Time is running out for Greece

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The Greek endgame is nigh. Bloomberg reports that Greek banks are running short of collateral to keep afloat. Desperate to stay in business, they are using the collateral parked at the Greek central bank. In other words, they are tapping more and more emergency liquidity every week. And as Bloomberg points, they could only do that for another three weeks.

Greece is cornered, The IMF and ECB refuse to relent. Greek Prime Minister Alexis Tsipras is running out of options.

The newspaper Ekathimerini reported on Sunday that he had sent a letter to IMF managing director Christine Lagarde on May 8 telling her that Greece would not be able to make its May 12 IMF payment. He had also sent the letter to the EU’s Jean-Claude Juncker and the Mario Draghi of the ECB.,

Peter Spiegel at the Financial Times says IMF board members are raising the possibility of presenting a “take it or leave it proposal” to Greece. The IMF and ECB have form on this strategy. It was similar to what happened when the Cypriot government was presented with a severe bailout plan and told it must agree or lose ECB support for its failing banking sector.

Wolfgang Schäuble, Germany’s finance minister, is pushing for a Greek referendum which would see Mr Tsipras taking the bailout ultimatum to a nationwide vote for approval.

With the two sides at loggerheads on the key issues, all signs are pointing to a Greek default.

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