Government members are putting together a plan they hope would achieve budget targets that bailout creditors want, while relying more on eliminating tax breaks and less on pension cuts than the lenders’ own proposal, the officials said. The Greek cabinet is due to discuss the proposal on Sunday morning. It isn’t clear whether the cabinet under Prime Minister Alexis Tsipras will endorse the plan, which was being prepared on the weekend by Deputy Prime Minister Yannis Dragasakis and others who are considered among the more pragmatic members of the leftist Syriza-led government.
In another weekend op-ed, this one in the Financial Times, economist Larry Summers wrote that without a deal, Greece might become a failed state — although at least one critic suggested that Summers' argument might be a bit hyperbolic.
But perhaps more importantly from a big picture perspective, Greece may have already breached the upper limit of its borrowing base. JPM calculates Greek banks’ eligible collateral at €121 billion (€38 billion in EFSF bonds €8 billion in government securities, and €75 billion in “credit claims”). With Friday’s ELA increase, the country’s total borrowings (that’s OMO plus ELA) amount to some €125 bilion. Why would the ECB allow this? Because it knows the breach will be promptly limited or reversed on Monday, or there will be a deal.
Meanwhile, Greece Is Quietly Printing Billions Of Euros | Zero Hedge
So, it is literally “deal or no deal” time, because if JPM is correct and eligible collateral was either exhausted two weeks ago or, in the best case scenario, is right at the limit, capital controls will need to be put in place as early as Tuesday at which point the ATMs will officially stop dispensing freshly-minted euros which, incidentally, brings up an important point. As Barclays notes, during the same period over which Greek banks lost nearly €30 billion in deposits, banknotes in circulation jumped by some €13 billion. In short, because Greeks are increasingly prone to stuffing their euros in mattresses, a large proportion of the deposit flight has come in the form of hard currency withdrawals, meaning the Bank of Greece is forced to (literally) print billions in physical banknotes
Meanwhile, Greece Is Quietly Printing Billions Of Euros | Zero Hedge
Eurozone leaders are offering Tsipras a form of debt relief - the key point for Athens - but not immediately. Greece needs to pay the IMF €1.6bn by 30 June. It is understood that the only way it will be able to make the payment is if the European Central Bank - one of its three creditors - raises the ceiling on the volume of short-term debt that the government can sell to the Greek central bank.
Greece and eurozone leaders in last-ditch scramble to reach deal | World news | The Guardian
The Greek finance minister, Yanis Varoufakis, said his country’s fate was in Merkel’s hands and told her she faced a stark decision. He said there would be no agreement that did not include the prospect of debt relief for Greece, something not on offer from the eurozone unless Tsipras commits to and proves he can implement the kind of austerity measures he was elected to reject.
Greece and eurozone leaders in last-ditch scramble to reach deal | World news | The Guardian