The European Central Bank has thrown Greece a lifeline to prevent Athens running out of money before crunch talks with European leaders.  The extension of emergency funding to the Greek finance sector by the eurozone’s central bankers lifted the euro and gave Greece’s prime minister, Alexis Tsipras, a stronger hand before meetings with senior officials at the leaders summit in Brussels.

Tsipras was scheduled to meet the German chancellor, Angela Merkel, in an attempt to hammer out a deal after he told her, following his election a little more than a fortnight ago, that he will lift draconian austerity measures, contravening the terms of the Greek bailout programme.  Greece has failed so far to persuade European leaders that it needs more generous loan financing to alleviate poverty and to promote growth. Talks earlier his week between eurozone finance ministers reached a deadlock after plans put forward by Athens for cheaper long-term loans were rejected...The ECB has come under pressure to allow Greece to access short-term lending facilities after it said the crisis-hit country no longer qualified for drawing on standard borrowing terms. ECB officials declined to comment, but two sources familiar with the matter told Reuters that the provision of emergency liquidity assistance (ELA) by the Greek central bank would be authorized by the ECB as a temporary expedient...  Merkel was scheduled to meet Tsipras privately on the sidelines of the one-day informal EU summit, which was meant to focus mainly on the Ukraine crisis and report back on negotiations in Minsk with the Russian president, Vladimir Putin.   Tsipras’s position appeared to weaken before the summit after figures showed a shortfall in Greek tax receipts and a steady flight of savings from the country’s largest commercial banks. Finance ministry data showed tax revenues were €3.49bn (£2.58bn) in January, well below the €4.54bn target set under Greece’s latest budget.  The grim data adds to concerns that Greece will run out of time and money before settling differences with European partners, who want Athens to stick with a debt plan that expires at the end of this month.  Greek households withheld tax payments desperately needed by the new Athens government after it rejected the last payment worth €7.2bn under the existing bailout scheme.   Greek banks have also been hit by a flight of capital to foreign-owned rivals in the runup to snap elections, which propelled Tsipras’s radical left party Syriza to the head of a coalition.

A possible Greek exit from the euro zone is not, obviously, a new concern. Three years ago, it looked like a realistic possibility until Berlin became convinced that the risks of contagion for other euro-zone countries was too great. But since then, the situation has changed dramatically. Both Greece and the euro zone are in better shape than they were in 2012 and would be better prepared to handle a Grexit.   Still, Greece's departure from the common currency union would almost certainly be more problematic than Schäuble has made it sound. Josef Ackermann, the former head of Deutsche Bank who led the debt haircut negotiations in 2012 on behalf of Greece's private creditors, continues to believe that a Greek exit "is still a very risky proposition. It would very probably lead to bank insolvencies and enormous social costs in Greece."

Euro-zone countries may have established a functioning bailout fund and made progress on a banking union scheme, but a Greek exit could attract speculators. "International investors would quickly begin asking which country might fall next," Ackermann believes. Markets could gain the impression that the currency union is a club that countries could join or leave as they liked.

Speculators could begin testing just how durable the rest of the euro zone really is and focus on countries like Portugal, Spain or Italy. "Their interest rates would increase drastically, which would thwart the policies of ECB head Mario Draghi, who would like to prevent exactly that," says Jochen Felsenheimer, CEO of the investment firm Xaia.

Greece's departure would also be just as expensive for the remaining euro-zone member states as a debt haircut because Athens would hardly be in a position to fulfill its financial obligations. Its currency would be drastically devalued and its economy would be threatened with collapse.

The ECB's tough stance has ratcheted up the pressure on Greece's new government, raising the question as to whether Athens will give in and seek to reach an agreement with its creditors or whether it will risk a damaging confrontation that could end in a Grexit.

Thus far, there has been little sign of panic on the stock markets, indicating that financial markets are, for the moment, betting on a peaceful solution.

And even a banker like Ackermann is able to see Tsipras in a positive light. "The new government, unburdened by the past as it is, could represent an opportunity to cease whitewashing the situation and to finally do away with old, incrusted structures," he says. "Nevertheless, initial measures under consideration would seem to be more designed to drive investors and companies out of the country or to discourage them from becoming involved there in the first place."... The ECB is only prepared to assist Greek banks so long as the country remains a part of a bailout program. Yet Greek banks are in vital need of liquidity from the ECB, partly because Greeks continue to withdraw money from their accounts out of concern about a banking system collapse. Indeed, the new government will only be able to prevent the looming run on Greek banks by rapidly reestablishing trust or via the introduction of controls on capital flows.

A Greek exit from the eurozone appears inevitable and Britain must insulate itself from the effects, former Chancellor Ken Clarke has warned.   The Conservative MP branded the new government in Athens “latter day Trotskyites”, and said there was no way their demands could be met. 

“I can’t see how you can sensibly avoid the Greeks defaulting and the Greeks having to leave the eurozone.   “It’s not anything to do with just the Germans, I can’t see why any other states should take a huge multi-billion pound hit again for the Greeks so they can hire more civil servants, raise their minimum wage (and) scrap all their labour market laws.”

He added: “I hope a very great deal of work is going on to minimise the impact on financial markets, on the United Kingdom - because it affects us just as much anybody else in the western world.” ...the euro is still the problem. it is not a functioning currency. basically, greek drachmas would be depreciated against the dmark to a level where greece could perform as either as a tourist hotspot or as an exporter of fine foods. the depreciation between nations is a banker's issue. greeks using drachmas in a greek economy won't see an impact. but use euros and then greece has to be up to the same economic standards as germany. thus, the greeks need to impoverish themselves more than have to. the current arrangement practically forces greece to relinquish its sovereignty. they can't even default and recover like iceland did.

...and now...the BS of this week ...

The eurozone's economy grew by a stronger-than-expected 0.3% in the last three months of 2014, helped by rapid growth in Germany.  Germany's economy - the largest in the eurozone - grew by 0.7% in the quarter, comfortably beating analysts' forecasts.  However, France's economy grew by just 0.1% in the same period.  Figures from European statistics agency Eurostat showed the eurozone's economy grew by 0.9% across 2014 as a whole. 

While Germany's economy shrank 0.1% in the third quarter of last year, strong domestic demand helped it to regain momentum in the fourth quarter, the Federal Statistical Office said. The economy grew by 1.6% during 2014.

"This is a thunderbolt," said UniCredit economist Andreas Rees.  "Some spoke of possible recession after the summer but instead Germany rebounded. The fact that the growth comes mainly from the domestic economy gives strong grounds for optimism," he said. The strong data helped to lift European stock markets, and the German Dax index climbed above the 11,000 mark for the first time.

Berenberg Bank economist Christian Schulz suggested cheaper oil, a weaker euro exchange rate and government bond buying by the European Central Bank (ECB) should all help the German economy and "more than offset the serious short-term risks such as Greece and Russia".

"While the first half of 2015 could still be a little more subdued due to these risks, we expect German growth to reach trend levels a bit above 2% in the summer 2015."

Meanwhile, France's anaemic fourth quarter growth meant the economy expanded by just 0.4% over 2014 as a whole.  "It's obviously still too weak, but the conditions are ripe to permit a cleaner start of activity in 2015," said French Finance Minister Michel Sapin.

There is no chance of truce or political solution on the very same day when Merkel and François made their trip to Kiev. On the same day, John Kerry visited Kiev and blame Russia for everything. At the same time, Joe Biden was visiting Brussel and talking to EU president (polish guy) about stopping Russia from redrawing the map.   Merkel and François want to reduce the risk of "total war". John Kerry and Joe Biden are obviously on the opposite direction. Each side has their audience in Europe. And Kiev is listening to nobody but American.  If I have to bet my money, I will short EU currency before spring comes.    The EU has a strasbourg court to punish its member states for HRA non-compliance. Most member states have a judiciary that is an independent pillar that can balance and challenge the executive. The EU itself has no such judiciary to challenge its own shady inner workings and corruptions.   For instance where is the means to force an inquiry into the action of the EU officials and Catharine Ashton which precipitated the fall of the Yanukovych administration. Where are the judicial structures to shine a light on chronic mismanagement and corruption at the EU level and hold its players to account?   Then we can also consider that Khordokovsky was jailed for tax evasion in Russia, most Putin opponents are bankrolled by super rich people who do not want to pay taxes. The jailing of khordokovsky was condemned by the west for unspecified failings in the legal process involved. Though there is much awareness of bank related frauds and mismanagement and of wide spread tax evasion and dodging in the EU and we can see no one held to account, whilst the majority of the population must suffer with austerity. Which region and jurisdiction has the most fair legal system and competent government may be the first one to cast their stone against Russia. It is a pity that we are up to our necks in the west dominated by establishment cronies that have mismanaged their way to the top and now offload the blame and distraction onto Russia and shield their lies behind a wall of mass fear and hysteria.   As for the criticism that the US have given of Russian "meddling" in Ukraine, one may not be in a glass house to throw stones. Exactly how many countries sanctioned the US when it sent in proxy armies into various republics and toppled and assassinated various governments and political leaders? How many governments opposed the US installed puppet states in Iran and elsewhere? How many governments opposed France and UK and issued sanctions when it sought to take the Suez?

If the standards used to indite and send Russia to hell were consistent and not hypocritical in form then people would not be able to see the corrupt state of our countries stolen from us by charlatans and liars.

The former head of the US central bank, Alan Greenspan, has predicted that Greece will have to leave the eurozone. He told the BBC he could not see who would be willing to put up more loans to bolster Greece's struggling economy.  Greece wants to re-negotiate its bailout, but Mr Greenspan said "I don't think it will be resolved without Greece leaving the eurozone".  Earlier, UK Chancellor George Osborne said a Greek exit would cause "deep ructions" for Britain.  Mr Greenspan, chairman of the Federal Reserve from 1987 to 2006, said: "I believe [Greece] will eventually leave. I don't think it helps them or the rest of the eurozone - it is just a matter of time before everyone recognises that parting is the best strategy.  The problem is that there there is no way that I can conceive of the euro of continuing, unless and until all of the members of eurozone become politically integrated - actually even just fiscally integrated won't do it."  Following the election in Greece of the anti-austerity Syriza party, Greek ministers have been touring European capitals trying to drum up support for a re-negotiation of its bailout terms.  However, there appears little willingness in Berlin, or at the European Central Bank, to alter the terms of its €240bn (£182bn) rescue by the European Union, ECB, and International Monetary Fund.  "The [bailout] conditions with Greece were generous, beyond all measure,'' German Finance Minister Wolfgang Schaeuble said last week. He saw not justification for relaxing them further. Euro break-up ... Mr Greenspan said: "All the cards are being held by members of the eurozone." He also warned that trying to hold the 19-nation euro bloc together "is putting strain on everybody". He said as well as Greece leaving the eurozone, there was a real risk of a "much bigger break-up" with other southern European countries forced out. Earlier on Sunday, Mr Osborne told the BBC's Andrew Marr Show that the UK was stepping up contingency planning to prepare for a possible Greek exit. "This stand-off between Greece and the eurozone is increasing the risks every day to the British economy," the chancellor said.  A Greek exit from the single currency would create instability in European financial markets and cause "real ructions" in Britain, too, he added.