and most powerful states at lower level, with German politicians pushing for Greece to leave the Eurozone, while French ones were more keen to resume talks and keep it in.
"Finance Minister Michel Sapin told Europe 1 radio stationthat a Greek exit from the currency union “isn’t automatic”, and that the Greek government should make new proposals to break the deadlock."
"However, Siegmar Gabriel, Germany’s vice-chancellor, said Sunday it was “hard to imagine” any new offer being made. Germany’s finance ministers and many senior lawmakers have urged Greece to leave the Eurozone."
"Italy as well could be an ally:
"The split between France and Germany is most evident in the pressure their politicians are putting on the European Central Bank, which received a request from the Greek central bank to increase the emergency lending assistance to four large banks, according to Reuters. The Germans are dead set against (many would like to see the ECB pull the plug immediately), but Sapin warned Monday that the lifeline mustn’t be cut."
"Germany has a key ally in Spain, which doesn’t want to give its own radical left party, Podemos, any encouragement ahead of elections later this year. However, Italy, the Eurozone’s third-largest economy, is more sympathetic towards the Greeks, having more to lose from a fresh bout of market volatility."
"The ECB’s leadership has been deafeningly silent since the referendum, in which Greeks voted against the creditors’ terms for aid by a margin of nearly two-to-one. It’s likely to keep its counsel until Tuesday night, after a meeting of the Eurogroup–the Eurozone’s 19 finance ministers. The group’s hawkish chairman Jeroen Dijsselbloem Sunday said only that “the result is very regrettable for the future of Greece.”
So the questions remain?
1. Will the EU push them out?
2. Even if 1 is negative is it best for Greece to leave?
However, Tsipras and the Greek government are not talking about Grexit but getting a better deal than what was rejected by voters yesterday.
http://diaryofarepublicanhater.blogspot.com/2015/07/with-euro-can-you-ever-really-leave.html
Tsipras gave up his colorful finance minister as a sacrificial lamb and is now according to Fortune going for the oldest trick in modern Europe-fanning a Franco-German rift.
"Controversial finance minister is sacrificed as Greece prepares to renew its requests for help on improved terms. Meanwhile, France speaks up against rushing to push Greece out of the Eurozone."
http://fortune.com/2015/07/06/varoufakis-quits-as-greece-moves-to-exploit-franco-german-split/
It's a peace offering of a kind. Some argue that it won't make much difference as there wasn't any real daylight between Varoufakis and Tsipras but it's all the EU is going to get.
The most promising avenue is that France could be a buffer against Germany. In early returns there is a clear difference between Germany and France post no vote.
"All eyes are focused now on Paris, where French President Francois Hollande is due to receive German Chancellor Angela Merkel for talks. Neither leader has commented yet, but there are clear rifts between the Eurozone’s two largest and most powerful states at lower level, with German politicians pushing for Greece to leave the Eurozone, while French ones were more keen to resume talks and keep it in.
"Finance Minister Michel Sapin told Europe 1 radio stationthat a Greek exit from the currency union “isn’t automatic”, and that the Greek government should make new proposals to break the deadlock."
"However, Siegmar Gabriel, Germany’s vice-chancellor, said Sunday it was “hard to imagine” any new offer being made. Germany’s finance ministers and many senior lawmakers have urged Greece to leave the Eurozone."
"Italy as well could be an ally:
"The split between France and Germany is most evident in the pressure their politicians are putting on the European Central Bank, which received a request from the Greek central bank to increase the emergency lending assistance to four large banks, according to Reuters. The Germans are dead set against (many would like to see the ECB pull the plug immediately), but Sapin warned Monday that the lifeline mustn’t be cut."
"Germany has a key ally in Spain, which doesn’t want to give its own radical left party, Podemos, any encouragement ahead of elections later this year. However, Italy, the Eurozone’s third-largest economy, is more sympathetic towards the Greeks, having more to lose from a fresh bout of market volatility."
"The ECB’s leadership has been deafeningly silent since the referendum, in which Greeks voted against the creditors’ terms for aid by a margin of nearly two-to-one. It’s likely to keep its counsel until Tuesday night, after a meeting of the Eurogroup–the Eurozone’s 19 finance ministers. The group’s hawkish chairman Jeroen Dijsselbloem Sunday said only that “the result is very regrettable for the future of Greece.”
So the questions remain?
1. Will the EU push them out?
2. Even if 1 is negative is it best for Greece to leave?
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