FORTUNE Live Blog: D-Day for Greece?

June 22, 2015, 9:10 AM UTC
Greek Nation Failed To Make Tangible Headway In Its Efforts To Secure Funding And Avoid A Default
Photograph by Bloomberg via Getty Images

1130 ET: What would any live blog be without the Twitter reactions? And yet, and yet, the attempted meme of #Grexit_songs has failed to fire the imagination, with almost everybody drawn like a moth to the proverbial flame to The Clash’s Should I Stay Or Should I Go. I will leave you, for now at least, with this eerily appropriate winner of the 1981 Eurovision Song Contest. If only to remind you that, as bad as it is, it could be much, much worse. We could still have to listen to this stuff every day.

1105 ET: Athens’ stock market has closed in no doubt that the situation has been saved. The Athens General-Composite index ended up 9% on the day, with bank stocks up an average of 20%. Evidently, the market believes that the ECB isn’t going to close their doors tomorrow. As you can see from this chart, the market opened sharply higher after the initial welcoming noises, lost nearly half those gains as the Finance Ministers grumbled, and then rose strongly after Jeroen Dijsselbloem’s press conference. If you think trading this market would be fun, we advise you to go find a dark room, and lie down till the feeling goes away.

The Greek roller-coaster


1030 ET: In the lull between the departure of the finance ministers and the arrival of the leaders, it’s worth reflecting on what’s at stake here. Ever since the formation of the European Coal and Steel Community in 1949, European politics has only gone one way: the way of more integration. That momentum has sped up and slowed down in cycles, even after the E.U. accepted a swathe of new entrants from the former Communist bloc, but the direction of travel has never been reversed. “Grexit”, if it happens, promises to be that defining first reversal. It could still be a blip, especially if the fallout scares the remaining members into abandoning national political taboos to create a more effective safety net. But it could equally be the start of a really, really long-term process of disintegration–one that could pick up speed if the much larger U.K. votes to leave the E.U. entirely in the next couple of years.

Refugees from Afghanistan arrive on the shores of Lesbos near Skala Skamnias, Greece on June 2, 2015. They are the lucky ones. Credit: Getty Images
Photograph by Soeren Bidstrup — AFP/Getty Images

That’s still too far ahead to speculate on. More important, and much more certain, in the short run is that the humanitarian disaster in the Mediterranean will get far, far worse. Greece has received 48,000 refugees in various states of distress so far this year, second only to Italy’s 54,000 (according to UNHCR data). Many are fleeing the civil war in Syria. Many more come from Afghanistan, and Many more have died trying to reach it.Nobody can count exactly, but it’s highly likely this year’s figure is already over 1,000. Even if the Greek state were functioning at its best, it could not cope with the current situation. A bankrupt Greece will not be able to police its own waters, or to administer the refugees once they arrive. Trafficking of drugs and people can only increase, at a cost of untold misery. And the problem is, of course, one that will not stop at Greece’s borders.

0930 ET: Dijsselbloem’s comments were a lot more positive in tone than the brutal negativity of his colleagues before the meeting, and given the poor state of relations between Varoufakis and the rest of the group, it would be surprising if the difference could be explained by a particularly charming apology. The key question for the rest of the day is–how much pressure do the leaders want to apply (or feel that they can get away with applying) to guarantee enough progress over the rest of the week? The other question is–to what extent will the semblance of progress relieve the pressure of deposit outflows back in Greece?

0920 ET: In other news, the Wall Street Journal’s Nektaria Stamouli reports the simply incredible.

0905 ET: At a press conference, Eurogroup chairman Jeroen Dijsselbloem says of the Greek proposals: “The first general view was that it was broad and comprehensive but (we) really need to look at it to see if it adds up…It is a basis to restart the talks over the next couple of days and really get a result.”

He also diplomatically plays down the issue with conflicting versions of the proposals circulating, saying it was “no big deal.”

So what’s the point of having the summit then? asks The Guardian’s correspondent. Well, leaders are always entitled to have a different opinion, Dijsselbloem says. Behind that triteness lies an important point: it’s the likes of Merkel and Francois Hollande (pressing for an agreement already tonight here, in French) who are going to decide this, not their bean-counter deputies. And their opinions may well be less harsh (they got a full night’s sleep after all).

0855 ET: The finance ministers have had enough and are going home in a huff to catch up on their beauty sleep.

Commission vice-president Valdis Dombrovskis tweets that the Eurogroup will meet again later this week, to resounding cheers from no-one.

Like a malevolent KGB interrogator, Greece’s Yanis Varoufakis will probably send them another draft at 3am tomorrow morning and another one 24 hours later to make sure that, by the next time the Eurogroup convenes, they’ll be so tired that they confess to plotting with counter-revolutionary elements to bring down the Workers’ State without so much as asking for a latte and a croissant.

0815 ET Good morning, America! Well, what promised to be My Big Fat Greek Decision Day started brightly enough: the European Central Bank gave a helping hand by increasing emergency loans to the banks, and the European Commission tried its best to sound optimistic about the latest Greek proposals to avoid default and reach a compromise. Financial markets all opened higher…and then, it all started to go pear-shaped.

Reading between the lines, what appears to have happened is:

1. Greece offered new proposals to the creditors in the middle of the night on the key issues of pensions and VAT. Deutsche Bank summarises them thus (click to enlarge):

Screen Shot 2015-06-22 at 12.56.59

2. Panos Kammenos, who heads the junior party in Alexis Tsipras’ coalition, threatened he’d rather bring down the government than agree to the VAT increases.

3. A new set of documents was circulated that is a lot less conciliatory.

Thus, by the time Eurozone finance ministers arrived to prepare the ground for the summit meeting later Monday, the mood music had changed badly for the worse. The situation was best summed up by Nick Malkoutzis, editor of the Greek analysis website

and, on the other side, by a bad-tempered Hans-Joerg Schelling, Austria’s finance minister, who said that “To have us all come here, to call a summit that isn’t able to take decisions because the documents haven’t been prepared–that could really have been done more professionally.”

BUT! The day is still young. It’s by no means clear which set of proposals is going to form the basis of negotiations when the heads of government get round the dinner table in Brussels tonight (at 1300 ET). If Tsipras gets firm backing for the first set of proposals, then that puts him in a very strong position at home: either Kammenos’ ANEL gives in and signs, or they quit the government and Tsipras is free to form a new one with a more moderate party (likely to be the centrist ‘To Potami’). But if he’s reading from the less ambitious set of proposals, then the pressure could be ratcheted up a lot further. One ECB council member has already been on the newswires (see below) warning that today’s decision emergency loans is conditional on the negotiations making progress. If that isn’t forthcoming tonight, then it’s quite feasible that the gathered leaders will give the nod to ECB President Mario Draghi to impose limits on cash withdrawals from tomorrow.

At which point a third, more familiar, summary of the situation comes to mind from Samuel Johnson: “Depend upon it, sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully.”

0720 ET: Grumpy, Sleep-Deprived Finance Ministers Anonymous is now officially Europe’s fastest-growing club. Austria’s Hans-Joerg Schelling (whose eyes aren’t bag-free at the best of times) is now treating journalists to his less-than-flattering opinion of Athens, raging that what was received last night “could have been sent on Thursday…To have us all come here, to call a summit that isn’t able to take decisions because the documents haven’t been prepared–that could really have been done more professionally.” Oh go on, Hans-Joerg, tell us what you really think. Hm. Apparently what he really thinks is that “There are obviously massive communications in the Greek government.”

At least they’ll all be able to agree on something today then.

0715 ET: Just in case anyone couldn’t hear him over the deafening drumming of the rain, Finnish finance minister Alex Stubb just obligingly put out the following:

It’s going to be a long week, by the looks of things. It’s alright for Stubb–he can do an Iron Man challenge in under 10 hours. Am not sure how the rest of the Eurogroup is going to hold up though.

0705 ET: So it’s looking like there’ll be no comprehensive deal struck tonight between Greece and the rest of the Eurozone, after some pretty sour comments from key creditors. The question is now whether the Heads of Government react as badly to the latest mix-up as their finance ministers did. If they do, then they’re likely to let ECB President Mario Draghi know they have no objections to him imposing capital controls from tomorrow. And…right on cue, here comes Ewald Nowotny, the Austrian central bank governor, telling Bloomberg that the ECB’s decision on ELA “is valid for today” only, and that extending it “will depend on the outcome of negotiations.”

0645 ET: It’s all unravelling now. You wouldn’t have thought anyone could increase the amount of cold water in Brussels today, but the Finance Ministers of Germany (as you might have expected) and (slightly more surprisingly) Ireland have conjured some out of nowhere. Wolfgang Schäuble says: “I don’t see how we can prepare the heads of government meeting” after failing to receive any substantial new proposals. Michael Noonan, for his part, is withering about the confusion that led to multiple versions of the Greek proposals being circulated. “It says a lot about the situation in Athens. It doesn’t say very much about the situation in Brussels,” he says.

0640 ET: At last! The big breakthrough!!

If only…

0630 ET: Details are dribbling out about Greece’s new proposals, and they support the reports of concessions on the key VAT and pensions issues. Despite that, Finland’s Alexander Stubb tells reporters from underneath a HUGE umbrella that he has “very low expectations for today.” He says today’s meeting is “going to be a nonentity” and that “a lot of air miles have been wasted.” I wouldn’t have guessed that the Finnish Finance Ministry actively uses its airmiles account to keep spending down but I guess it makes sense. In other news, Market News now puts the size of today’s ELA increase at €1.3 billion, which brings the overall ceiling to €87.2 billion. That’s getting on for 20% of all Greece’s banking assets which don’t have funding from private individuals and markets.

0615 ET: Finance ministers are arriving for the Eurogroup meeting. France’s Michel Sapin went in without saying a word. Now Belgium’s Johan van Overveldt, one of the harder-line Grecoskeptics, goes in with a tart observation that it wasn’t really clear after this morning’s mix-ups what the Greeks were proposing. For those who are interested, it’s chucking it down it Brussels, just like it did before the Battle of Waterloo 200 years ago. The reporters on the doorstep are going to get an absolute soaking.

0600 ET: If you’re having a hard time working out from financial markets just how likely this whole thing is to blow up, you may be better off following the bookies. Ireland’s Paddy Power currently offers odds of Evens (i.e., a 50% chance) of Greece being declared in default by the European Commission this year. It offers 9-4 on new elections by the end of the year in Athens, and 4/6 that Greece will issue another currency by the end of 2017 (note the precise wording). If I were a betting man…no, I’m not a betting man. Well, not on this, anyways.

0545 ET: The markets have calmed down a bit after their explosive start, as officials get back into the groove of managing expectations. Juncker says he “doesn’t know” if there will be a deal today, which seems logical given that no-one knows how long it will take till everybody is sure they’re looking at the same version Greece’s. Reports suggest that there is some movement on the key points of eliminating VAT exemptions and cutting public-sector pensions. Interestingly, Panos Kammenos, who heads Tsipras’ right-wing coalition partner, the Independent Greeks, has said he would rather leave government than allow the lower rate on VAT on Greece’s islands to be scrapped. The lenders would dearly love that, as it would force Tsipras to choose a new pro-bailout partner if he wants to stay in power. Obviously nothing would be that simple, though.

0515 ET: Let’s see if Juncker is even-handed enough to greet Angela Merkel the same way.

0500 ET: Juncker welcomes Tsipras with one of his trademark welcomes – a playful slap to the face. Tsipras tells the reporters on the doorstep he wants Greece to stay in the Eurozone and came to Brussels “with the aim of succeeding (in finding) an economically viable solution.” That, of course, is code for debt restructuring, which is the one point that no-one on the other side of the table wants to concede yet.

0420 ET: European markets have opened with a bang after Greece’s latest compromise proposal was greeted enthusiastically by officials in Brussels. The yields on Greece’s government bonds have fallen sharply as markets shave expectations of a default. Stocks are also up across Europe (led by a 7.7% bounce in Athens) and the euro briefly hit $1.14 before the almost inevitable disappointment that Greece “sent the wrong documents” to its partners, according to the Financial Times. ”

Greece 2-Year Bond Yield(Daily)20150622092653


0345 ET: After a weekend of ominous lines at the ATMs outside Greek banks, there are no reports of panic this morning for now. The European Central Bank raised the ceiling for its emergency short-term loans to the country’s financial system again this morning, less than 72 hours after the last increase. Juncker’s chief of staff tweeted last night he expected a “forceps delivery”, opening the floodgates for a likely torrent of birthing-related puns throughout the day.