Confirmation that a 3rd bailout will be very hard to agree:

The Guardian isn’t the only UK paper leading on Greece tomorrow -- the crisis is also splashed on the FT (again!) and The Scotsman, plus the International New York Times.

Our Europe editor, Ian Traynor, captures the historic nature of tonight’s events (I’ve added links to earlier points in the blog):

Greece is left alone insolvent and almost bankrupt today after five years of €240bn in European bailouts dried up and the country became the first in the European Union to default on its creditors. The country failed to make a €1.5bn payment to the International Monetary Fund on time and thrust the eurozone into an emergency.

The long-running debt debacle left Greece on the brink of financial collapse, worsening recent years of wrenching austerity, and represented a historic blow to a Europe committed to the irreversibility of its 16-year-old single currency.

The deadline on Greece’s bailout programmes, inaugurated in 2010, ended at midnight. The country was left without a financial lifeline for the first time since.

In a sudden referendum called on creditors’ bailout terms which formally no longer exist, Greeks are to vote on Sunday on what EU leaders say is a choice between quitting or staying in the euro.

Following a fortnight of non-stop brinkmanship at the highest level of EU leadership over how to resolve the impasse over Greece’s financial rescue, the radical leftwing government of the prime minister, Alexis Tsipras, tabled surprise new proposals on Tuesday, demanding that the bailout concluding yesterday be rolled over into a new two-year programme worth almost €30bn to Greece to be spent on servicing debt.

The demand included calls for a month of bridging finance to avoid the IMF default and for broader debt relief without mentioning Greek concessions in return for acceptance. It was promptly spurned by key creditors as too little too late.

“We won’t negotiate about anything new at all until a referendum, as planned, takes place,” said Chancellor Angela Merkel of Germany on Tuesday. “This evening the programme expires.”

The 19 finance ministers of the single currency bloc talked for merely an hour by teleconference on Tuesday evening and dismissed the last-minute brinkmanship from Tsipras.

But Jeroen Dijsselbloem, the Dutch finance minister who chairs the committee, said the ministers would confer again on Wednesday and that Athens was expected to present further proposals on how to resolve the critical situation.....

More, if your nerves can take it, here:

Analysts at SocGen agree that any new bailout would take time, which has implications for the ECB in terms of getting its own repayments due in July from Greece.

“Our view is that agreeing on a third bailout will be a lengthy process, which suggests that Greece will miss the ECB payment on 20 July.”

€6.7bn of Greek bonds owned by the ECB mature in July and August, according to this handy breakdown of Greek debts from Reuters.

Greece now joins Somalia, Sudan and Zimbabwe in arrears at the IMF tonight.

Now, attention shifts to Frankfurt and the European Central Bank.

The ECB, which has been providing drip-feed support to Greece’s ravaged banks, will discuss whether to increase, or potentially withdraw emergency funding at its scheduled governing council meeting on Wednesday.

Referring to Greece’s sudden request for a new deal on Tuesday, the economic research team at Daiwa Capital Markets drew a link to Wednesday’s ECB meeting and discussions about emergency liquidity assistance (ELA).

In a note published before, but in anticipation of, the missed IMF deadline, they wrote:

“Given the length and ultimate failure of the talks on the current programme, it would likely take several months to agree the detail of a new third programme, if indeed such a programme could be agreed at all. (The creditors would surely expect the current Greek government to be negotiating in bad faith.)

So, this latest ruse from Tsipras might be interpreted as an attempt to boost the ‘No’ vote in the coming weekend’s referendum by suggesting that it need not necessarily represent a vote for Grexit. It might also seek to give cover to the ECB to maintain ELA tomorrow if and when the IMF payment has been missed.”

Over in Brussels, the death of Greece’s second bailout programme has been confirmed too.

The failure to get an extension tonight - and the broader failure of the two sides to reach a deal since January (!) – means the €7.2bn of loans won’t be handed over. It also meatns that €10.9bn set aside to recapitalise Greece’s banks has vanished too.

Klaus Regling, CEO of the EFSF (the body which made the loans to Greece) argues that the bailout programme was delivering results:

Due to the economic policies adopted under the EFSF programme, the country was on a good path towards strong growth until the second half of 2014. The many sacrifices which the Greek people had to make were paying off.

Greece managed to cut its budget deficit and regain competitiveness. The country was able to access financial markets again and saw its high unemployment start declining.

According to the OECD and World Bank, Greece was a reform champion until 2014, with encouraging growth prospects. This trend can continue if the Greek population decides to return to the path of reform within the euro area.”

Greece shouldn’t hold out much hope of an extension to its €1.5bn bill -- even though the IMF said it would consider the request.

On top of the ‘is it, or is it not, a default’ debate, there is the question over whether this constitutes a credit event.

This matters, because a credit event (which isn’t simply what it says on the tin: someone not meeting a creditor demand) triggers payouts on credit default swaps - a kind of insurance contract against a country or company defaulting.

The credit ratings agencies have already said not paying the IMF, which relates to official money and not private bondholders, is not a credit event.

In any case it is up to the International Swaps and Derivatives Association (ISDA) to rule over what is and isn’t a credit event. More on ISDA and all that in this piece from 2012.

In the genteel world of the IMF, one falls into ‘arrears’ rather than plunging into ‘default’.

But, if it looks like a default, swims like a default, and quacks like a default, then it’s probably a default, my colleague Katie Allen explains.

As near-bankrupt hurtles towards its deadline to pay the International Monetary Fund on Tuesday, financial experts are grappling with the question of whether a failure to come up with the cash would constitute a sovereign default.

A default occurs when a country, or other borrower, fails to meet its obligation to repay a lender on time. But it is not, technically, the borrower who defaults: it is the lender who declares that the borrower is in default.

Rating agencies have declared that missing a payment to an official body like the IMF isn’t the same as defaulting on a loan to, say, a commercial bank.

But, as Gary Jenkins, chief credit strategist at LNG Capital, said:

“There has been lots of talk that this is not really a default. Indeed the rating agencies have stated that they would not consider a non-payment as a default. All I can say on this matter is that if you do not pay the absolute last lender of resort I think that’s a default.”

The IMF has issued a short statement, confirming that Gerry Rice told reporters a few minutes ago that:

“I confirm that the SDR 1.2 billion repayment (about EUR 1.5 billion) due by Greece to the IMF today has not been received. We have informed our Executive Board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared.

“I can also confirm that the IMF received a request today from the Greek authorities for an extension of Greece’s repayment obligation that fell due today, which will go to the IMF’s Executive Board in due course.”

Greece is not the first country to be in arrears to the IMF, and (spoiler alert) it certainly won’t be the last.

But it is the first ‘advanced economy’ to be in this state (Argentina simply threw the IMF out). And most other countries have only taken such a dramatic step because they were riven with conflict.

These are not normal times in the eurozone. This really is a moment.

Here’s how the news broke in Washington, via Reuters.

The International Monetary Fund on Tuesday confirmed Greece had not made its 1.5 billioneuro loan repayment to the Fund, making it the first advanced economy to ever be in arrears to the Fund.

The missed payment, the largest in the Fund’s history, is equivalent to a default, in that both imply a breach of Athens’ obligations.

IMF spokesman Gerry Rice said Greece can now only receive further IMF funding once the arrears are cleared.

Rice confirmed that Greece had asked for a last-minute repayment extension earlier on Tuesday, which the Fund’s board will consider “in due course.”

That’s it. It’s 6pm in Washington....so we’re about to find if Greece is the first developed country to default on an IMF loan......

And midnight in Brussels, meaning its second bailout programme is over.

Tick, tock, tick, tock....

A sneak preview of Wednesday’s front page:

And the story is that Greece has no chance of debts down to a sustainable level anytime soon, if it accepts the deal from its creditors.

Alberto Nardelli reports:

Greece would face an unsustainable level of debt by 2030 even if it signs up to the full package of tax and spending reforms demanded of it, according to unpublished documents compiled by its three main creditors.

The documents, drawn up by the so-called troika of lenders, support Greece’s argument that it needs substantial debt relief for a lasting economic recovery. They show that, even after 15 years of sustained strong growth, the country would face a level of debt that the International Monetary Fund deems unsustainable.

The documents show that the IMF’s baseline estimate – the most likely outcome – is that Greece’s debt would still be 118% of GDP in 2030, even if it signs up to the package of tax and spending reforms demanded. That is well above the 110% the IMF regards as sustainable given Greece’s debt profile, a level set in 2012. The country’s debt level is currently 175% and likely to go higher because of its recent slide back into recession.

The documents admit that under the baseline scenario “significant concessions” are necessary to improve Greece’s chances of ridding itself permanently of its debt financing woes.

Even under the best case scenario, which includes growth of 4% a year for the next five years, Greece’s debt levels will drop to only 124%, by 2022. The best case also anticipates €15bn (£10bn) in proceeds from privatisations, five times the estimate in the most likely scenario.

But under all the scenarios, which all assume a third bailout programme, looked at by the troika – the European commission, the European Central Bank and the IMF – Greece has no chance of meeting the target of reducing its debt to “well below 110% of GDP by 2022” set by the Eurogroup of finance ministers in November 2012.... (more here)

Jeroen Dijsselbloem has also told CNN that “Greece will be in default tomorrow morning to the IMF”, unless it makes that €1.6bn repayment within the hour....

Here’s a video clip of tonight’s demonstration, from Reuters:

And for balance.... here’s a reminder of yesterday’s “No campaign” rally.

Rumours of (attempted) horse-trading at the eurogroup conference call this evening:

Drat, I missed the hour mark. Greece now has just under two hours until its bailout expires.

That’s also the moment that it misses its payment to the IMF - joining a small gang who are currently in arrears:

There’s some dispute tonight about exactly what Dragasakis said on TV. So, for Greek readers, here’s a clip:

The rest of us can watch the comments section below for insight..... :)

Deputy Prime Minister Yannis Dragasakis also told ERT tonight that Greece had sent at letter to the eurogroup that “narrows the differences further”.

This suggests Athens may make new concessions in return for a new, 3rd bailout:

“We are making an additional effort. There are six points where this effort can be made. I don’t want to get into specifics. But it includes pensions and labour issues.”

And that plan can be discussed on Wednesday morning - a conference call has been called for 10.30am BST / 12.30pm Athens.

Greece’s Kathimerini newspaper is reporting tonight that Yanis Varoufakis, the finance minister, will present details of the measures Greece would implement in return for a third bailout.

Several readers are kindly pointing out that tonight’s protests can’t match the huge anti-bailout protests of 2011-2012 -- tonight’s merely looks like one of the biggest “pro-bailout” demos. Sorry for the confusion.

Evangelos Venizelos, the former Socialist Pasok leader and finance minister, told SKAI News earlier:

“If there is no deal, the ship of hope will head towards a desert. This is a prologue what we are living and experiencing this week.”

The rain does seem to have dampened the mood somewhat:

Despite the rain (and it’s now pouring) protestors in Athens are saying they will remain in Syntagma until midnight “so that politicians inside parliament can hear our resounding yes.”

The yes camp is also planning a a major demonstration on Thursday, organisers say.

Athens could get pretty heated, if supporters of the NO camp decide to rally on the same day.

After speaking at the rally, Athens mayor George Kaminis hotfooted it to Bloomberg TV, and called for Alexis Tsipras to resign so “fresh new leadership” can be put in place.

Greece has barely three hours to meet its €1.6bn repayment to the IMF, or fall ‘into arrears’.

Greece’s deputy PM, Yannis Dragasakis, has revealed that Athens sought a last-ditch delay....

Over in Athens SKAI news is reporting that at least 22,000 people have poured into Syntagma square to attend tonight’s “yes” rally, reports our correspondent Helena Smith.

The gathering is so large that protestors are now crushed and spilling out of ALL the streets that run into the Greek capital’s main square.

No pro-bailout demonstration, quite as big, has been seen in the five years that I have covered the crisis.

The passion of those attending was evident in the speech that an uncharacterically angry mayor of Athens, George Kaminis, gave at the start of the rally.

Thumping the lectern, Kaminis accused the leftist-led government of masterminding a referendum that now puts Greek voters in front of a false dilemma.

“The real dilemma is yes or no to Europe,” he railed.

This anecdote may show how tonight’s Yes demonstrators are wealthier than those who attended last night’s rally, for the No side.

Some pro-Eu protesters have argued with riot police who were deployed to prevent them reaching the parliament building in Athens:

Eurozone finance ministers are likely to speak again tomorrow:

Newsflash: Eurozone finance ministers have just finished their teleconference call.

And Finland’s representative, Alex Stubb, has tweeted a strong hint that Greece’s request for short bailout extension will not be granted (not a shock)

A third bailout programme, though, is possible.....

No doubts about it - it’s a big turnout of Yes voters tonight:

(if you’re just tuning in, there are video interviews with yes campaigners here)

Half of Fleet Street have decamped to Athens, adding a new terror to the Greek debt crisis.

(the other half are running rival Greek crisis liveblogs)

The FT’s Henry Foy reports that tonight’s Yes protest is pretty civilised:

Jess Brammar of BBC Newsnight has found signs of a backlash against Yanis Varoufakis:

Our own Jon Henley is ready to get wet as he speaks to the crowds again:

And Buzzfeed’s Jim Waterson has found that whistles are being sold to demonstrators:

Back in Brussels, EC president Jean-Claude Juncker fled a meeting with the press, because he has something more urgent, and Greek-related to attend to:

Our own Jon Henley has also been speaking to Yes supporters today.

Spyros Petropoulos, a commercial lawyer, said he resented being branded a “traitor, even a German-lover” by some anti-austerity voters.

“I’ve worked hard, I’ve worked well, I’ve contributed to what’s left of the economy and I’ve made sure people can be paid their salaries and their pensions,” he said.

“I’m proud of that, actually. But I see why people feel so strongly. Greece is suffering and Greece needs change, and there are a lot of people who think radical change is the only answer. You have to respect where they’re coming from.”

Ptropoulos said he believed firmly that Greece have to stay in Europe and in the eurozone.

This just so dangerous. This country needs stability, and that’s the reverse of what it’s getting. And going back to the drachma will be far, far harder than anyone thinks. We’ll be like a developing country.”

Most recent polls show a clear – though apparently shrinking – majority of Greeks are eager to stay in the euro, but are at the same time reluctant to accept the additional austerity demanded by their country’s creditors as the price for continued membership in the bloc.

A former history teacher, Vasilis Papakonstantinou, said leaving the euro would be “disastrous, just disastrous.”

“The knock-on effects would be simply terrible. I can understand an unemployed graduate might not see things that way – but I believe Greece would be entering a new era of hardship like we haven’t seen here for nearly a century.”

Another Yes voter tells Phoebe Greenwood that she is very fearful of the impact of a No results on Sunday.

As well as the economic impact of leaving the EU, she worries that “non-democratic processes” could take hold in Greece:

It’s only in the European Union that legal democratic processes are guaranteed.

Oh dear. Indiegogo, the crowdfunding web site, now appears to have crashed under the weight of people trying to donate to Greece tonight.

Sorry guys.

Wolfango Piccoli of Teneo Intelligence reckons the application for a third bailout today was just “domestic consumption” ahead of Sunday’s vote.

The most realistic scenario remains a Greek application for a third program at some point after the referendum on Sunday – supposing that the “YES” vote prevails.

The request for a €30bn loan means Tsipras is betting on a “win-win situation”, Wolf reckons:

If the counter offer were to be accepted by the creditors (unlikely), this would be positive given it entails debt relief; if the offer is rejected (highly likely), he can re-unify his cabinet, blaming Greece’s European partners and boosting the “NO” vote ahead of Sunday.

However...

the increasingly erratic activism in Athens over the last hours also reveals that some in the Greek government are deeply worried now that it becomes clear that the Greek bet on the lenders’ fear of contagion has not played out

A senior Syriza party official has just told Helena Smith that: “EVERYTHING NOW IS POSSIBLE.”

With extraordinary timing a storm is now moving through Athens with a sudden downpour of rain over Syntagma where thousands are gathering for tonight’s “yes” rally.

A crowd-sourcing fund set up to help Greece has pulling in donations at an impressive rate.

Started yesterday by London shoe seller Thom Feeney, it has already raised almost €230,000 from almost 15,000 people.

Officially, Feeney is aiming to raise €1.6n to cover tonight’s €1.6bn bill to the IMF. After all, as he puts it:

I was fed up of the Greek crisis going round in circles, while politicians are dithering, this is affecting real people. While all the posturing is going on, then it’s easy for the politicians to forget that. I just thought, sod it, I’ll have a crack.

In return for funding, you could receive a little something from Greece:

• Pledge €3 and get a postcard sent from Greece of Alex Tsipras.
  
• Pledge €6 and get a greek Feta and Olive salad
  
• 
  
• Pledge €10 and get a small bottle of Ouzo sent to you
  
• Pledge €25 and get a bottle of Greek wine
  

You can donate here.

There are reports from Athens that some firms have been pushing their staff to take part in tonight’s Yes rally.

Not sure how substantial they are, so I’ve alerted our people on the ground - in the meantime, regular reader equusmulusoctopus has kindly provided the details:

equusmulusoctopus

30 June 2015 3:49pm

The labour inspection of the Greek ministry of work and social insurance says that it has been receiving dozens of complaints since early this morning about employers trying to force their employees to participate in the "yes" demonstration this evening. The attempt appears to be well organised and the employees are told to gather at certain places where they will be given placards and whistles and be marched to Syntagma. Those who don't go are threatened by immediate dismissal.

The attempts to force employees to the demonstration are made at all sorts of companies, mostly big and medium-sized. The ministry mentions shipping companies, companies trading in foodstuffs, German companies trading electric goods and insurance companies explicitly, but adds that the complaints come "from everywhere imaginable".

Source: Efsyn

Yes supporters are gathering in the centre of Athens tonight for their rally, along with plenty of journalists who report that all is calm so far.

There’s no way of stopping Sunday’s referendum, it seems.

Not only has the Tsipras government now set up a web page dedicated to the plebiscite, the parliament’s fiery president Zoe Konstantopoulou has announced that constitutionally there is no way to revoke the popular vote.

“From the moment that it was decided, there is no constitutional procedure to cancel the referendum....”

said Konstantopoulou appealing for an end to the “cunning interventions, terror and propaganda” that, she said, had been employed to stop the ballot.

A sticker for rules, Konstantopoulou, who comes from Syriza’s far left, has repeatedly said that Greece’s quest to experience its right to democratic vote will not be thwarted.

As president of the 300-seat House she has often stated that no memorandum outlining austerity will be endorsed by parliament.

The Athens stock market remains closed today, for the second day running.

And that is a real problem for fund managers. They are meant to record a “Net Asset Value:” for their assets, but how on earth can they assess what their shares and bonds are worth?

Ryan McNelley, Managing Director in portfolio valuations at Duff & Phelps, says investors are in a real pickle:

We are receiving calls from liquid managers trying to figure out a value for their Greek investments.

Most simply do not have a pricing policy that accommodates this situation, as many fund strategies specifically exclude investment in illiquid securities. Absent observable market inputs for valuation, these newly illiquid investments will move from objective market valuations to a more subjective analysis.

The amount of subjectivity involved in working out a price for a Level 3 asset makes it essential that managers adopt an objective, independent view when arriving at that value.

Greece appears to be requesting a bailout of almost €30bn

Today’s letter explains that it is simply seeking more funding to cover debt that expires between 2015 and 2017. And that, according to this letter uploaded by the FT, is over €29bn.

In that case, Greece would have to run a balanced budget - as it is locked out of the financial markets.

As we covered earlier, Greece is also asking for its debt to be restructured (tricky) and a short extension of its current bailout (trickier still).

Also.... the request is being made under Articles 12 and 16 of the ESM Treaty. As Peter Spiegel of the FT points out:

Unfortunately for Tsipras, Article 16 also happens to mention that a new programme must include a new “MoU” – or memorandum of understanding, a phrase that is politically poisonous in Greece.

In the financial markets, there’s little hope of any major breakthroughs tonight, says Chris Weston of IG:

Greece is living in its final hours before passing into the unknown territory that lies beyond the bailouts of the past five years. It is a journey that even Jason and his Argonauts might balk at venturing on.

Europe’s stock markets ended the day deep in the red again, with the Greek crisis causing some alarms again (although not a full-blown crash).

There was a last-minute selloff (how appropriate!), driving the FTSE 100 down 99 points for the day:

Other members of Greece’s negotiating team have joined Yanis Varoufakis and Alexis Tsipras at the PM’s mansion to discuss the situation (in a blow for photographers, they didn’t all arrive on motorbikes)

The latest rumblings out of Brussels don’t sound too good for Greece....

But one thing’s clear, this story ain’t over yet.

The campaign for a Yes vote in Sunday’s referendum will begin holding demonstrations in central Athens, in around an hour’s time.

Germany isn’t alone in reacting warily to Greece’s request for a third bailout; Politico’s Ryan Heath hears that others countries are unimpressed.

Wall Street has gone back to - largely - ignoring the Greek crisis after yesterday’s dip.

In morning trading the Dow, S&P 500 and the Nasdaq are all up marginally. There has been speculation that the Federal Reserve may delay raising interest rates if the eurozone crisis escalates, which could account for today’s better mood.

At least someone’s happy...

As news of the third bailout request sent ripples through the eurozone, Greece’s finance minister left the finance ministry.

His destination -- the prime minister’s residence, Maximos Mansion, for a meeting.

First though, Yanis Varoufakis had to negotiate his way through the Athens traffic, and the gridlock of reporters outside his office.

Angela Merkel has told lawmakers in Germany that her government can’t consider any new proposal from Greece until Sunday’s referendum has taken place.

Is that slamming the door, or leaving it tantalisingly ajar?

Eurozone finance ministers cannot simply shred this request from Athens for a new bailout; they have to give it serious consideration.

As our Europe editor, Ian Traynor, points out, Brussels has been insisting for days that the door is open. They can’t just slam it in Alexis Tsipras’s face now, however exasperated they may be.

The Greek government’s statement leads little for conjecture, says Helena Smith. It is still not backing down from holding a referendum on Sunday.

“The Greek government today suggested a two-year agreement from the European Stability Mechanism for the full coverage of financial needs and at the same time restructuring of debt.

‘The Greek government until the end will seek a viable solution within the euro. This will be the message of NO to a bad agreement in Sunday’s referendum.”

Here’s the letter which Greece has sent to the Eurogroup, asking for a new two-year loan.

You can see that Athens is also asking, again, for its current bailout to be extended beyond tonight for “a short period of time” to avoid a technical default.

(such an extension now seems almost impossible, though, as it would need parliamentary approval)

Vince Scarpetta, of the Open Europe thinktank, agrees that Greece would probably face a similar list of ‘reforms’ if it took a third bailout.

But the debt relief question remains critical here.... could Tsipras get enough to persuade his MPs to back it, and persuade the country that he’d got the best deal possible?

Greece’s proposal for a new two-year bailout has just arrived in Brussels, according to Marco Zatterin of Italian newspaper La Stampa.

So now, we wait to discover exactly what Greece is suggesting.....

If Greece does get a third bailout, it would inevitably have to agree new economic reforms (or conditionality), as Credit Agricole’s Frederik Ducrozet points out:

And a third bailout would have to be agreed by all other eurozone governments; Germany’s Bundestag is in NO mood to give the current Greek government any concessions.

Many experts have been predicting for months that Greece would need a third bailout, if it couldn’t return to the financial markets this summer (as it clearly cannot).

But the constant wrangling over the second bailout has meant that no discussion could take place about a third deal.

The imminent death of Greece’s second bailout means the situation changes.

But it didn’t have to be done this way, as the FT’s Peter Spiegel points out:

Our Athens correspondent, Helena Smith, is hearing the deputy prime minister Yannis Dragasakis will announce news of the proposed third bailout tonight.

Insiders are saying that the Greek prime minister will fly to Brussels imminently.

How Tsipras will make the about turn - and save face - will be interesting. The issue of debt relief is key....

The eurozone crisis simply cannot break its addiction for last-minute developments and late-night meetings.

But this request for a third bailout, as second programme enters its final hours, is a classic....

Over in the Greek capital, a press briefing with foreign journalists has just been cancelled - so cabinet ministers can gather for an urgent meeting.

The Eurogroup president, Jeroen Dijsselbloem, has also just pulled out of a TV interview - citing “urgent obligation”.

So much urgency, and so little time left.....

Here’s Bloomberg on Schäuble’s comments:

German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that Greece would stay in the euro for the time being if Greek voters reject austerity in a referendum scheduled this week, according to three people present.

Schaeuble also said the European Central Bank would do what’s needed to protect the euro if Greeks voted against the bailout terms in the July 5 referendum, according to the people, all of whom participated in the closed-door meeting on Tuesday. They asked not to be identified, citing the private nature of the discussion.

The German Finance Ministry declined to comment.

German finance minister Wolfgang Schäuble seems to have gone against the trend, by saying Greece would not have to leave the euro if it voted no in Sunday’s referendum, according to Reuters.

Meanwhile one thing working against the No campaign in the Greek referendum is the broad media support for the country accepting the terms on offer from its creditors. John Hooper reports from Athens:

Television is overwhelmingly anti-Syriza. All the big, privately-owned channels – Alpha, ANT1, Mega, Star and Skai – lean towards accepting the lenders’ offer to secure Greece’s position in the euro zone.

The exception is state-owned ERT -- unsurprisingly since it was put back on the air by the current government after being shut down as an economy measure in 2013.

There was a pretty easy way this week of telling which way a Greek newspaper leaned in the debate – the alarm quotient in its coverage. “Pensions with tears” screamed the headline on Tuesday’s edition of centre-right Dimokratia over a story about how some beneficiaries had been unable to get their pensions after the imposition of capital controls on Sunday night. Ta Nea, EU-friendly and centre left, had “Payment suspensions throughout business: only cash for transactions.”

But leafing through Avgi, the only major daily close to Syriza, you might think nothing much out of the ordinary was happening in Greece this week. The only concession to a move that has made headlines around the world was a story on its front page headlined: “Side-effects of capital controls under control.”

With the conservative broadsheet, Kathimerini, centre-right Eleftheros Typos and centre-left Efimerida ton Syntakton also favouring a compromise, the rejectionists are heavily outgunned in the Greece’s lively and extensive press. Even Rizospastis, the official newspaper of the Communist Party of Greece (KKE), has an ambiguous stance.

KKE’s 15 MPs voted against the referendum, but now it is taking place, the party is recommending a ‘no’ vote. Rizospastis said it was urging voters to download a special ballot paper to “say no to both”.

Bookies William Hill have cut their odds on a No vote in the Greek referendum from 2/1 to 5/4, and lengthened the odds for a Yes vote from 4/11 to 4/7. ‘All the serious money so far has been for a ‘No’ vote’ said Hill’s spokesman Graham Sharpe.

Hills now offer 7/4 that Greece will leave the Eurozone during 2015, 2/5 that the country will stay in.

The effect of the Greek crisis on everyday lives is being shown again, as Fitch Ratings reports that mortgage arrears have risen during the protracted negotiations between the government and its creditors. Fitch says:

A deteriorating economy and almost total absence of bank credit may have combined with retail borrowers withholding loan repayments during the extended period of uncertainty.

Some mortgage borrowers may already be strategically entering early-stage arrears as the crisis damages the banking sector. They may also be choosing to make payments on other debts rather than mortgages as they are aware that banks are unlikely to enforce against their property collateral.

Greek mortgage performance appeared to be stabilising before the January elections. Loans with at least one monthly instalment overdue represented around 16% of total loan balance. But they climbed to 16.9% in February in the aftermath of the elections, and continued to rise even after a temporary bailout programme extension was secured at the end of that month, reaching 17.3% in May. We expect early-stage arrears to have increased further during June.

The full report is here:

Fitch: Greek Tensions Have Pushed Up Mortgage Arrears

It is still unclear whether there is anything new on the table.

Greece’s chief negotiator Euclid Tsakalotos seemed to be suggesting earlier that there was.

But Reuters is quoting German chancellor Angela Merkel saying that the last offer she is aware of from the Commission is the one from Friday of last week. And...

Meanwhile, as a change of pace, here is a piece of video of yesterday’s rally in Athens:

The Greek prime minister’s office has also announced that Tsipras has had telephone contact today with EU president Jean-Claude Juncker, the head of the European Central Bank, Mario Draghi and European parliament president Martin Schultz, reports Helena.

Despite that, hopes are indeed growing for a deal.

More from Greece’s chief negotiator Euclid Tsakalotos:

Meanwhile, more from the EU Commission spokesman:

This refers to Juncker’s comment yesterday about “not choosing suicide over death.”

Uh oh:

Greek television is now reporting that the country’s government is sending its own proposals to creditors:

And apparently EC president Juncker has no plans to visit Greece before the referendum.

Confirmation that contact between the two sides is underway, but so far no real movement, according to the EU commission spokesman. Reuters reports:

Greece has not yet made any movement in response to a last-minute bid by creditors to broker a deal to end a deadlock over the Greek debt crisis, the European Commission said on Tuesday.

Greek Prime Minister Alexis Tsipras called European Commission President Jean-Claude Juncker on Monday night and Juncker, after speaking to the chair of euro zone finance ministers Jeroen Dijsselbloem, explained what a last-minute deal could look like, Commission spokesman Margaritis Schinas told reporters.

“This would require a move from the Greek government which President Juncker asked (for) before midnight last night. As we speak, this move has not yet been received, registered, and time is now narrowing,” Schinas said.

Contacts were under way with the Greek government on Tuesday however, Schinas said.

And another piece of housekeeping.

Eurozone inflation slowed in June from 0.3% year on year to 0.2%, in line with economists’ forecasts.

Meanwhile eurozone unemployment came in at 11.1% in May, the same level as in April and - again - in line with expectations.

The European Commission seems to be showing little sign of bending:

• 30-Jun-2015 11:19:20 - EUROPEAN COMMISSION SAYS DOOR OPEN FOR GREEK DEAL, BUT TIME RUNNING OUT QUICKLY
• 30-Jun-2015 11:20:27 - EUROPEAN COMMISSION SAYS NO MOVE HAS BEEN RECEIVED FROM GREECE
• 30-Jun-2015 11:21:05 - EUROPEAN COMMISSION SAYS GREEK GOVERMENT WOULD NEED TO ACCEPT PUBLISHED PROPOSAL

(snaps from Reuters)

Danuta Huebner, chair of the committee on constitutional affairs at the European Parliament, has tweeted about the legality of Grexit:

But of course, nothing is ever as easy as both sides agreeing something in a straightforward way, as the FT’s Peter Spiegel indicates:

As a reminder, here’s our handy guide to the payments Greece is due to make:

Meanwhile the reports that Greek prime minister Alex Tsipras is considering the latest EU proposals - and has told Brussels as much - have lifted markets off their worst levels.

Germany’s Dax is now down just 0.3% while France’s Cac is 0.2% lower. Spain’s Ibex is now up 0.3%.

Amid all the planning for the referendum and the uncertainty of Greece’s current situation, finance minister Yanis Varoufakis has made time to read the views of economist Joseph Stiglitz published by the Guardian:

Any deal would reportedly be based on the offer made to Athens by EC president Jean-Claude Juncker last night:

Meanwhile our correspondent Helena Smith has just spoken with the country ‘s chief negotiator who insists that Greece has indeed not closed the doors on talks with its creditors:

Sunday’s referendum should be seen “as part” of the negotiations not something that cancels them out, Euclid Tsakalotos, the point man in talks between Athens and the international bodies keeping it afloat, told me this morning. “The referendum is part of the negotiation, it is not in lieu of it,” he said. “Europe shouldn’t be afraid.”

The comments echoed similar sentiment voiced by prime minister Alexis Tsipras last night who also said that a strong “no” vote would bolster Greece’s place at the negotiating table.

“We have not left the negotiating table. We are still at the negotiating table,” he told state-run TV, ERT.

Tsakalotos, who has been coordinating talks between the two sides since replacing outspoken finance minister Yanis Varoufakis, seemed optimistic that despite the hullabaloo over the referendum, negotiations would continue.

“Yes, of course they will,” he said, suggesting that the two sides had come very close to a deal last week. “The idea was that we were going to take it to parliament before Germany and other parliaments also voted on it. But then we went one step further and said we should put it to the Greek people as a whole, let democracy work, which would have meant extending the programme by a week or so,” he said of Greece’s request to prolong its financial lifeline. “I really can’t see why that couldn’t happen. Extending [the programme] by a few days would not have been the end of the world.”

Political commentators this morning said it was clear that Tsipras’ leftist-led government was still holding out for a better deal. “He is still playing some kind of poker, waiting for something better,” said Christos Memis, a veteran political analyst now in charge of the respected news portal, Protagon.gr. “That is very unlikely to happen now before the poll [on Sunday]. What has become clear is that lenders don’t trust Tsipras, they want him out and he is right when he says the differences are ideological, it is no longer just about him.”

Tsipras may be trapped in his referendum gambit but creditors had also made several mistakes, Memis said.

“Tactically speaking they were totally wrong not to accept the 47-page list of proposals the government made last week. Had they accepted it and Tsipras tried to implement it, six months later his government would have collapsed, he would have gone.”

Greeks are waiting with baited breath for the release of several opinion polls that will reflect just where the country stands, psephologically, on the “no,” “yes” vote. “Things will become much clearer and move a lot faster when the polls come out later today and tomorrow,” said Memis.

And could those talks in fact actually take place after all?

Bit of housekeeping, the UK GDP figures:

More from Rajoy, courtesy Reuters:

Mariano Rajoy said on Tuesday that if Greece were to leave the euro it could send the message that the common currency union is reversible and other countries could follow.

“What would happen if Greece came out of the euro? There would be a negative message that euro membership is reversible,” Rajoy said in a radio interview.

“People may think that if one country can leave the euro, others could do so in the future. I think that is the most serious problem that could arise (from a Greek exit).”

We’ve been gathering views from Greeks on their views on the current turmoil and whether they want to remain in the eurozone, and the results from 100 people are here:

The European Central Bank has admitted that Greece may end up leaving the euro.

In an interview with France’s Les Echo, ECB executive board member Benoit Coeure said a Grexit could happen, although it was not what the Bank or other EU institutions wanted. He said:

A Greek exit from the eurozone, so far a theoretical issue, can unfortunately not be excluded any more.

And according to Reuters, there may be no need for the drachma’s return after all:

Greece will not leave the euro zone, the country’s foreign minister Nikos Kotzias told China’s Ambassador to Greece Zou Xiaoli, according to a statement on China’s Foreign Ministry website.

“Greece will not leave the euro zone, and is willing to work with China to further develop bilateral relations and practical cooperation in all areas,” the Foreign Ministry statement cited Kotzias as saying.

Kotzias made the comments in a meeting with Zou on Monday.

Here’s the latest German unemployment figures:

Italian prime minister Matteo Renzi has been one of the closest allies of Greek prime minister Alexis Tsipras, but yesterday he added his voice to the chorus of leaders saying the referendum was a vote on Greece’s eurozone membership.

And now he has perhaps shown one reason why he is losing patience with the Greek government:

The market falls are accelerating as the uncertainty continues:

• The FTSE 100 is now down 0.84% at 6565
• Germany’s Dax has lost 0.94%
• France’s Cac is 1.06% lower
• Spain’s Ibex has fallen 0.65%

Here’s our latest update on the situation from Jennifer Rankin:

Greece is on course to miss a crucial debt repayment on Tuesday, amid an ongoing and bitter row with creditors about who is to blame for the breakdown in talks on its eurozone future.

After five years of painful austerity and four months of wrangling with its creditors, Greece’s international bailout will come to an end on Tuesday, as a €1.6bn (£1.13bn) payment to the International Monetary Fund falls due.

A Greek government official confirmed on Monday that Athens will not make the €1.6bn loan instalment, which is due to the IMF by 6pm Washington time (11pm BST, midnight in Brussels and 1am in Athens). The Washington-based fund has long said that late-payers do not get a grace period.

Failure to pay means Greece will become the first developed nation in history to default to the IMF and joins a club of countries in arrears that currently includes Sudan, Somalia and Zimbabwe.

Full story here:

When is a default not a default? Many have been saying that if Greece does not pay the €1.6bn due to the International Monetary Fund by tonight’s deadline that does not count. Gary Jenkins, chief credit strategist at LNG Capital, is not so sure:

Greece is due to pay the IMF today. It appears that they will not make the payment. There has been lots of talk that this is not really a default. Indeed the rating agencies have stated that they would not consider a non-payment as a default. All I can say on this matter is that if you do not pay the absolute last lender of resort I think that’s a default.

We’ll see how the markets take it when it happens (as seems inevitable). On the referendum, Jenkins says:

My take on it is that if the Greek people vote ‘No’ to the proposals that Mr Tsipras may feel vindicated and insist upon a new round of negotiation. However the probable damage done to the economy by recent events will make this a largely Pyrrhic victory. It is possible that the Institutions will restart negotiations but it is equally likely that they would indeed regard such a result as a step towards exit from the Eurozone. I’m leaning towards more negotiations but with little additional support from the ECB so more damage to the economy.

If the Greek people vote ‘Yes’ then it is difficult to see how Mr Tsipras can remain as Prime Minister. Under this scenario a new government is likely to be formed that will accept the Institutions terms which I guess may be eased somewhat to reflect the new economic conditions and to try and build a new relationship between the parties.

So whilst the impact upon the market on Day 1 has been less than feared that is not to say that we will not see further weakness over the coming days. The market may have been taking comfort from all of the opinion polls that have taken place in Greece over the last few years showing that the Greek people wanted to stay in the Eurozone at pretty much any cost. However all of these polls were taken before the call for a referendum. Certainly I would expect a ‘No’ vote to be met with significant volatility in peripheral government bonds amid the classic flight to quality.

This is clearly now a fast moving situation and it is still by unclear as to how it will play out. As an old credit analyst my instinct therefore is to be cautious and wait to see what the weekend brings. Next Monday could be a much worse day for peripheral debt than yesterday was if the ‘No’ vote wins.

Not that we thought they had but:

European markets edge lower in early trading

If Greece does default on its payment to the IMF it will be following an historical precedent. The Economist says:

The first recorded sovereign default was in the 4th century BC when ten Greek cities failed to honour loans from the temple of Delos.

Its full piece on defaults is here.

Away from Greece, a couple of other bits of economic news due today:

9.30 BST UK final revision of first quarter GDP

10.00 Eurozone unemployment

10.00 Eurozone consumer price index

15.00 US consumer confidence

As if the stakes were not high enough, Greece is threatening a court injunction against the EU institutions to block any exit from the eurozone, according to the Daily Telegraph:

“The Greek government will make use of all our legal rights,” said the finance minister, Yanis Varoufakis.

“We are taking advice and will certainly consider an injunction at the European Court of Justice. The EU treaties make no provision for euro exit and we refuse to accept it. Our membership is not negotiable,“ he told the Telegraph.