Two Minutes After Midnight, Still No Pumpkins; Schäuble Seeks Capital Controls; Sisyphus

Early this morning, we saw reports of a last minute deal offer by Greece. That was followed by a Financial Times headline that read "Hopes Fade of Breakthrough Greece Deal".

The exact same link now displays this headline: Greek Concessions Keep Hopes of Bailout Deal Alive.

Greece on Monday kept alive hopes of an eleventh-hour deal with creditors to avoid default after Athens presented its first substantial concessions in months of fruitless negotiations.

Donald Tusk, president of the European Council, said Athens had produced “its first real proposals in many weeks”.

Jeroen Dijsselbloem, who heads the eurogroup of eurozone finance ministers, called the new Greek proposal “a positive step”.

Markets soared amid rising hopes of a breakthrough. The main Athens stock index closed up 9 per cent and bank shares surged more than 20 per cent.

Jean-Claude Juncker, the European Commission president, said finance ministers would be called back on Wednesday in an effort to finalise an agreement, and two Greek ministers will remain in Brussels to negotiate with creditors.

Some eurozone members remain deeply sceptical of the chances for a deal. According to three officials, finance ministers had an intense discussion about whether capital controls should be imposed in Greece.

Germany’s Wolfgang Schäuble and Michael Noonan, his Irish counterpart, pushed for curbs on emergency liquidity for Greek banks unless capital controls were imposed, one of the officials said.

At the evening summit of eurozone leaders, offcials said Mr Tsipras acknowledged he had lost the trust of many leaders in the room and tried to rebuild confidence by outlining the breadth of concessions he had made.

Mr Tsipras also raised the issue of debt relief during the session, something he has insisted on as a necessity to get support for a refom programme at home. Officials said he was told by other leaders that the issue could not be part of the current deal, but there was willingness to discuss it as part of future negotiations.

Angela Merkel, German chancellor, said at a post-summit press conference that she was open to considering debt relief — but only after the current negotiations over economic reforms were completed first.

After Midnight

Here we go again. It is easily after midnight, for the nth time. Yet, no matter what happens, the clock instantly reverts to 11:58.

Watching action in Greece is like watching Sisyphus roll a ball up a hill.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com