francine: man with a plan. alexis tsipras braces with an emergency meeting after presenting new measures that could decide his nation's future in the euro. bidding for bouygues telecom. patrick drahi is trying to acquire. apple is baking down on royalty payment. -- backing down on royalty payments. ♪ francine: welcome to "the pulse ." i am francine lacqua. the greek prime minister alexis

tsipras has presented a new plan. the proposal is the discussion at an emergency summit in brussels today that could go a long way in determining greece's future in europe. we have complete coverage. hans nichols joins us from brussels. guy johnson in athens. jeff black in frankfurt. what do we actually know about the new proposal by greece? hans: we know how it is being received. being received with caution optimism. we heard from giorgios katrougalos saying it a good basis for talks and similar from another person. in terms of the actual proposal we think it has a firm amount in terms of raising taxes. less clear in terms of cutting spending. -- we think it is a fair amount in terms of raising taxes. then you have to may be a

surcharge, a solidarity charge on individuals that make more than 30,000 euros per year. then all three bands of vat. the highest of value added tax would be at 23%. maybe something on kicking and retiring and having that delayed but that will not happen until next year. we do not know precisely what this will do to pensions. that is been a stumbling block. reports that they would cut tensions of gdp. creditors have been moving in the direction of one person sent. unclear where there will find the missing revenue. from yanis varoufakis in terms of rhetoric, we heard from yanis varoufakis yesterday and an interview and talked about the decision was up to angela merkel and the decisions up to her to make on monday. what would heard from the german foreign minister, he is speaking in luxembourg and you said the

decision is clearly and the greek's court. this kind of stand up i will put in the negative ledger. positive ledger there is a proposal and no one is dismissing it out right. francine: we know mr. tsipras is testing angela merkel's patience. we'll should be harder or softer than two weeks ago? hans: according to a person familiar with her thinking mr. tsipras maybe overthinking car willingness or how far she will bend to keep greece in the euro. another person familiar said a greek default would cost about one billion euros a year for germany. a massive sum. a question really and we heard from the commerzbank president it could be contained. the general view inside a germany that it what not to be an economic contingent not a catastrophe. maybe political catastrophe.

the view is inside a germany that germany could withstand a greek exit. francine: hans nichols in brussels. now to athens where guy johnson is there. what is the situation like on the ground? guy: the banks have opened this morning and a stockmarket rally underway. there seems to be a sense of optimism that a deal can be doesn't -- and done. emile took place actually delivered something that will be received positively. that seems to be the feeling at the moment. on one hand, quite a bit of optimism. on the other, a bank run, let's call it a bank wall or crawl. it is still ongoing. money is moving out of the greek bank. we think it could be one of the biggest days for deposit outflows. significant orders placed over the weekend and it would for our

process. significant orders over the weekend. so, greek stocks are up, bank stocks are higher but the greek people -- people seem to be nervous and they are worried a deal will not be done. the optimism is definitely there. will it be read flacco with the credit -- will it be reflected with the creditors and ecb? almost hour by ho day by day basis. ur, -- hour by hour, day by day basis. if the banks stay open, if they continue, then this trade is on the table. any signs it is faltering, the problem gets magnified quite quickly. you asked about the mood and it seems positive. back to you. francine: thank you.

as guy was saying, we have the eurogroup and leaders summit and this ecb conference call. let's bring in jeff black. the ecb is holding further discussion about the greek tanks . what do we know so far? jeff: we know the ecb is very concerned about the situation and pretty unprecedented. the 3rd ela discussion in a week. they are monitoring day by day. they were in a position they do not want to be they are paying the bill for the political uncertainty. as a are the only ones standing between greek banks -- as they are the only ones standing between greek banks and a collapse. something they are monitoring and they are hoping for positive outcome this evening. otherwise, some changes may have to be made. it may have to come from the

ecb. francine: jeff, why do german politicians want to stop the ela? some do. jeff: the issue with ela is it gives the greek government space to negotiate. it is, -- the ecb is standing between a collapse. without them there, tsipras would not have the luxury of the negotiating time he has had. from the german point of view it looks like people are not having to pay the consequences of their actions and the ecb is essentially getting them out of jail. that is why they do not like it. the ecb said it is the lesser evil and not to keep the banks from going into chaos and we will do that until that's a political agreement or breakdown.

francine: jeff, thank you. our reporter -- our reporting trio. hans nichols guy johnson, and jet black. equities are looking positive. athens market is up sharply. what is going on? seeing the markets are maybe too optimistic. if they believe in a deal or the markets can live through. a look at the euro-dollar, the athens stock exchange. it has seen some quite big falls and the past few months. this is euro-dollar and a little bit of 1.1335. strengthening a little bit overnight. that brings us to the twitter question. is tsipras miscalculatingmerkel' -- miscalculating merkel's

patience? we have a professor. he is peter. great having the program. get us a sense of how optimistic you are will have a deal and not today, by the end of the week? peter: quite optimistic. observing and the past few weeks a typical chicken game and they have to come to an end. i do not think it will end with a crash. both sides have come pretty close to gather. it is still controversial but i think they have come pretty close. my view now isn't the greek government is moving in the right direction. -- is the greek government is moving in the right direction and that is the element of the approach that can be found. i think were relatively close to

solution especially the pressure by the ecb. will not want to absolve much longer. and not to be able to extend a bail out indefinitely. therefore, pressure from the ecb on the greek side to blink and this chicken game. rces have told us that the ecb is likely to raise ela, the money that helps us the greek banks. do you think there's too much in the ecb? 11 a lot of german lawmakers opposed to this. peter bofinger: i think the ecb has a difficult role. ela is the lifeline for greek banks then it will be total chaos. and it could be a grexit. and i think they ecb is in a difficult situation and therefore this situation cannot be extended for much longer. therefore the ecb will exert pressure on the greek government

and i think this pressure will help. that they will give in and raise and make compromises as far as extensions are concerned. i think find a short-term solutions for tonight. i think what is really important is for the greek economy muddling through we have been observing since years now has come to an end and greek economy needs a medium-term program. to which the greek side is committed a european institution is committed. and program for the next four years so that in the people in the greek economy no how it will be going on -- will know how it will be going on at the future prospects are. and the continuation that we are up solving now.

francine: have you noticed a shift in merkel's stance lately? peter bofinger: i think she has already ended the first months of this year. and she knows how much is at stake for germany. a grexit would not be a problem for the german economy. that is true for the very short-term. the medium-term, a grexit definitely changes the nature. a fixed rate system like countries leave. as such an erosion would be very, very bad outcome for the german economy. our economy benefits and that's what ms. merkel sees and that is why she really tries to put everything to keep it together. francine: peter, are you concerned the markets are brushing this off? we had a note of this morning

said it would be a regional concern, in greece were to default or as the euro and a concern to greece. do you agree with that view? peter bofingerl: and the short-term, the global economy is completely different situation. since it -- since september 2008, a lehman moment but the markets are concerned for the short term. the problems of a grexit could materialize and the medium-term. another country in the area has major problems political parties come to power in people will remember what happened in greece and the situation much more unstable. the short-term risk are very limited but the medium-term is high especially for germany which they may benefit or. -- benefiter.

francine: do you think the eu has suffered every parable damage -- irreparable damage? peter bofinger: that is a difficult question. maybe europe grows with the crisis and a major changes will only serve the crisis and could be a positive element that new structures and now this report that reminds us that the picture has to be finalized. maybe that is the positive side of all of the crises that with experience in the last few years. first the bank we are getting some news peter bofinger. mr. mario draghi commenting in a statement saying "the eu should safeguard the irreversibility of the euro." should we do that at any cost?

peter bofinger: not that any cost. the costs right now would warrant to give up our damage the eu. first the bank peter bofinger thank you for joining us -- francine: peter bofinger thank you for joining us. now, more on the situation in greece where we are joined james. thank you for being with us. are you concerned the markets are brushing it off or is it business as usual? james: i am concerned. we can take the optimistic view. it should be a deal. we believe logic will prevail and there will be a deal. the reality is when we get people for arguing bitterly and have positions, there is room for disaster. the key casualty it may not to

be hard economics but the credibility of european central bank and the eu as a decision-making entity. people will turn around and say a run of the banking system and bank of japan to a degree and bank of england, the ecb has not done well with a easing strategy. francine: they have not at all. i always thought it was a political problem. draghi is in control. james bevan: mario draghi has done a great job. from that point of view it is correct that the political dimension has never been resolved. you have to have a fiscal offer that has the similar mandate to protect eurozone as we have. francine: that will not happen. james bevan: it has to happen.

if we say, we have to protect euro actual costs. what will he do when there are fiscal policies that are destructive? francine: citizens will never agree. political upheaval and what we see in greece. further away from a real union. james bevan: we are seeing fundamental thought lines. significantly exposed to the public land. you are right. people do not like it. within the u.k., england and scotland glaring at each other. the cusses we should maintain that union. -- the fact that we should maintain the union. if we were to have a single currency what ever expenditure

it wanted, threatening the u.k. francine: you talk about credibility. how do the markets measure credibility? what do you buy right now? james bevan: first, clear signs greece is beginning to inch toward a deal. the issue of greater taxation, sorting out pensions that is a news. on the plus side, six-month standoff that is essential. 18 billion euros of finance. the third issue is the electorate is the eventual right to down, right off of a large chunk of greek existing debt. that's a real sticking point. greece has been running a primary surplus. that been raising more current revenue that spending on current

expenditure. the challenge however it is the big debt that goes up. yes, there are problems but did the debt burden is the real sticking point. greece has recently discharge those debts. francine: what does it mean when you get to talk about restructuring? once we have agreement, it will not come straight away. james bevan: there will be an agreement in principle. with been kicking the can down the road for greece for years. i want to go back. 2010, we really [indiscernible] yes, we are. francine: i am struggling with the 20 but you. james bevan: an interesting problem. people say shouldn't the ecb be tougher? have to maintain stability of

the banking system. that's the ecb's job. francine: is angela merkel losing patience with alexis tsipras? what is your take? she will give away everything she has? james bevan: no, she clearly wants a deal. she needs it to be rational. she needs to have some gift to get some take. i do think they are inching toward a deal. francine: thank you so much. james bevan investment manager. a reminder web with special program on the greek dilemma right here on bloomberg tv. coming up. bouygues telecom, the $10 billion bid. the details after the break. ♪

francine: welcome back to "the pulse." our top corporate story is the bid for bouygues telecom. suffrage billionaire is set to left made an offer of over $10 billion to acquire france's third-largest telecom. manuel great devin the

program. is it likely to go through? -- great have you on the program. maneul: does a great deal. web scene offers and a lot -- we have seen a lot of offers. there's a lot of consolidation. whenever it moves from operator to regulators are really highly scrutinizing these deals. we might see, we may enter a long process of back-and-forth with the deals. this time, i think [indiscernible] francine: why make the move now? manuel baigorri: we heard about this deal even last year. it was rejected then in february we reported there was preparations going on. now is the time. there's a couple of things. one is the spectrum auction

taking place in france later this year. that is going to force companies to bid and spent quite a bit of money. they have decided to move before that so they can avoid competition and being very rampant. at the same time, based on our reporting, patrick drahi is worried about possible interest rate increases down the road as wolves volatility, and from issues like greece. president how do we know about that capacity -- francine: how do we know about more capacity? manuel baigorri: he has done deals in the u.s. which is very surprising. going to the u.s. and he has been looking at other assets. and now, he is moving in france. he has the capacity and the

ability to do deals. and then he has banks to provide financing. he takes a lot of that the deals. as far as a markets or financial markets remain cheap, he will continue to do more. francine: thank you for that. manuel baigorri our deals reported. coming up, live in athens to talk to the former greek minister. just reminder you can follow us on twitter. in terms of what the markets are doing, greek stocks are leaving european stocks higher. a look at the stock exchange. 7%. whether it was optimism about a deal or like j.p. morgan chase it does not make that much of a difference because if something were to happen with a greece or we do not have a deal the

leaders meeting on thursday and friday. it does not have worldwide implications. we are back in two. ♪

francine: welcome back to "the pulse." we are live from bloomberg's european headquarters in london. eu foreign ministers had extended actions against russia to keep the pressure on the kremlin to bring peace to ukraine. the restrictions bar financing for major russian banks, and prohibit the sale of weapons. afghan security forces say they've killed seven terrorists who targeted parliament buildings. the telegram says it carried out an attack, the most brazen yet since afghan forces took over security duties from the u.s. south korea has reported more deaths from merzs although

officials say there are signs the outbreak may be easing. the latest fatalities take the number 1027. mers at affected 1100 people and killed 400 worldwide. greece's prime minister is in brussels today after describing a solution to the country's debt crisis. euro area leaders will hold a summit with alexis tsipras from 6:00 p.m. u.k. time after finance ministers failed to reach an agreement for unlocking an aid deal for greece. anti-austerity demonstrations were held in athens last night. for more, let's head to athens where guy johnson is joined by a guest. guy: good morning, francine. i am joined by a former finance minister. nikos christodoulakis joins us now. nice to see you. when you look at the situation, greece has always managed to do

a deal at the 11th hour. are we at that point now? >> i hope so. it would be ridiculous to end negotiations with the european union and the ecb just because of a gap of around 2 billion euros. i think the greek economy is suffering quite a lot more. it has lost more than 2 billion euros because of all this uncertainty and strain of liquidity. i think to get a deal is going to be for the benefit of both. they are going to have an agreement that debts are going to be repaid and also for greece, because uncertainty might start to evaporate after all this huge consequences that

it had in the past two months. guy: are the greek people who are taking their money out of the banks acting rationally? >> there has been some expectation about the future but i think this phenomenon will dissipate. for that to happen and deposits to start returning to the banks i think the deal should not be just a short-term arrangement. it has to be a medium-term agreement on placing specific duties on what each side has to do. i think the greek side has to do fiscal reforms and market reforms in order to start investment activity. the european union, ecb, and the eurozone in general should take

some steps to indicate how debt can become viable and at the same time help the economy of greece to recover. the main problem we have right now is not just debt deficit and liquidity problems. this is the phenomenon of problems. the real, deep, structural problems. a great deal of productive capital has been destroyed over the last few years in greece. we need new investments both from the public sector and private sector, in order to reinvigorate the economy and create jobs. without jobs, the future is going to be bleak. it is going to be undeserving. guy: so we need to change the growth dynamic. that would help the debt story out. it would help the debt to gdp line.

do you think the government is right to insist on pushing for debt restructuring? is that a good course of action? do you think it is right that they've stuck to this idea of a redline on pensions? >> i think the real redline is -- [indiscernible] i think very little help has been given to them so far. i think nobody is right to have red lines in greece. the european union can take a lesson after they saw that the payments which they suggested and in many cases enforced upon greece failed. i think this lesson should never be forgotten. i think that greece does not need any more ideological lectures or moral lectures or punishment lectures or anything like that. i think greece needs some partners, some certainty, in

order to restart investment activity. guy: so the tsipras government is right when it talks about the idea that we don't need more austerity, that we need to change the narrative here. and mr. schaeuble, who says we need to stick to the current plan, is wrong? >> austerity, if you have it too much or not at all, may harm you. i think what we need is a good level of optimal fiscal -- [indiscernible] i think the step that the greek government has taken so far to meet fiscal targets is at levels of 4% or 5% per year and this should be taken into account. i think the government should -- [indiscernible]

and then at the same time try to negotiate more market reforms. the economy is not just the public sector. everybody in greece they talk exclusively about the public sector civil servants and all these type of things. at the same time, they neglect the private sector, which is the real engine of growth and employment creation. i think now is high time for the government and the european union to pay attention to all these people to create more jobs. unemployment is a big problem. under investment is a problem. i think that greek debt and deficit might have a much better opportunity to become more viable than they are now. guy: it has been a great leisure. thank you very much indeed. the view of a former greek

finance minister. plenty more coverage coming from athens. the stock market continues to surge but people are taking their money out of the banks. for now, back to you. francine: thank you. guy johnson bringing us that great interview from athens. for more, we cross live to frankfurt. bruno, give me a sense of, are you worried that the markets are not worried about what is happening in greece and the fact that we could have a chance to not get an agreement today? >> i think we have a good chance to have an agreement because of the developments in the greek situation last week. greek people have voted against their government. it is not a formal vote, but when they withdraw cash from their bank account, it is a kind of way of saying, we don't trust this government any longer.

maybe mr. tsipras remains popular in opinion votes, but last week, greek people showed that there was another greece not willing to be -- to have any trust in this government any longer. this makes domestic pressure on mr. tsipras and his government to reach a deal. i think the imf and the ecb have been very clear that it is the last chance for them to get a fair deal. francine: are you concerned that the markets are brushing over this? if you look at the impact, this may be contained, this is maybe just for greece. it is a problem of credibility in europe. it is a problem of how we deal with the next country that wants to negotiate. why are these markets on the upswing? >> it is uncertainty.

markets don't like uncertainty. i want to stress something very important. three years ago, the last time we considered seriously the possibility of a grexit, the difference, the gap between greece and the second weakest link in the eurozone was very small. today, the second weakest country is portugal. portugal has implemented reforms. so the gap between greece and the second weakest country in europe is very large. we could say maybe markets are too much upset with this question, because the risk of contagion exists, but i think it is very small. especially if we compare with the situation three years ago. a big change in the meantime is the fact that the ecb is now

prepared to halt any contagion, to make sure the risk of denomination is not there. basically, the ecb has unlimited firepower to purchase bonds from other countries. maybe markets underestimate this new feature in the greek crisis. francine: bruno, do we need debt restructuring? how painful would that be? greek debt restructuring. >> one way or another, i think that we don't know exactly what kind of deal will be signed. i think it is fair to say that today, greek debt is unsustainable. so i don't think that we will have a right off. i think the officials are

prepared to say to the greek government, we may in the future consider maybe lengthening of the majority and maybe increasing the grace period for greece to pay interest. i think this is a possibility. i don't know if you want to call it a restructuring but i think it is part of the deal. my understanding of the recent statements by the imf and europe, it is a possibility. francine: bruno, are you confident that we will get something today or this week or does it matter so much as long as it is before the 30th? >> sorry, i didn't get the question. francine: do you think we will get a deal today? a deal on greece. >> i think we will. we don't know exactly the amount

of cash which is withdrawn from banks. we had various press reports saying maybe it was 1.7 billion, maybe one billion this morning. it is clear that at this pace of cash withdrawal, the banking sector could collapse in the next few days. this is basically the main pressure on the greek government to sign the deal. i think the imf and the europe leaders are willing to have this deal now. now it is greece's move. with the new pressure on them as i said, the fact that greek people are voting against their government, the fact that they are withdrawing cash at a very high pace every day in the past

few days, the situation is not sustainable any longer. it is today or a collapse of the banking sector. probably with the collapse of the banking sector, the government will be forced to impose capital controls. the government will not survive this kind of measures. francine: all right, bruno thank you so much. bruno cavalier joining us from frankfurt. european equity markets are looking positive. if we look at the ftse, the cac 40, even the dax, one of the biggest gains in the last year or so. it has gained 3.3%. the cac also gaining 3%. in athens, this is baffling some investors, but overall, european stocks are rising after the greek prime minister has presented this new plan for reforms. athens gaining 8.10%.

one of the biggest gainers, in fact the biggest gainer. coming up, why apple has had a swift change of tune. ♪

francine: welcome back to "the pulse." one of the best selling music artists of all time, taylor swift, has helped the world's

most valuable company change course. apple will now pay out musicians for its streaming service, apple music. here with more is caroline hyde. she fought for what she thought was right and her argument won. caroline: it did. it helped steer that course. she said, you want our music you pay. she wasn't just trying to fight on her own behalf. she was saying, i can afford to pay myself, my crew, because i can go out and perform live. but she was trying to fight, as she says, for those who can't afford that. the people just releasing their first song. they are seeing their song do well on the charts, so why would they not be paid if people are listening to that? apple music is about to come live. you and i can try the streaming service. we then start paying. we pay about $10 per month in

the u.s. it would be the artist that wouldn't see any bang for their buck from the music for three months. taylor swift went out there and put out on tumblr her reasoning as to why she felt this was wrong. she said she found it shocking, disappointing, and unlike this historically progressive company. she is really helping the independent labels. the u.s., u.k., germany france, all have been speaking out against apple. it seems it takes 59 million twitter followers to change the course of things that happen. francine: so apple didn't want to do this because they were reinvesting the money. caroline: it would appear that way. suddenly, you have a u-turn. a complete u-turn coming from a senior the p for software and services.

having been brought on board by apple to start the streaming service, he says he heard from taylor swift, and that solidified what we needed to make a change. apple will always pay artists, he's saying. we will pay artists for streaming even during customers' free trial period. interestingly, the blog had been from taylor to apple. they are coming back with a little love for taylor swift as well. taylor swift herself, i'm elated and relieved. they listened. clearly, it is the power of social media. someone with 59 million followers can change the course of the world's most valuable company. francine: because they want to be seen as friendly. this goes back to why we buy their products. because you are apple, you want to make sure you are close to

your customers. caroline: exactly. that's what a lot of these big u.s. giants are trying to fight. people are tending to feel that these companies are taking liberties with our data, with the way they treat musicians. it does show that people power does potentially win out in the end. if you want to keep your brand, you have to listen to those that help. francine: thank you so much. after the leaks over the weekend, the european commission would have something to say. caroline hyde with the latest on apple and taylor swift. ♪

francine: welcome back to "the pulse." here are some of bloomberg's top headlines. "jurassic world" has maintained its record-setting performance, earning more than $100 million in its second weekend. the universal pictures film has now raked in more than $800 million around the world. "inside out" was the second highest earner over the weekend, taking in more than $90 million. billionaire patrick drahi has been more than $11 billion to acquire france's third-largest mobilephone company from bouygues. bouygues says no negotiations

are underway. the french economy minister says the timing isn't right for further consolidation. american golfer jordan spieth has become the youngest player to win the u.s. open since 1923. spieth gained victory. it is the second major title of the year for the 21-year-old who also won the masters in april. increasing tax rates have been described as a redline by the greek government in negotiations with creditors. how heavy is the tax burden? bloomberg spent an afternoon at a neighborhood restaurant in athens to find out. >> it was raised reduced, they will raise again.

for a small business, it is 70% the taxes and the social security money i have to give every month. it is insane. the taxes make it look expensive. everything else went up the last year. vegetables, meat milk, everything. about half of his salary i have to pay to the employee for social security. to give 30 euros a day, you must pay 45. and the employee doesn't have any social security. nothing. you can visit any greek hospital and see what happens in the last five years. people will think it is a report

from iraq. francine: all right. we will have plenty more from greece throughout the day. ♪

francine: the man with the plan. alexis tsipras presents new measures that could decide his nation's future. the banks in greece are open today, but will that be the case tomorrow? and, thousands have taken to the streets of athens, but is tsipras overplaying his hand? we have the latest on the fast developing story. welcome to a special program here on bloomberg television "the greek drama." i'm francine lacqua. alexis tsipras has presented a new plan in hopes to stave off a debt default.

the proposals will form the basis of a discussion in brussels today that could go a long way in determining the future in europe. we are just hearing from mr. juncker, saying they are not there on a greek pact. he's also saying, i don't know if we will have an agreement today. we have full coverage of the crucial day for greece. hans nichols joins us from brussels. guy johnson is on the ground in athens. paul gordon is in frankfurt. hans, what do we know about the greek proposal? hans: we know they sent a revised proposal late last night. my colleague is reporting that right now. they initially sent the wrong proposal. they have resent the right one. we have mr. tsipras addressing the media, mr. juncker saying we are not quite there yet. that may suck some of the oxygen out of the room. it has been an optimistic

morning across the board. you have seen equities rally. we still don't know what is in this final deal, but if juncker is saying we are not there, he in the past has been the most optimistic. we heard from jeroen dijsselbloem, the dutch minister. he said he hasn't seen enough to make any comments. i would take juncker's lukewarm comments as pretty negative given the fact that for the most part, he's been the one trying to frontload a deal. francine: i'm looking at the markets. i know they are maybe not a benchmark into reality but at the moment, they are not losing at all. the dax has gained 3%. the ftse is gaining 1.4%. juncker saying, i don't know if we will have an agreement today. how is it that we have an agreement today?

we still have time. hans: it looks like from what everyone is saying publicly, even mr. moscovici, he has been generally optimistic about the prospects and the path forward to a deal. he said today really is the final deadline. you need to have an agreement today. over the weekend, mr. dijsselbloem was saying it is close to impossible to get a deal that you would have money released at the end of the month. that money release could pay the imf. what dijsselbloem was saying indicated that greece wouldn't be able to pay the imf. he said they are heading in that direction of default. a lot of the optimism is the fact that greece has sent a new proposal and no one has been critical yet, except for mr. juncker. we haven't heard from the international monetary fund and we have not heard from the germans.

until we do, i'm going to check my own optimism. francine: what do we know about angela merkel's optimism, her thinking? hans: yeah. a great story from my colleagues in berlin, merkel, there's a notion that tsipras may be overestimating her desire to cut a deal. when you look at the numbers out there, according to the same official that is familiar with merkel's thinking, it would be one billion euros per year hit to the german financial system. that is not a massive hit. if the cost of greece leaving is only one billion euros, that is something merkel can abide politically and her public will be able to stomach as well. francine: all right, thank you so much. we have guy johnson in athens. we have paul gordon in frankfurt. this is almost a three-pronged attack. we have the eurogroup, we have leaders later today, and we have

the banks. guy johnson is over that. paul gordon is watching the ecb. paul: this is the third time now in less than a week, wednesday friday, and again here on monday, as we understand the ecb is now prepared to meet whenever needed to review greek liquidity. instead of giving the greeks seven days worth of money that is no longer happening. the ecb is providing liquidity. it is looking much more closely every day to say, should we get back and rethink? if a deal isn't made, we could find that ela gets frozen or cut. that makes life much more difficult for all concerned. francine: why are the german politicians calling for a stop to the ela? paul: there are a lot of german

politicians who've been opposed to the idea of giving this liquidity to greece because of multiple issues. one is, do they really need it? the ecb is a rule-based organization. the quality of greek collateral has degenerated. it is getting close to running out of collateral. you should be reducing ela. the other issue is moral hazard. if greece's banks continue to get this bailout cash the government can drag this out longer. it is not a political decision. this is a monetary policy decision. the ecb will pursue that angle. francine: thank you so much. let's get to guy johnson in athens. what is happening with the banks? if you look at stocks, they are up significantly. what is the mood like? guy: the greek bank stocks have bounced.

they are effectively penny stocks. you get big percentage moves that maybe make it look more dramatic. we are looking at a story of people taking their money out. significant orders were placed for withdrawals this morning. i went around the block a few times. if you are expecting queues at atms or outside banks that is not what you are seeing. hans talks about wanting to check the optimism. i think the ultimate test will be on the banks, whether the greek people continue to withdraw their money. they will be glued to their television trying to find out what is going to happen. every nuance, every twist, will be watched carefully by people here. at the moment, things seem fairly calm. there is a sense that a deal is going to be done. muscle memory would indicate that is the case. when we get to 11:59, somebody

pulls a rabbit out of a hat. has alexis tsipras done that now? has he done enough to make people think greece should remain? that is the story we are watching here. as the day progresses, we could see that optimism fading or continuing to grow. we don't know yet. we don't know the details of the proposal. until we find that out, maybe mr. juncker is right. maybe we should be more cautious. francine: thank you so much. meanwhile, european equities are powering ahead. this is a picture of the markets. european stocks rising for a third day. it is led by athens and by the greek banks. they've fallen sharply over the last couple of months. this is a picture for the athens stock exchange. let's check on the euro. we have a lot to get through. we have great guests waiting.

euro-dollar that brings us to today's twitter question. is it tsipras miscalculating merkel's patience? you can tweet me. you can also tweet the guys coming up. you can all tweet us. let's bring in now our guests sony coupler and mark gilbert. thank you so much for coming in. who do i believe? do i believe juncker, do i believe the markets, or do i believe angela merkel, who is tightlipped but a little more cautious on all this? >> i think we are going to get a deal. it may not happen today, but the details are not important. we've been having the same conversation month after month after month. i'm very optimistic. i'm close to offering to eat my hat. live on television.

i'm not doing that quite yet. francine: mark? mark: it is hard. angela merkel does not want to be presiding over the fracture of the euro. that is what tsipras is banking on. it is not about germany losing a billion euros a year. it is about the project itself being fatally wounded once it is proven it is not irreversible. it is a gamble. guess what. it is paying off. we are still having talks. they haven't cut the ropes yet. the ecb is continuing to fund what must be an insolvent banking system given the outflows reported. so far, tsipras is winning the brinksmanship. if anybody is going to blink, it looks like germany. francine: i know you both expect a deal and she doesn't want it to be her legacy that she

oversaw the breakup of the eurozone, but we understand from insiders that she is fed up. her patience is at the limit. sony, you say we will have it at the end of the week. how crucial is it that we get something today? sony: i think it is not all that crucial. delays in payment to the imf is not a default. traditionally, the imf has almost always given a 30-day grace period. the reason christine lagarde said that it may not happen is putting pressure. both sides are putting as much pressure as possible on each other. the ecb has gone from weekly to daily monitoring to give the sense of urgency. basically, you sense the end-game is nine. the game still looks like a compromise. despite what you said about mrs. merkel blinking, greece has moved far more from the initial

position of syriza compared to what the institutions had put on. greece has come three quarters of the way. even the eu is not so stupid as to break up the eurozone on the basis of one 100th of a percentage of eu gdp. that is the only difference that remains. we are not going to see the collapse of the eurozone over that piddling amount of money. francine: even the eu is not that stupid. is it? there is a point where maybe politicians say, let's go through with this. mark: the catharsis argument has legs. given the attitude of the german finance minister, i would bet that he's got an inkling that the euro would be stronger without greece. the problem is, the unintended consequences might kick in. the other point on the deal is, it has to be ratified by

national parliaments. someone has to write a check if it wants to avoid not paying on june 30. you are going to see a lot of financial engineering at that point. they would rather not miss that payment, even if technically they could. francine: sony, do you think the markets are guns blazing today because they think there will be a deal or even if there is no deal, there is the ecb? sony: there's a great fatigue in the markets. we've seen this game so many times. given that president obama has wavered, given that it has become clear that it is mrs. merkel's call and as we've discussed, mr. charla has been in favor of taking greece out since 2012, but it was never his call. it has become clear that this is a political decision. the more political this decision is, the less likely that the

market expects there to be a grexit. mark: why is the euro so concerned? jack lew sounded very concerned. is it all to do with euro-dollar? is he concerned the euro will collapse? is there a wider political issue? sony: i think it is the security dimension more than anything else. very senior people like nato have been concerned about the security implications of this. it is geostrategic more than direct financial or economic consequences. francine: sony kapoor and mark gilbert stay with us. they will be staying with me throughout the program. let's look at some of the other top stories on bloomberg. billionaire patrick drahi has bid more than $11 billion to acquire france's third-largest mobilephone company from bouygues. bouygues has called the offer unsolicited and says no negotiations are underway.

the french economy minister says the timing isn't right for consolidation. afghan security forces say they've killed seven terrorists who targeted the parliament building. the taliban says it carried out an attack, which is the most brazen yet since afghan forces took over security duties from the u.s. apple music is to change its plans and will now pay royalties to artists during its three-month free trial for users. it comes after taylor swift told her latest album from the service, saying that three months is a long time to go unpaid. she says she's elated and relieved by apple's decision. now let's go back to our top story. let's head straight back to athens. guy johnson is standing by with a guest. guy: thanks, fran. sony and mark talking about the role the u.s. played in all this. let's carry on that conversation now with the former deputy

finance minister of greece. they've just been discussing this in the studio, the role the u.s. may play in this. can we say that -- that mr. obama has played a part in this? >> he definitely has played a part. he has told ms. merkel that he would not like to see greece without a standing army or police force. his role has been in the greek eyes, constructive and positive. guy: it is almost as if european politics is pushing greece out, and geopolitics is pulling it back in again and the latter is the stronger force. >> if greece went out of the european system, it would cost billions to get it back. the difference that we have about 1.8 billion, is peanuts compared to what would happen if greece collapsed. i think europe is realizing that and is doing a lot to get greeks

back to the fold. guy: has mr. tsipras played this one beautifully? >> yes. played it very well. but we need to get moving. we need to start negotiating and get greece back on its feet. we need to get a place where taxes start getting lower, rather than continuously higher. he has played his cards well, but now it is time to finish it. guy: what do you mean by that? >> get an agreement tonight. an agreement that will be as conclusive as possible, rather than delaying future agreements and get the business of going back to business. guy: syriza is not a party of the free market. do you think he has it in him to make that happen? >> he doesn't, but he's getting there. he is a quick learner. so far, he resisted of using the private sector but i think he's

moving towards the center. if he does that quickly, it would be good for himself and his political career. guy: so he's going to move to the center? >> he's already starting doing that. syriza, some of them kicking and screaming, some of them willingly, will get there. guy: you said he could become the tony blair of greece. >> without iraq. he has the looks, the style, people like him. he could get there. but it is up to him. he has to start delivering faster than so far. guy: if we get a deal tonight do the greeks stopped taking their money out of the banks. >> today, there hasn't been that much motion in the banking system. we lost about 30 billion of deposits in the last five months. greek deposits were 240 billion in 2008. they are 125 billion today. it has been a disaster scenario.

i think we are getting out of it now. if we get an agreement, you could see greece exploding in a positive sense, moving upwards. the stock market is up 7% this morning. bond markets are much better. let's get on with it. guy: how much damage has been done? >> 12 billion losses in stock market value. in the real economy, 2% of gdp. we are talking about 5 billion there, 25 billion loss of deposit. realistic values must have gone down by 20 billion or 30 billion in the past five months. the country has been under tremendous pressure. greece has taken it on good spirit. their incomes are down 25% to 30% over the past five years. if you have lopnndoners losing 5%, they would be

revolting. here, we have lost 30% and we are taking it in stride. i'm frustrated, but hopeful that we will get an agreement. guy: do you think that calls from elsewhere that taxes need to go up is the right course of action? >> the wrong course of action. guy: but we need to have a tax system that works. >> the tax system works. people are paying tax out of their bank deposits, not their incomes. incomes are being reduced. what we need to do is restructure and reduce the public sector. that is the problem. the taxes, we can collect, even if everybody pays absolutely everything, still are not enough to pay for such a huge public sector. it is a very painful exercise. we have people that need to -- that do not have a job, and it is very difficult. we have lives lost because we

are in such a mess. we need to turn the page and get it over with. guy: thank you for your time. francine, back to you. the views of a former deputy finance minister. plenty more still to come from athens. francine: fascinating stuff. guy johnson there in athens. this is what we have coming up. what might happen if greece does default? we take a look back at previous examples of how countries coped. keep it right here. ♪

francine: welcome back to the special program, "the greek dilemma" live on bloomberg tv. if greece fails to reach a deal with its creditors by june 30 the specter of default could become a reality. that could lead it to become the first country to exit the eurozone. how bad could this be for greece? a look at past defaults might give us some view. nejra cehic joins us. if we look at past defaults what do they tell us? nejra: if we look at argentina's default, russia's, what it shows us is that those defaults really punish their currencies. this isn't necessarily a bad thing. what that can act as is almost a

valve that can relieve pressure on an economy. it is not painless, but it can be quick. when these currencies get devalued, it can make a country more competitive, and it can help it sort of bounceback from the brink. that is what we saw in argentina and russia. if you look at the charts growth rebounded sharply in both these countries after those defaults and after the currency got devalued. unemployment rates also showed a clear turn for the better about a year after the default. francine: does greece have reason to feel hopeful? nejra: this is an interesting one. it depends how you look at it. basically, if you look at greece back in 2012 when it had that debt restructuring, but also put it alongside the lehman brothers collapse, on both these occasions, the reaction in the dollar and the euro was a little

mixed. we didn't see a big hit on either of those currencies. the downside of this was that the upturn in gdp was slower especially if you look at greece and the unemployment rate as well did not come down as quickly even though the currency wasn't as badly affected in russia or argentina. what makes greece different is that it is part of a common currency. it is part of the eurozone. the real kicker is that it can't actually enjoyed the benefit of a devaluation of the currency unless it exits the euro first. francine: thank you so much, nejra cehic. let's go to sony and mark. we literally have 20 seconds. mark: the market has no memory. if they get a deal, they will be back in 18 months. francine: mark, thank you. we will come back in just a

couple seconds. ♪

live from london. i am francine lacqua. greece's prime minister in brussels today after offering eu leaders what he describes as a solution to the debt crisis. euro area leaders will hold a summit with alexis tsipras after finance ministers failed to reach an agreement. afghan security forces say they have killed seven terrorists who targeted the parliament. the taliban's has been carried out an attack, the most brazen since afghan forces took over

security duties at the beginning of this year. eu foreign leaders have extended sanctions against russia. the restrictions bar financing from russian banks, ban the ex parte -- exportation of equipment. despite concerns about greece they are firing on all cylinders. france's cac 40, the biggest increase since january. you get the gist. it is happening among european stock markets. every single one as rising. up 7%. only the biggest gain since june 11.

highs of five or six years ago are down by 99%. we get swings on a daily basis. alpha bank up 20%. on the stoxx 600, every single industry is rising. caroline has been telling you. the feel-good factor within the stock market is feeding through to the bond market. look at the yield on the 10 year and grace. the 10 year yield is down by 135 basis points. the biggest drop since february 3. in the last three days, the yield has dropped by 186 basis points. that is the most in three years.

germany, a safe haven, moving out of the german 10 year. narrowly up to .82%. interesting comments about a potential for this crisis spreading. j.p. morgan chase says greece being ejected from the era will not rock global markets. australia and new zealand say the fallout is unlikely to spread beyond an additional knee-jerk. the euro was arising earlier. down by .1% today. the euro has risen three weeks against the dollar. euro down a fraction. a day of greed if you ignore the euro. francine: big gains early this

morning. the dax gaining the most in three years. let's join in sonny and mark gilbert. you believe even if we see some kind of default, it does not mean there is a grexit. what are the chances of capital controls if we do not have an agreement by today? >> it might make sense. you get a deal in place. it takes a long time to unwind. given the size of the outflows they have seen, they lost a fifth of deposits this year. francine: which you could argue is not enough given the situation they could be in. mark: your average greek person looking at their bank account and saying i will empty it and. in the garden. -- bury it in the garden.

capital controls ensure they remain solvent. it might be the breathing space they need. francine: it has stigma attached, doesn't it? sonny: i strongly prefer, as does the greek government, that there should not be capital controls. primarily because of the signal effect. it takes a long time to unwind. it is not obvious that they are necessary as long as there is a mizen of a likelihood of a deal -- as long as there is optimism of likelihood of a deal and there's ela. the least onerous ones would be daily limits on deposits, not strictly capital controls. it is a spectrum of policy measures to help stem deposits like. the best way of doing that is to keep the optimism going that is going to be a deal soon.

i a gray the deputy finance, the ex-deputy finance minister earlier. as soon as a deal is done, we are going to see a significant amount of money coming into the economy. much of the tax revenue projection and everything else that looks optimistic now might be exceeded. yanis varoufakis is right on that. if there were to be a deal, the economy will pick up significantly. cyclically, that is what the eurozone is doing. francine: even if we get a deal how much damage has this done? mark: horrible. the idea is no longer as indebted as it would be. you earlier used the words moral hazard. there is a sense that a next country that gets into trouble

will not be as willing to sort its own problems out. sony: i do not quite agree. any government willing to put its people through the kind of torture that greek citizens have been through 25% collapse of gdp. a slight concession in a rescue package from the eu. does not deserve to be a government. even mild concessions will lead to moral hazard and misbehavior. the pain every country has gone through has been so great that would put their people through it voluntarily. - -- no government would put their people through it voluntarily. mark: greece has historically been a poorly governed state. spain is better. even portugal has better structure. sony: no state would voluntarily

make itself a failing state to get a better deal. francine: you would not want a failing state, full stop. they do not have much to export. thank you for being on the show. breaking news from the french president. we heard from mr. juncker saying he is not that optimistic. francois hollande saying he does not want a partial agreement. he says anacortes possible tonight on greece. -- an accord is possible tonight on greece. let's get over to guy johnson in athens with the leader of greece 's main opposition party. guy: good morning. seems to be optimism that we will see a deal done tonight. do you share that? >> yes. we have to conclude an agreement. the situation is urgent for

greece as for the eu. we are obliged to conclude a compromise. the greek government has no time to negotiate further. the threat of capital controls is huge. we have to explain it does not matter if you have 500 or 50,000 euros in the bank account if you cannot use it. guy: mr. tsipras has taken greece to the edge, some would say. do you think he has done a good job? do you think he has put the greek people for a-- through too much. >> he makes a lot of big

mistakes. the tsipras government has spent its own capital its own political capital through political negotiations that. have had no results. his first mistake, he appointed mr. varoufakis as the minister of finance. a person behaving like a rockstar. we need a politician to negotiate. we need a strong relationship. not playing games. not trying to see the consequences of game theory on the table. guy: we are at a point where we could see a deal being done. the sense is that if we were to see a deal done, the greek economy might start to bounce back. in some ways, has he achieved

more than your government did? >>your government had a deal, we saw a lot of damage to the greek economy. we ended up with the greek people saying we need something else. in some ways, maybe is -- [no audio] francine: that is a technical issue. trying to get more on new democracy. back to sony and mark. what do you make of this comments? mark: political fighting -- francine: you have seen it before. mark: if the concessions tsipras makes are seen as unpalatable by his own party, you could see the government fracture once a deal is in place. that is a non-negligible risk. sony: there are enough parties out there that will step in. i think it is unlikely. as long as it is not too

different from what we expect. it's unlikely that the government will fall. francine: thank you. if talks on greece fail, could we see capital controls similar to cyprus? next another view from cyprus. keep it right here on "the pulse." ♪

francine: welcome back to this

special program, "the greek dilemma," live on bloomberg. the possibility of capital controls. we are joined from cyprus by the director of the cyprus international institute of management. thank you for joining us. you have a lot of experience with capital controls. would you be an advocate of putting capital controls in greece? this would give breathing space to banks to find an agreement by the end of the week. >> yes. if there is no agreement tonight in brussels then i think that the only solution for greece is to put capital controls. to stem the exit of funds, of capital from greece.

in huge proportions in recent days. we in cyprus have lived through that. it's a tough measure but it;''s unavoidable. we have reached this stage. francine: you think it is unavoidable if we do not have an agreement by today. how much more difficult would it be to impose capital controls in greece than it was in cyprus. it is a bigger system. banks are bigger probably worse funded. it is not an island, that makes a difference. >> yes. it will be much more difficult for greece than cyprus. the greek economy is much more porous. there's a lot of informal economy in greece. i think, given the fact that they have so many islands and

greece is so big, it is a very open economy. i think it would be a lot more difficult to put the capital controls. the people who want to take their money out will find a way. capital controls will make it more difficult. there's a need for capital controls to limit the withdrawal of money from banks. francine: thank you for your time. director of the cyprus institute of management joining us on the phone from nicosia.

increasing tax rates have been described as a redline by the greek government in negotiations. how heavy is the tax burden on greece's struggling business owners? bloomberg spent an afternoon at a neighborhood restaurant in athens to find out. >> it was raised, it was reduced, they are going to raise it again. in a small business it's 70% taxes and social security money every month, which is insane. we pay an average of 5500 per month. electricity is expensive in greece tax makes it look expensive. everything else went up. vegetables, meat milk, anything.

about half of his salary i have to pay for social security. if you give 30 euros a day, you must pay 45. the employee does not have any social security. does not have any security, social or no social. you can see what happens the last five years. people are going to think you report from iraq. the politicians in greece and brussels do not understand the impact it is going to have on a business like mine if they increase taxes. this is a catastrophe as it is. i am scared because they do not understand what is happening. i am scared because they have no idea. francine: here is more of

bloomberg's top headlines. south korea has reported more deaths from mers. health officials say there are signs the outbreak may be easing. the two latest fatalities takes the total number two 27. mers has killed around 400 worldwide. poland's national air carrier has launched an investigation after a hack attack temporarily paralyzed the computer system at warsaw's airport yesterday. domestic and international flights or disrupted delaying nearly 1500 passengers. apple music is to change its plan and will now pay rallies to artists during its three month trial. after taylor swift pulled her latest album, saying that three months is a long time to go unpaid. she says she was relieved by apple's decision. the american golfer gordon spieth has become the youngest

player to win the u.s. open. spieth sealed victory when dustin johnson lost by a single shot. the second major title for the 21-year-old spieth, who won the masters in april. still to come, live in brussels to give you a preview of what to watch out for. what are the chances of an agreement on greece? we discuss that, next. ♪

francine: welcome back to this special program, "the greek dilemma," live on bloomberg tv. for a look at what we are watching, greece where joined by hans nichols in brussels. ecb looking into ela. we are in the eurogroup meeting. hans: in 40 minutes' time, finance ministers will go into a meeting. my secret for figuring out whether or not this will be a success -- start your stopwatch on how long finance talk before they go into the meeting. this is not entirely scientific. the longer they talk before the meeting, the less like there -- the less likely there is for a deal after the meeting. we will see what they say coming

in and coming out. we may have an early indication. the finance minister say we simply do not have enough detail for us to bless this -- then what happens later on in the evening is going to be about the day after. what do you do in july if greece does end up defaulting? my shorthand we could know by early afternoon whether or not greece is going to default. we will not know until this evening what might happen if there is going to be a default. if there is not going to be a default, we are in for a late-night. francine: if there is a default the leaders are also meeting thursday and friday. why wouldn't we call it a default today? does it mean we get capital controls? hans: does not mean it is automatically capital controls. if it is clear you are not going to have an agreement by june 30 the ecb is going to pull the rug out. once the ecb does that, it is

likely you will have capital flight. up to greece to decide whether they want capital controls. if you look at what mr. dijsselbloem has been saying it is clear that unless you have something concrete i the end of today you are not going to physically disburse cash to greece for them to make the payment to the imf june 30. that is the dijsselbloem view. francine: thank you so much stop hans nichols in brussels. you will hear from funds through the day. guy johnson is in athens. on greek watch and ferarri watc h. guy tweeted a picture of a ferrari in front of the greek parliament. "i am not sure i would park my furry in front of greek

parliament." seems bizarre, especially with demonstrations. ♪

announcer: this is bloomberg "surveillance." tom: europe in search of a good basis for progress. tsipras will meet with tusk, d raghi, lagard, finally dijsselbloem.

cigna says no to anthem. investor and difference this is bloomberg "surveillance," live from new york. i'm tom keene. with me, vonnie quinn and brendan greeley. what matters to brendan greeley? brendan: there's possibilities there may be debt restructuring. the first time we've heard from the eu side the fact that they may, in exchange for the new concessions tsipras seems willing to make, do what they have been asking for. tom: there were tests in athens. brendan: how much money is leaving athens banks. tom: $1.85 billion friday. t