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Something Has To Give

The Greek "conciliatory" tone that was the catalyst to send stocks soaring on Monday is long forgotten, and has been replaced by a Greece that is willing to say anything and everything either for soundbite purposes, for a market test, or just to gauge Europe's reaction. However, now that the adversaries are reverting back to their party lines, we finally have the most direct confrontation yet between the two camps.

First, from Bloomberg:

  • GREEK GOVT WON'T ACCEPT TROIKA REMAINING IN COUNTRY: OFFICIAL

And from Reuters:

  • EU'S SCHULZ SAYS GREEK GOV'T HAS NO CHOICE BUT TO KEEP ITS OBLIGATIONS TO EUROPEAN PARTNERS

Bloomberg also reports, citing a report of German govt document, saying PM Alexis Tsipras mustn’t roll back reforms shows Germany has started substantive negotiations, playing hardball, a Greek govt official says in e-mail today.

Document, reported by Reuters, essentially asks Greek govt to ditch commitment to roll back austerity, accept bailout agreement, agree on pension cuts, let Troika remain in country. The Greek response: these conditions can’t be accepted, are against mandate of Greek people, and a hurdle to Europe’s economic growth

What is clear is that someone will have to give. However, this development also assures that the Greek liquidity crisis in the coming weeks will almost surely get worse before the Greek government is either forced to admit defeat, tail between its legs and forced to explain to its voters why - at the end of the day - it is no different than its predecessor, or it will end up calling Europe's bluff and Europe will give in to Greek demands, which is highly unlikely as it means Italy, Spain and everyone else lines up to demand their "fair share" after Greece is done.