Another Twist in Greece

Greek prime minister Alexis Tsipras was confident just yesterday of working out a deal with the Troika.

Thursday morning, when asked by reporters whether Friday's installment would be made, the Greek prime minister replied: “Don’t worry about that.”

Thursday afternoon, we learned Athens to Delay IMF Repayment.

Of course "Don’t worry about that" is quite different than "yes".

Grounded by Dissent

Friday morning we learned Alexis Tsipras Grounded by Dissent from Within Syriza.

After four hours of discussions with EU leaders in Brussels on Wednesday night, Alexis Tsipras was planning to return on Friday in hopes of at last sealing a bailout deal with creditors.

But the Greek prime minister has been grounded by a torrent of anger and resistance from his Syriza party. Instead of flying to Brussels, he will on Friday be appealing to a restive parliament in Athens with his government — and the country’s financial future — on the line.

“The overwhelming sentiment in the [Syriza] parliamentary group will be one of rejection,” Antonis Kamaras, a Greek political commentator, said of the bailout terms being offered by creditors. “It’s hard to see how the leadership can prevail.”

Mr Tsipras had called Wednesday’s talks “constructive and friendly.” But a senior Greek official said the International Monetary Fund, which was not represented at the meeting, had imposed new conditions that had not been tackled in earlier negotiations in Brussels.

Sitting in a cramped office at party headquarters, Alecos Kalyvas, Syriza’s economic strategy chief, captured the mood of the party’s mainstream. Greece faced big problems and “time was running out”, he said, but he “cannot accept” more pensions reductions, energy price rises and public sector job cuts.

Asked if a deal would be reached before the current bailout extension runs out at the end of June, Mr Kalyvas responded: “I’m optimistic but only moderately.”

Before Mr Tsipras flew back from Brussels, members of Syriza’s extreme left faction urged him to call an immediate general election if the talks resulted in an ultimatum from bailout monitors.

John Milios, the party’s previous economic strategy chief and leader of a new far-left faction, the Red Network, called for Greece to halt payments to the IMF and impose capital controls.

Panayotis Lafazanis, the hardline energy minister and official leader of the Left Platform, insisted that electricity prices would remain unchanged and that impoverished households would continue to be supplied with free electricity.

“This agreement isn’t in compliance with Syriza’s progressive platform and it’s not going to happen,” Mr Lafazanis said. “We’re a government of principle and we won’t be responsible for doing such great damage to the country.”

What's the Game?

Ever since Alexis Tsipras won the Greek election and appointed finance minister Yanis Varoufakis, an expert who wrote a book on game theory, it's been extremely difficult to determine who is bluffing and who isn't.

Heck, it's very difficult to determine what most of the players really want. German chancellor Angela Merkel is one notable exception. She wants Greece in the eurozone, but not if it costs her too many political points. How many points is too many? Ask Merkel, but she won't tell you. 

Does Alexis Tsipras want Greece out of the eurozone?

The possible answers are yes, no, yes provided he can blame the Troika, yes provided his party goes along, yes provided he can stay in power, etc.

The only way to know if anyone wants a deal is if there is a deal. 

If Tsipras' goal all along was to default and place the blame elsewhere, he played his hand masterfully well. He can blame the Troika, Germany, his own party, or coalition partners. And months of delays gave everyone a chance to pull deposits from Greek banks.

On that note I have a strong recommendation: If you have money in Greek banks, you are begging for a haircut. Get your money out of Greek banks immediately, and keep it out even if a deal is announced.

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

Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.