Grexit may come soon if no Greek deal

Alexis Tsipras, Greek Prime Minister

Weekend talks with creditors did not lead to any progress in negotiations between Greece and its creditors. The creditors insisted that Greece had not presented reforms sufficient to meet the conditions for a release of the final tranche of the existing bailout loan which ends the end of this month. However if there is not a deal before this Thursday when the Eurozone finance ministers hold a meeting there may not be time to pass any deal through country legislatures. 

Greece decided to make all four payments due this month to the IMF at the end of the month. It must find 1.54 billion euros ($1.7 billion) to make this payment. Unless the remaining 7.2 billion euros of the loan payment are released by then, Greece could very well default. It is quite possible that Greece will not be able to obtain any more concessions from its creditors. If Greece continues to resist pension and labor market changes demanded by the Troika of the European Commission, European Central Bank and International Monetary Fund, there may be no deal. Eventually Greece might be forced into a Grexit or exit from the eurozone and the reintroduction of the drachma as currency.

Some leftists within the ruling Syriza party are already suggesting that the government should be preparing for this eventuality.

---

The EU creditors are also preparing for this as a possibility. A German newspaper claims that Eurozone leaders are drawing up plans for capital controls on Greece if there is no deal by this next weekend. Greece will be handed an ultimatum deal this week the paper claims.

Prime Minister Alexis Tsipras condemned the unrealistic demands of creditors especially demands for pension cuts when pensions have already been significantly reduced. At the same time he said that he was open to resuming talks at any time. The Troika has been insisting for days that time is running out and that Greece needs to decide if it is going to accept the demands of creditors. The time for negotiation is over some have said. Yet Greek negotiators appear to think that they can gain more concessions from the Troika or institutions since the IMF and the European Central Bank have a lot to lose if Greece defaults.

The increasing uncertainty over any solution to the Greek crisis was reflected even in US markets with the Dow Jones index continuing to fall but the declines were even steeper in European markets.

Tuesday - Markets suffer as Greece teeters on the edge of Grexit - live

---