The curious story of the day is back-to-back reports, minutes apart, by the same news agency, saying different things.

Greece Says has Begun Drawing Up Agreement with Creditors

Here is Reuters headline number one: Greece Says has Begun Drawing Up Agreement with Creditors

Greece and its creditors are starting to draft a technical-level agreement, a government official said on Wednesday, signalling progress in long-running talks to unlock aid for the cash-strapped country.

“At the Brussels Group (of credit negotiators) today procedures to draw up a staff-level agreement are beginning,” the official said, adding that Prime Minister Alexis Tsipras would be in constant touch with other leaders to conclude a deal.

The official said the deal would avoid wage and pension cuts, include reform of value-added taxes and include a lower target for a primary surplus in the first year.

The Greek official also cited differences between the EU and IMF as holding up an overall deal and called on the creditors to do their part to ensure a deal was struck.

“There remains a problem with the differing stance among the institutions. If an agreement by the IMF was not needed, the deal would have closed by now,” the official said.

Eurozone Officials Dismiss Greek Comments

Here is Reuters headline number two (actually 8 minutes before the above): Euro Zone Officials Dismiss Greek Comments on Deal Being Drafted.

Greece’s European creditors cannot confirm a statement by Athens that it is starting the process of drafting a technical-level agreement with creditors to secure aid, an EU official told Reuters on Wednesday.

“I wish it were true,” a senior euro zone official said.

Loop of Lies?

It’s vaguely possible no one is lying here, but that’s only possible if the senior eurozone official does not know what is going on.

Another curious aspect is the Greek official blaming the IMF, when actually it is the IMF and not the eurozone creditors that have admitted Greek debt needs another haircut.

I suppose it is possible the IMF wants harsher terms on a new deal than Germany and the creditors, but somehow that seems unlikely.

Who Benefits?

Who benefits more from a lie?

The answer to that question is Greece, two ways.

  1. It buys Greece more time to prepare capital controls
  2. It may stop some panic out of Greek banks

Just because someone benefits from a lie is no proof a lie is in progress. Yet, lie or not, both of those two points are in play.

Greece needs to prepare for capital controls to stop a run on banks should talks fail.

Mike “Mish” Shedlock