In a small room with a rather plain looking wooden table sat the Alexis Tsipras, the Greek Prime Minister, along with Angela Merkel, the German Chancellor and Francois Hollande, the French President and a other officials. These key players were trying to avert a financial meltdown that is threatening Greece, the Euro as well as the European Union.
 
So as to avoid a bankrupt Greece, the German Chancellor and the French President made their final offer of a few billions Euros in aid provided Tsipras changes his economic course and brings in financial reforms demanded by Greek’s creditors.
 
According to Greek sources party to the negotiations, the meeting was a short one. This Greek economic tragedy had been dragging on for a while now and the participant’s body language looked stiff, their look – tired. Tsipras broke the tension by deciding to close the negotiations and head for an emergency meeting with his cabinet. Even as he negotiated with his two colleagues, he wanted the citizens of the Greek nation to decide their own fate, for he and his cabinet colleagues were unable to come to terms with Greek’s creditors.
 
As he flew back to Athens that very day, as per Greek officials, he along with his cabinet decided to take Greece on the referendum road. An election would be too long drawn, but a referendum, he surmised could be barometer for the will of the Greek people. This decision was announced on television late at night and shortly before doing so, Hollande and Merkel were informed by telephone.
 
What is at stake is more than just money, for this Greek economic tragedy tests the very cord that binds nations to the European Union. While for Greece it is for its sovereignty, for the European Union it is a litmus test of its unity, of whether the 19 nation single currency bloc can stick together for the greater good and make its nations meet agreed rules for economic standards.
 
Greek’s call for referendum certainly did not go down well with finance minister from the Eurogroup. They along with the International Monetary Fund (IMF) had earlier rescued Greece from its fiscal liabilities with a gigantic bailout program. Greece was scheduled to payback Euro 1.6 billion by the end of June. But it could not, thus the crisis.
 
With Tsipras taking the referendum route, the Eurogroup’s patience for economic reform for Greek came to a grinding halt. The European Central Bank (ECB) which was keeping Greek banks afloat with Euro 89 billion decided that enough was enough, Greece’s emergency funding had to stop.
 
For citizens of Greece, fearful that their entire life’s saving would be wiped out in a single stroke, decided to queue up in front of ATMs and started to withdrawn their life’s saving. In order to control this crisis, Tsipras ordered that banks remain close and introduced capital controls.
 
Greek’s referendum is scheduled to be held on the 5^th of July, although there are rumours going around that it may be cancelled at the last minute. However, if it goes through, the citizens of Greece have a fateful choice to make: they could either go on their own and cut themselves off from the European Union or they could swallow the less bitter pill of economic reforms and have a brighter future with the European Union. For their part, European leaders have made it clear, the decision to not enforce economic reforms amounts to quitting the Eurozone. Tsipras however, differs from this point of view, preferring to be part of the European Union and still have his way.
 
Only the future will tell whether Greece can have the cake and eat it too.

References:
http://www.reuters.com/article/2015/07/01/us-eurozone-greece-negotiations-specialr-idUSKCN0PB4QK20150701

In connection to the size of the issue, a couple of billion euros is very little. The GDP of the euro zone for the first quarter of 2015 was 2,565 billion euros, so the yearly rate would be more than 10 thousand billions. Yet the loan specialists are correct that they can't simply hand that cash over to Greece and afterward kick back and hold up to see whether things will turn out better.
 
Greece needs to focus on basic changes, obligation lessening, better levy. The issue of the level of annuities, while essential in a basic sense, does not need to be tended to with desperation to the detriment of current beneficiaries.
 
The EU, ECB and IMF can't give Greece obligation absolution for a few reasons – any concessions done to Greece would incite a response by nations like Ireland who needed to sweat out of their emergency with a safeguard bundle that had numerous strings connected.
 
It would likewise give an awful flag to whatever other euro zone part that may keep running into inconvenience later on, and would likewise urge hopeful part nations to be less strict when requisitioning enrollment.
 
Motions
 
Then again, the Greek obligation burden can likewise be assaulted by a rebuilding, with longer developments, by support some obligation to resources and by swapping different obligations to tradable securities.
 
Germany appears to be unwilling to significantly consider this and a few legislators state they preferably see Greece outside the euro zone than considering any hair style, straight or eliminated to what's to come. Those individuals are wearing signals and don't understand the harm to Germany from any Grexit, nor do they have the authentic sense that it was Germany that has profited from financial mercy by its European accomplices.
 
Case in point amid the unification of west and east Germany where European nations conveyed the expenses of a good rate for east Germany imprint to the Deutschmark, that was then the key reference coin of the locale that directed the outer estimation of other European monetary standards versus the dollar or yen.
 
Germany needs to open its eyes and it would be great if Chancellor Angela Merkel put forth an open expression to energize the Greeks. She and other European pioneers have stopped messing around with Greece, halfway to counter the hysterics of the Syriza pioneers. They have won adequate innings.
 
Alexis Tsipras likewise needs to tone down his talk a considerable measure.
 
He expected to set up a battle to legitimize his race on a hostile to grimness stage yet he can't have any desire to tolerate obligation regarding the aggregate annihilation of what is left of the Greek economy.
 
His solid words may help him hanging on a lion's share in parliament, yet it won't get him any more like an arrangement. What is required now is a complete bundle of obligation rebuilding and financial changes. The current chose Greek government will need to sign that bundle, as will the Greek president and national bank.
 
At that point the Syriza government will need to face a certainty vote in parliament and on the off chance that it doesn't get a dominant part there should be new decisions. The new government won't have the likelihood to change the bundle. Tsipras has asked the EU and IMF to "acquiesce to authenticity" – he better utilize that remedy on himself.
 
 
 
Reference:
http://www.forbes.com/sites/marcelmichelson/2015/06/17/greek-drama-is-close-to-becoming-a-tragedy-while-differences-are-small/

Take the non-papers which have surfaced from the Greek government today. The first distils the administration's requests into four key focuses:
 

 

 

 

 
There is only no reasonable possibility of this shaping the premise of an arrangement. We all considered talk obligation rebuilding had been set to bed back in February, yet the administration now continues demanding it. The unexpected piece of it is that I really concur with Syriza that an obligation rebuilding is required however it is not piece of the fleeting talks. They have to focus on a far reaching change bundle first and afterward arrange the more extended term understanding over how Greece will finance itself in impending years. This is a more serious issue in that they continue attempting to connection the transient talks (concentrated on finishing the current bailout) and the long haul talks (concentrated on what happens after).
 
With the prospects intensifying, stories surfaced today of restored talk of capital controls. Given where we are, it merits investigating in subtle element how such controls would function, what they would mean, when they may be forced and why Greece may make this course of move.
 
How might capital controls be executed and what structure may they take?
 
It's imaginable that such controls would should be acquired throughout a weekend, however I expect they might likewise should be joined with some bank occasions at any rate.
 
Remote exchange controls: The point here would be to utmost the sum that individuals can exchange abroad from Greece in one go furthermore more than a set period. Clearly a few exchanges are required for organizations to capacity so there would should be a procedure by which organizations related (and other checked) exchanges could at present experience.
 
Money/ATM withdrawal constrains: This would be a basic control with a specific end goal to stop the tremendous outpouring of stores which has been occurring and which will get if an arrangement isn't struck soon. In Cyprus the farthest point was situated at €300 per individual every day. Notwithstanding, I think ones in Greece may go even lower. This is on the grounds that Greece is experiencing genuine local withdrawals while the essential concern in Cyprus was outside surges.
 
Time necessities or charges: Other choices or renditions of the above incorporate exhausting certain withdrawals or outside exchanges intensely. This has the upside of conceivably making an income stream for the legislature, however it may take a stab at a high cost. The administration could likewise declaration time constrains on specific stores or interests trying to cutoff withdrawals in a roundabout way.
 
Physical controls: Obviously with free development inside of the EU it would be simple for individuals to move a lot of money or resources crosswise over outskirts. As being what is indicated there will should be checks and cutoff points on the measure of money individuals can bring abroad with them. This may additionally need to stretch out to resources. For instance, somebody could buy an auto and afterward attempt and drive over an outskirt and offer it on. This is dubious to police however a few endeavors may well be made.
 
What effect would such controls have on the Greek economy?
 
Greece is still overwhelmingly a money economy. As being what is indicated, capital controls can possibly make a tremendous liquidity crunch. This was seen in Argentina in the mid 2000s when capital controls were forced.
 
For the most part, the points of confinement on withdrawals and also exchanges will make it hard for organizations to work together. Remote business specifically will get to be troublesome. The general effect will depend for to what extent the controls stay set up for and how stringent they are. Cyprus had the capacity uproot the capital controls following two years (after intermittently slackening them) while Iceland is just now anticipated that would evacuate its controls, 8 years after they were forced. For Greece, the controls might have the capacity to be evacuated once the danger of Grexit has been handled. This implies most likely once a transient and long haul arrangement have been hit with the Eurozone over how Greece will finance itself for the impending months and years.
 
At the point when may capital controls be forced?
 
As talked about some time recently, there are a couple of situations which could trigger the requirement for capital controls:
 
A default – this would likely be if Greece missed its installment to the IMF toward the end of the month. Such an occasion would presumably expand concerns and potentially encourage a bank run. Notwithstanding, this would likewise be connected into the accompanying triggers.
 
An end or top on national bank liquidity – the ECB is right now evaluating the procurement of Emergency Liquidity Assistance to Greek bets on a week by week premise. In the event that no arrangement is pending it may decline to raise the point of confinement or it could take care of the guarantee rules, along these lines lessening the sum Greek banks can get to. In the event that store withdrawals proceeded with while the ELA was topped, there would be a subsidizing hole and capital controls could be required. The ECB could cut off ELA altogether if the bailout lapsed or if Greece defaulted. Then again, it must be noticed that so far the ECB has been hesitant to be the particular case that pulls the trigger on compounding the circumstance.
 
Bailout terminates – toward the end of the month, when the current bailout lapses, if there is no arrangement there will be a colossal measure of instability. This again could trigger bank runs. Thusly, controls may be required.
 
Why might Greece go for capital controls?
 
This appears a conspicuous answer given the majority of the above – to end bank runs and stop cash streaming out of the economy. Be that as it may, there is a more extensive inquiry that should be replied. What might be the point and final objective of capital controls? At last, capital controls are just truly of utilization in the matter of purchasing to time or pushing through some extreme approaches. In Cyprus and Iceland the controls were expected to force extreme compose downs on outside investors/financial specialists however stop enormous outpourings of cash. Yet, the real record was over decently fast. In any case, in Greece the issue is a long haul discomfort and colossal vulnerability over its future position in the Eurozone – not a solitary erratic occasion for which time should be purchased.
 
Capital controls would just be useful on the off chance that we got to the phase where an arrangement was close yet couldn't be struck in time. In any case, in the event that we get to that it will be on account of the contrasts in the middle of Greece and its banks couldn't be tackled in the course of recent months. It's not clear that a couple of additional days, weeks or months under capital controls would drive an assention. It's likewise not clear why the administration would need to put the economy and individuals through the agony of such controls to then simply concur an arrangement. Why not simply concur one at this point? Unquestionably, it doesn't appear to be likely that Greece's arranging hand would be more grounded under such controls? Along these lines, while capital controls are actually conceivable, I have neglected to see any unmistakable reply in the matter of why they would really attractive, particularly from the Greece.
 
 
Reference:
http://www.forbes.com/sites/raoulruparel/2015/06/12/is-greece-moving-towards-capital-controls/

The Greek government is yet to rally out of the financial crisis facing the nation amidst proposals of strict rationing by every other European leader involved including the International Monetary Fund.

Between all the back and forth on the reform proposals, the Greek nation has ceased to receive the international bailout packages allocated. Talks of planning and changing reform proposals from the international forum and also on the Greek side have been ubiquitously endless.

Now the Greek Prime Minister Alexis Tsipras has gone ahead to issue a statement in regards to the Greek government’s position on this contentious matter. According to him, the Greek government has formulated "a realistic proposal" to resolve issues of securing a deal over its debts from its international creditors.

This has been deemed a pre-emptive move on the part of the Greeks, coming up with a plan including concessions instead of just waiting for heavy sanctions imposed by the international forum. The Prime Minister’s words came hot in the heels of the talks in Berlin attended by the heads of both the European Central Bank and the International Monetary Fund.

The night time Berlin talks as reports have now suggested the presence of ECB Chief Mario Draghi, IMF Chief Christine Lagarde, French President Francois Hollande, German Chancellor Angela Merkel and European Commission head Jean-Claude Juncker. The talks were aimed at coming up with a concrete plan to present to Greece in dealing with its financial disintegration.

Mr. Tsipras has denied being contacted by the IMF, ECB or other European leaders; and has expressed his displeasure with the austere sanctions that international creditors have been proposing towards Greece.

Greece is supposed to make a payment of 305m Euros to the IMF coming Friday. This amount marks the first of the four payments totalling to 1.5bn Euros that Greece owes the IMF. There has been growing tumult and scepticism among creditors about Greece’s capability in paying back this amount due to lack of funds that might plunge Greece into defaulting its way out of the eurozone.
 
'Absurd proposals'
The hard-pressed Greek Prime Minister Tsipras has publicly hit out at the “absurd proposals” and “indifference to the recent democratic choice of the Greek people” being peddled by its creditors for being the main reason behind Greece’s inability to climb out of the debt zone.

Tsipras has called for realistic considerations before the European leaders reach a conclusion and has hence put forward its own financial proposal out of this mess.

Greece now remains in a four-month deadlock for release of 7.2bn Euros in bailout funds by international creditors. Creditors have been pushing for strict austere sanctions in return of the financial aid as Greece keeps on rolling against the cash-for-reform deal.

The other European leaders have welcomed the efforts of Germany and France in trying to reach reform conclusions to negotiate with Athens. Otherwise, a potential exit by Greece from the eurozone could have "gigantic consequences".

As of now, the Greek leadership has maintained being open to discussions but has stated outright that it would not accept hard proposals that contradict their country’s popular anti-austerity stance.
 
References:
http://www.bbc.com/news/business-32970661