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A long 9 hour discussion in the group of euro-zone finance ministers ended without conclusion. There were worrying signs even before the meetup began, but the outcome so far is a total disaster. The Eurogroup will re-convene on Sunday at 9:00 GMT, just hours ahead of the leaders’ summit that is considered the real deadline to resolve the Greek crisis. Otherwise, there is a real danger that Greece will be forced out of the euro-zone, even if there are no provisions for that in the EU treaties.

What seemed like a done deal is going down to the wire, and there may be no happy end.

Update:  Greek crisis: Various disagreements within Europe – chances for deal look low

What Germany really wants

After Greece surrendered on austerity measures and approved them in parliament, hopes were high that they would be passed on in the Eurogroup. After all, Greece finally agreed to the demands that were presented as a take it or leave it offer from the institutions (aka the troika) just two weeks ago.

But after the Greek referendum, this is not enough. Or perhaps it was never going to be enough, with Germany always wanting a Grexit, as former Greek finance minister Yanis Varoufakis had said just on Friday.

This line of thought was seen with a German hard line:    a desire for a Grexit.  According to paper floated by Germany, Greece will temporarily leave the euro-zone but hand over 50 billion worth of state assets to the euro-zone. So, even less economic independence but without the euro. This is not exactly consistent with a Europe that is united together, perhaps united with chains.

Debt restructuring issue

In order to become independent again and  pay back a significant amount of its debt, some form of debt restructuring is needed.  Everybody knows that. Greece asked for it after the IMF already said it.

German finance minister Schaeuble wants to push Greece out while there are  provisions for forcing a country out of the monetary union do not exist. On the other hand, he does admit that Greece needs a debt cut in order to make its debt sustainable, but says it is illegal under current rules. Hypocrisy at its best.

Split Europe

Germany is supported by  Finland which is even more extreme. On the other hand, we have a  frustrated Italy that is angry with the humiliation of Greece, and a frustrated France. The second core country tried to assist Greece with its proposals, and this angered Germany.

Things do not look good. If this continues, EUR/USD is headed for a third consecutive Sunday gap, but this time it could be wider and perhaps will not close so fast.

Greek crisis – all the updates

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