Time Machines Appear in Brussels

Via the magic of time machines, it appears that midnight three weeks ago has still not arrived.

I say that because the midnight hour for a Greek deal came and went weeks ago. Yet, this evening,  the New York Times says Greece Submits 11th-Hour Bailout Proposal to Creditors.

Only a day after grim predictions of financial and social collapse in Greece, a scramble appeared underway to work out the details of a new bailout package to bring the country back from the brink.

Germany’s truculent finance minister, Wolfgang Schäuble, finally gave a little on debt relief for Greece, admitting Thursday that “debt sustainability is not feasible without a haircut,” or writedown of debt.

Donald Tusk, the prime minister of Poland and the president of the European Council, said on Twitter that any “realistic proposal from Athens needs to be matched by realistic proposal from creditors on debt sustainability to create win-win situation.”

What was breathtaking, however, was how in a matter of hours the entire dynamic in the Greek crisis seemed to shift, from apocalyptic warnings of a Zimbabwe in the Balkans, to a fresh optimism that the basics of a deal could be worked out.

The question now is whether that apparent change of heart reflected a new political determination to cut a deal that keeps Greece in the eurozone.

Breathtaking About Face! Forward March!

Tspiras can likely force anything through Greek parliament following the massive “No” campaign.

But how does one explain the sudden “about face” by Wolfgang Schäuble?

The New York Times offers this explanation: “There is a group of people who have been sent to help the Greeks, to try to transform words into action,” said a French government official with knowledge of the effort.

Group of People?

Hmm. Who can that “group of people” be at this hour (whatever hour it may be) other than the US?

It would not surprise me in the least if the US guaranteed Greek debt.

France refuses that Greece leaves the eurozone in the name of our position and our commitments,” he [French prime minister Manuel Valls] told lawmakers in the National Assembly on Wednesday in a speech that was broadcast live on Greek television.

Valls also suggested that Mr. Tsipras’s most pivotal request — a program to make Greece’s mountainous debt more sustainable — be taken seriously by other European countries as part of any deal. Until recently, that has been nearly a taboo idea in Europe’s halls of power, since European taxpayers are currently on the hook if Greece defaults on its debts.

There can be no taboos. It is essential to establish a sustainable trajectory for Greek debt in the coming years,” Mr. Valls said.

Even German Vice Chancellor Sigmar Gabriel, is in on the about-face act. Yesterday the Financial Times reported Alexis Tsipras loses Sigmar Gabriel, his last best hope in Germany.

Alexis Tsipras had pulled down the last bridges over which Europe and Greece could have moved to a compromise.”

Today Gabriel says “It’s not a case of bringing Alexis Tsipras to his knees, but it is certainly not that Europe should be brought to its knees.”

Obama Calls

In a flurry of recent phone calls with the French, German and Greek leaders, President Obama and Treasury Secretary Jack Lew have pressed all sides to come to a deal that would avoid a breakup of the eurozone.”

The US concern clearly is NATO and Russia. The US does not want Greece to fall into Russian hands.

If there is a deal, the US is behind it.

Deal or no deal, what the hell did Obama promise or threaten to cause this miraculous reversal by Schäuble, Tusk, Gabriel and others?

That’s what I want to know.

Mike “Mish” Shedlock