So the Greeks themselves are to be given the chance to approve or reject the bailout terms. The flabbergasted combination of the ECB, the Euro group and Greece’s creditors have overplayed their hand. This blog has repeatedly warned in various posts that there is a social limit to how much financial authorities can impose solutions upon populations before the people turn against them. Essentially this is now what has happened in Greece. Elected on a mandate to bring an end to the worst elements of austerity the Tsipras government expected some significant movement by Eurozone leaders to cut a better deal in the negotiations, so as to give them something to keep the Greek people on side. They did not bend and were dismissive of the proposals put by the Greeks; Christine Lagarde of the IMF was insulting in her comments and called for grown ups to be in the room.
Well now it has gone pear shaped and the end cannot be predicted. The euro in its present form and its process of governance are now in deadly peril because events are now out of control, like a ship in a storm which loses its engine power. Nobody even knows whether the Greek economy can survive the week. Repayment of its loans are now a pipe dream unless the Euro group come up with something acceptable and do it fast. Merkel has been anxious to protect the money of German taxpayers. It is now on the cards she will have to tell them she has lost the lot.