Déjà Vu All Over Again

With a hat tip to Yogi Berra, the setup in Greece today is a case of déjà vu all over again.

  1. Prime Minister Alexis Tsipras’ Syriza hardliners threaten mutiny because the party believes the prime minister made too many concessions.
  2. Meanwhile, the IMF does not like the Greek proposal because it is too dependent on tax hikes instead of spending cuts.
  3. Germany rejects the proposal outright.

Syriza Mutiny Over Concessions

The Financial Times reports Greece Under Pressure to Build Support.

Greece’s parliament will have only a few days to pass all the economic reforms pledged by Athens to unlock desperately needed bailout aid, putting intense pressure on Prime Minister Alexis Tsipras to build domestic political support for the concessions.

Berlin has insisted on full and immediate legislative approval of measures that may be agreed at a meeting of eurozone finance ministers on Wednesday evening, even though officials now concede a deal may come too late for Athens to meet a €1.5bn debt repayment to the International Monetary Fund due on June 30.

Greek authorities have begun preparations for a hasty and potentially rancorous parliamentary debate over the weekend amid growing signs that Mr Tsipras’s new reform plan — which would be presented to eurozone leaders on Thursday — faces fierce resistance in Greece.

A handful of more radical members of Mr Tsipras’ governing Syriza party have already vowed to mutiny over the proposals, and thousands of pensioners took to the streets of Athens on Tuesday evening to decry the plans.

Officials representing the creditors said in Brussels on Tuesday that a deal before Wednesday’s finance ministers meeting was still far from assured. The IMF has raised concerns that Greece’s proposal relies too heavily on new taxes on labour and capital, rather than on cuts in government spending. One official involved in the negotiations on Tuesday with Athens described the talks as an “uphill” struggle.

Emmanuel Macron, the French economy minister, said on Wednesday that he supported the IMF’s tough stance. “The IMF is exercising its right and is right to be demanding of Greece,” he told CNN.

Breakthrough Far Off as Deal Terms Rejected

Bloomberg reports Germany Says Greece Breakthrough Far Off as Deal Terms Rejected.

Germany downplayed the chances of an imminent deal with Greece as Prime Minister Alexis Tsipras’s government rejected the latest terms set by creditors to unlock bailout aid.

The downbeat tone from Berlin reinforced the brinkmanship at play as Tsipras met in Brussels Wednesday with the heads of the three creditor institutions: International Monetary Fund Managing Director Christine Lagarde, European Commission President Jean-Claude Juncker and European Central Bank President Mario Draghi.

“Our impression is that there’s still a long way to go,” German Finance Ministry spokesman Martin Jaeger told reporters at a regular government press briefing in Berlin. Creditor institutions have made “exceptionally generous” concessions to the Greek government, and “it’s now up to the Greek side to show some movement,” he said.

It’s time for the adults in the room (are there any?) to simply admit the obvious: even if there is another deal, it cannot possibly hold.

Mike “Mish” Shedlock