Is Greece going to set off the long feared next wave of the Great Recession?

Very hard for me to guess where all this is going as of June 26.

Very hard for me to guess where all this is going as of June 26.

ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras on Saturday called a referendum on July 5 whether the country should accept or reject a bailout agreement offered by creditors.

"These proposals, which clearly violate the European rules and the basic rights to work, equality and dignity show that the purpose of some of the partners and institutions was not a viable agreement for all parties, but possibly the humiliation of an entire people," Tsipras said in a televised address to the nation.

“What do you do when you take over a company that's not doing well? You regulate past debt, negotiating with creditors as best you can. However you tell your bankers 'if you lend me now, I will pay back everything'. You create credit for the future. You stall, you talk as much as possible about the past. And what do they do? The opposite. They say: ' All former debt of Greece will be paid back to the last penny. But for, the future, beware, if you lend money, you risk not getting it back'. So they do exactly the opposite of what the head of company would do when taking over a problematic firm.”

In the end, Luxembourg Finance Minister Pierre Gramegna said Greece gave the other eurozone ministers no choice but to vote against extending the bailout program for Greece, a move which sent Athens toward an uncertain financial future.

Gramegna said that "the Greek decision to so suddenly announce a referendum without warning its partners has not only surprised everyone but also shocked confidence." He spoke after two eurozone finance ministers' meetings, one with Greece and one without it.

He said displeasure increased when late Friday, "the Greek delegation left the table in the middle of negotiations when the prime minister decided on a referendum."

"Thirdly, and perhaps the most dramatic element, was the Greek announcement to advise its people to vote against the European package that was not even finalized."

Do you have a credible theory about his motives?

Until Saturday's debacle in Brussels, the ECB bought time to allow discussions to continue, pumping cash into the teetering Greek financial system.

To achieve that, the Frankfurt-based central bank maintained its emergency liquidity funding to Greek banks to prevent their collapse -- and in doing so withstood heated opposition from Germany.

So far ECB chief Mario Draghi has refused to cut emergency funding for Greek banks, but that decision is expected to be soon reversed.

The central bank's governing council is set to hold an emergency meeting on Sunday, and a decision to end the lifeline is increasingly expected.

One Greek official told me Athens is not even asking Russia and China for serious money at this stage, telling them it would be pointless. Syriza is already looking beyond, exploring who can help them rebuild after the inevitable default - whether inside EMU as they once hoped, or outside EMU as they now fear.
Russia is not rich enough to rescue Greece. It is in a deep crisis of its own - facing economic contraction of 3pc this year - and risks Soviet-era stagnation if oil prices settle near $60 a barrel. Most of its $360bn foreign reserves are needed to plug holes and to help Russian companies roll over hard-currency debt. Yet it is not broke either.

In the upper reaches of the Euro elite, where leaders are forever driving up to summit meetings in shiny German cars and looking grave and self-important for the cameras, where smooth diplomats know that the way to get business done is to do it discreetly with fellow officials, there is no surer sign that a colleague has gone stark raving mad than him announcing that he is going to hold a referendum on matters European.

It is bad enough that David Cameron has decided to put Britain’s future in the EU to the voters. But at least the UK Prime Minister has given warning several years in advance and has enlisted the support of the British business establishment to win his vote in 2017. By contrast, the Greek leader, Alexis Tsipras, announced on Friday that he wants to hold a referendum in Greece on the eurozone crisis on July 5.
In the eyes of the Euro elite, this momentous decision made Mr Tsipras the instant winner of the European madman of the year competition.