Greek Prime Minister Alexis Tsipras has announced a referendum in response to the ultimatum submitted by the country's creditors, the so-called 'institutions', formerly the troika of the European Commission, the European Central Bank and the International Monetary Fund.
On Saturday Mr Tsipras will formally ask for a few days extension to the program Greece is in so that the Greek people can vote next Sunday, July 5, without undue pressure. (If Greece is not formally in the program, the ECB is not allowed to support Greek banks).
After the euphoria earlier in the week when it seemed that Greece and its creditors were quite close to a deal it is stunning to arrive at this point. Paul Krugman had something to say about it earlier this week.
Talk to IMF people and they will go on about the impossibility of dealing with Syriza, their annoyance at the grandstanding, and so on. But we’re not in high school here. And right now it’s the creditors, much more than the Greeks, who keep moving the goalposts. So what is happening? Is the goal to break Syriza? Is it to force Greece into a presumably disastrous default, to encourage the others?The Prime Minister has promised to fully support whatever the Greek people decide though it seems quite clear that he and his government will be pushing for 'NO'.
At this point it’s time to stop talking about “Graccident”; if Grexit happens it will be because the creditors, or at least the IMF, wanted it to happen.
I have updated with new information and my own thinking as they became available and may continue to do so for a while. It is getting very late here.