This is the only way in which it can become independent again and able eventually to introduce programs that the people desire rather than Greece's creditors. There is no doubt there would be considerable painful adjustments to be made but recovery could come rather quickly as the low value of the Greek drachma will encourage tourism and exports.
So far there is little sign the Tsipras or Varoufakis the finance minister, are planning to default and exit the euro zone. Tsipras appears to remain optimistic that a deal can be reached. However, with the flight of cash out of Greek banks and a horrendous 24.6 per cent fall in revenues in May it would seem that Greece might be so desperate to reach a deal that it will give up its few remaining "red lines" such as pension cuts and labor market reforms.
Nevertheless Tsipras said: "The blind insistence of cuts (in pensions) in a country with a 25 percent unemployment rate and where half of all the young people are unemployed will only cause a further worsening of the already dramatic social situation." Many economists would agree but that matters little. What counts are the demands of creditors. If they are not met, there will be no deal. The Greek government may think that the creditors will allow more leeway since they will end up losing billions if Greece defaults but that gamble may turn out to be quite wrong.
Some think that Russia might come to the aid of Greece. However the Russian deputy finance minister said that there had been no request for funds from Greece and that in any event Russia lacked the resources to bail out Greece.
As with Tsipras, German chancellor Merkel thought a deal was still possible and said to German lawmakers: "I'm still convinced: where there's a will, there's a way. If those in charge in Greece can muster the will, an agreement ... is still possible." There is strong resistance in Germany to providing any further funds to Greece and a slim majority are in favor of Greece leaving the euro zone.
Saturday morning BBC News is reporting German Chancellor Angela Merkel has warned there must be a deal between Greece and its creditors ahead of Monday's emergency EU summit.
In order to make earlier loan payments to the IMF, the Greek government had to borrow from pension funds and defer payments to schools and hospitals: The result is that the government has managed to scrape together just enough funds to meet IMF and ECB repayments in the last few months, while hospitals have no medicines and equipment, schools have no books and materials, and doctors and teachers leave the country. The situation for businesses is dire.
According to the Greek retailers' association each day about 59 business close down and 613 jobs are lost. Talks a week ago between head of the European Commission, Jean-Claude Juncker did not produce a breakthrough. Greece strenuously rejected creditors' proposed deal. Greece submitted a new list of reform proposals on Tuesday an extension of the program beyond its end of June deadline has also been discussed.
The new Greek proposals were already dismissed as inadequate by the EU by early Wednesday.
The chief European Commission spokesperson, Margaritas Schinas, said of the situation: “For this final push, the Commission is of the view that the ball is clearly on the court of the Greek government. It needs to follow up on the agreement on the meeting with President Juncker last Wednesday night.”
Those talks failed!
Pierre Moscovici, the EU Commissioner for Economic and Financial Affairs told a Greek delegation yesterday that "their latest suggestions do not reflect that state of the discussions between" between Brussels and Athens. Moscovici did say that work was continuing to break the deadlock on economic reforms that creditor's insist that Greece must agree to before unlocking the remainder of the funds in the bailout loan.
The Greek government finds it in an impossible situation as it attempts to be allowed at least a few of its anti-austerity policies as part of the deal in order to placate critics within its own party and retain some credibility with the Greek populace. So far creditors have given the government virtually nothing. The only option now for the Greek government seems to be to cave and spin the result positively or finally decide to default and perhaps leave the Eurozone.
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Ken is a retired philosophy professor living in the boondocks of Manitoba, Canada, with his Filipina wife. He enjoys reading the news and writing articles. Politically Ken is on the far left of the political spectrum on many issues.
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