Syriza ftw

Germany says no to Greek request.To be fair, I think news reports describing the Greek letter as a complete u-turn and capitulation are wrong. I see this:
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and it looks to me as if Greece is quite carefully not committing to the original fiscal targets; it will attain “appropriate primary fiscal surpluses”, which almost surely means less than 4.5 percent of GDP. So if the German complaint is that Greece is not agreeing to lock in total surrender to the preexisting austerity plan, this appears to be right. Instead, Greece appears to be seeking to buy some time to put together an economic strategy (remember, this is a new government without a deep bench of technocrats), and to negotiate terms later. Germany, on the other hand, is trying to force Syriza into complete abandonment of its election promises right now, today.
Do the Germans really think that’s a likely outcome? I suspect not. This looks to me like an attempt to force Greece out of the euro, right now. German policy is objectively pro-Grexit.
It’s also, given the likely fallout, objectively pro-Golden Dawn.
The role of the ECB is critical here, and Peter Doyle says what I’ve been meaning to say, but better:

[I]n the event that Euro-Greek negotiations fail, the ECB should unequivocally continue to provide full ELA to Greece. Furthermore, it should make that position clear now, while negotiations on the program continue. This would determine that Euro policymakers must not only resolve Greece without the ECB stick corralling them but must also find themselves another Euro enforcement mechanism.

Crunch time.

(Bloomberg) -- German Chancellor Angela Merkel’s coalition partner called for talks with the Greek government even after Finance Minister Wolfgang Schaeuble rejected its proposal for an extension of the country’s financial lifeline.
“I would advise that we don’t rush to say yes or no, but that we engage in talks,” Economy Minister Sigmar Gabriel, who’s also vice chancellor and leader of Merkel’s Social Democrat ally in government, told reporters in Potsdam near Berlin on Thursday. “Certainly not everything is possible, but I’m very happy that we’ve come this far.”
Gabriel’s comments may signal scope for an accord between Greece and its euro-region creditors at a meeting of finance ministers in Brussels on Friday. European Commission spokesman Margaritis Schinas said the Greek proposal could be the basis for a “reasonable compromise.”

Even so, there are reasons for the rebuff by Schaeuble’s ministry earlier Thursday and any changes Alexis Tsipras’ government wants to make to the current aid program have to be financed by the Greek government itself, Gabriel said.
“What the Greek government needs to know is that it’s their right to change policies in Greece, but that it’s not possible to distribute the resulting costs to others in Europe,” Gabriel said. “We can’t explain to Slovak citizens why the minimum wage in Greece is twice as high and why Slovak taxpayers should make transfers to Greece.”
The Greek offer “doesn’t meet the criteria agreed upon in the euro group on Monday,” Finance Ministry Spokesman Martin Jaeger said earlier today in an e-mailed statement. Tsipras’ government aims to get bridge financing without meeting the requirements of its program, he said.