Greece Debt Crisis

Greece Votes NO – Let The Chaos Begin…

Off the keyboard of Michael Snyder

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on The Economic Collapse on July 5, 2015

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

No - Public Domain

Discuss this article at the Economics Table inside the Diner

The result of the referendum in Greece is a great victory for freedom, but it is also threatens to unleash unprecedented economic chaos all across Europe.  With almost all of the votes counted, it is being reported that approximately 61 percent of Greeks have voted “no” and only about 39 percent of Greeks have voted “yes”.  This is a much larger margin of victory for the “no” side than almost everyone was anticipating, and it represents a stunning rejection of European austerity.  Massive celebrations have erupted on the streets of Athens and other major Greek cities, but the euphoria may not last long.  Greek Prime Minister Alexis Tsipras is promising that Greece will be able to stay in the euro, but that gives EU bureaucrats and the IMF a tremendous amount of power, because at this point the Greek government is flat broke.  Without more money from the EU and the IMF, the Greek government will not be able to pay its bills and virtually all Greek banks will inevitably collapse.  Meanwhile, the rest of Europe is about to experience a tremendous amount of pain as financial markets respond to the results of this referendum.  The euro is already plummeting, and most analysts expect European bond yields to soar and European stocks to drop substantially when trading opens on Monday morning.

Personally, I love the fact that the Greek people decided not to buckle under the pressure being imposed on them by the EU and the IMF.  But amidst all of the celebration, the cold, hard reality of the matter is that your options are extremely limited when you are out of money.

How is the Greek government going to pay its bills without any money?

How are the insolvent Greek banks going to operate without any money?

How is the Greek economy going to function without any money?

Now that the Greek people have overwhelmingly rejected the demands of the creditors, it will be very interesting to see what the EU and the IMF do.  Prior to the referendum, European leaders were insisting that a “no” vote would put an end to negotiations and would force Greece to leave the euro.

Now that the results are in, are they going to change their tune?  Because the ball is definitely in their court

“This does two things: it legitimises the stance of the Greek government and it leaves the ball in Europe’s court,” ANZ Bank analysts said in a note.

Europe either folds or Greece goes bankrupt; over to you Merkel.”

So would they actually let Greece go bankrupt?

It is going to be fascinating to watch what happens over the next few days.  Right now, Greek banks are on life support.  If the European Central Bank decides to pull the plug, they would essentially destroy the entire Greek banking system.  The only thing that can keep Greek banks alive and kicking is more intervention from the ECB.  The following comes from the New York Times

Now that Greek voters have said no to the economic demands of its international creditors, the fate of the country’s struggling banks is in the hands of the European Central Bank.

Greece’s banks, closed since last Monday because they are perilously low on cash, have been kept alive in recent weeks by emergency loans from the European Central Bank. On Monday, the central bank’s policy makers plan to convene to determine how much longer they are willing to prop up the Greek banks, now that the country has essentially said no to the unpopular dictates of the other eurozone countries.

Of much greater concern to the rest of the world is how financial markets are going to respond to all of this.  As I write this article, things already appear to be unraveling.  The following comes from CNBC

Germany’s Dax is indicated sharply lower from Friday’s close at around 4 percent, while the euro was down 2 percent against the yen as the news emerged. U.S. stocks are expected to open around 1 percent lower Monday, according to recent stock futures data.

What could be most important for those worried about contagion from the Greek crisis is how Portuguese, Spanish and Italian government bonds perform in Monday morning trade.

If these peripheral euro zone countries, often lumped in with Greece, suffer a sharp spike in yields, this could cause alarm about whether Greece leaving the currency might cause further contagion to other weaker euro zone economies.

This could potentially become a “trigger event” that unleashes a wave of financial panic all over Europe.  And once financial panic begins, it is very difficult to end.

If the EU and the IMF want to avoid a crisis, they could just give in to the new Greek government.  But that would be politically risky for certain high profile European leaders.  For instance, Angela Merkel would face a huge backlash back home if she conceded to the new Greek government now.  And other German leaders are already calling the referendum result a “disaster”

German politicians branded the result a ‘disaster’, with the country’s economy minister Sigmar Gabriel Sigmar accusing Tsipras of ‘tearing down the last bridges on which Greece and Europe could have moved towards a compromise’.

He added: ‘Tsipras and his government are leading the Greek people on a path of bitter abandonment and hopelessness.’

And the president of the European Parliament, a German, told a German radio station over the weekend that a “no” vote would almost certainly mean that the Greeks will be forced out of the euro

If after the referendum, the majority is a ‘no,’ they will have to introduce another currency because the euro will no longer be available for a means of payment,” Martin Schulz, European Parliament president, said on German radio.

That is pretty strong language, eh?

Here is yet another quote from Schulz

Without new money, salaries won’t be paid, the health system will stop functioning, the power network and public transport will break down, and they won’t be able to import vital goods because nobody can pay,” he said.

So at this point it is all up to the EU and the IMF, and in particular the focus will be on the Germans.

What will they decide to do?

Will they give in, or will they force the Greeks to leave the euro?

If the Greeks do transition from the euro to a new currency, it will be a process that takes months (if not longer).  You just can’t change ATMs, computer systems, cash registers, etc. overnight.  So a move to the drachma  would not be as simple as many are suggesting…

British firms like De La Rue, which prints 150 currencies worldwide, are believed to have been contacted with a view to providing such services.

It’s done in great secrecy to prevent currency speculation. The other big problem is the logistical challenges of switching a currency. All ATMs, computers and other machinery of commerce that bears the euro symbol will have to be adjusted. It could, and would, take months.

And if Greece does leave, it will be a massive shock for global financial markets.  Faith in the European project will be shattered, the euro will drop like a rock, bond yields all over the continent will rise to unsustainable levels and major banks all over Europe will fail.

I think that the following quote from Romano Prodi sums things up quite well

Romano Prodi, former chief of the European Commission and Italy’s ex-premier, said it is the EU’s own survival that is now at stake as the botched handling of the Greek crisis escalates into a catastrophe. “If the EU cannot resolve a small problem the size of Greece, what is the point of Europe?

Meanwhile, we should all keep in mind that a financial crisis has already erupted over in Asia as well.  Chinese stocks have lost 30 percent of their value in just the last three weeks.  In fact, the amount of “paper wealth” wiped out in China over the past three weeks is approximately equivalent to “10 times Greece’s gross domestic product”

A dizzying three-week plunge in Chinese equities has wiped out $2.36 trillion in market value — equivalent to about 10 times Greece’s gross domestic product last year.

The great financial collapse of 2015 is well underway, and it should be a very interesting week for global markets.

But no matter what happens this week, we all need to keep in mind that this is just the tip of the iceberg.

A “perfect storm” is on the way, and we all need to get prepared for it while we still can.

 

Knarf plays the Doomer Blues

https://image.freepik.com/free-icon/musical-notes-symbols_318-29778.jpg

Support the Diner

Search the Diner

Surveys & Podcasts

NEW SURVEY

Renewable Energy

VISIT AND FOLLOW US ON DINER SOUNDCLOUD

" As a daily reader of all of the doomsday blogs, e.g. the Diner, Nature Bats Last, Zerohedge, Scribbler, etc… I must say that I most look forward to your “off the microphone” rants. Your analysis, insights, and conclusions are always logical, well supported, and clearly articulated – a trifecta not frequently achieved."- Joe D

Archives

Global Diners

View Full Diner Stats

Global Population Stats

Enter a Country Name for full Population & Demographic Statistics

Lake Mead Watch

http://si.wsj.net/public/resources/images/NA-BX686_LakeMe_G_20130816175615.jpg

loading

Inside the Diner

The Dow, which everyone knows is in the Mother of All Bubbles, is off a percent and half. Pardon me if I'm not impressed.It is clear that the trade war is extremely stupid and a terrible policy. But those expecting immediate financial armageddon are g...

Once, this was a long time ago, perhaps twenty years, a Cuban Boxing team visited Seattle.  Four or five men.  How they got here I don't know.  Some international weirdness.  Local news ignored it totally.  I was in a university area bar/restaurant wh...

How fast can Trumpovetsky bring on  Collapse?REhttps://www.cnbc.com/2018/06/19/dow-futures-tumble-350-points-as-china-responds-to-latest-...

Look. This country IS already socialist (albeit a very flawed example). Nobody gets turned away at any county hospital in this country. Once your medical bills bankrupt you here, you're eligible for free care, although it might not be the best care.E...

Oh please. Your bullshit gets weaker by the day. You didn't make any points to refute. Anybody can get knifed in the back, anywhere. And I can get a work permit in most countries, because I know something and have extremely useful skills. But why woul...

Diner Twitter feed

Knarf’s Knewz

Quote from: Eddie on March 13, 2018, 05:21:10 PMAl [...]

Quote from: knarf on March 13, 2018, 03:33:01 PMAU [...]

Quote from: knarf on March 13, 2018, 03:25:04 PM [...]

A new study found that the Great Recession correla [...]

From 2003 to 2005, Gina Haspel was a senior offici [...]

Diner Newz Feeds

  • Surly
  • Agelbert
  • Knarf
  • Golden Oxen
  • Frostbite Falls

Quote from: Surly1 on June 17, 2018, 07:34:06 AMDo [...]

Doomstead Diner Daily 6/17 The Fathers' Day E [...]

Note that publication in this space of the DDD wil [...]

Quote from: Surly1 on June 14, 2018, 03:18:35 AMNo [...]

Note that publication in this space of the DDD wil [...]

Humanitarian Boat 🕊 Turned Away by Italy Arrives i [...]

STUDY WAR NO MORE 🕊A Concerned Citizens Study [...]

Quote from: Eddie on June 18, 2018, 10:37:13 AMQuo [...]

Quote from: Eddie on March 13, 2018, 05:21:10 PMAl [...]

Quote from: knarf on March 13, 2018, 03:33:01 PMAU [...]

Quote from: knarf on March 13, 2018, 03:25:04 PM [...]

A new study found that the Great Recession correla [...]

From 2003 to 2005, Gina Haspel was a senior offici [...]

The reason bad money drives out good is that gover [...]

Quote from: Eddie on June 13, 2018, 08:51:21 AMQuo [...]

Quote from: Golden Oxen on June 13, 2018, 08:31:45 [...]

Prices on the move again Dear Readers, Trust me, G [...]

https://www.huffingtonpost.com/entry/python-indone [...]

My friend Brian is up here from Spokane visiting w [...]

I guess turning them into Food Forests is out of t [...]

Quote from: RE on June 05, 2018, 12:14:17 AMBrian [...]

Quote from: Palloy2 on June 05, 2018, 01:12:55 AMT [...]

Alternate Perspectives

  • Two Ice Floes
  • Jumping Jack Flash
  • From Filmers to Farmers

It Takes a Village… By Cognitive Dissonance     Mrs. Cog and I live at the end of a dead end private [...]

Shadows by Cognitive Dissonance   Elevation changes the way the sun and atmosphere interact. In the [...]

Learning from America’s Forgotten Default   May 21, 2018 Sebastián Edwards   As originally posted on [...]

Propaganda, Human Consciousness, And The Future Of Civilization By Caitlin Johnstone As Originally P [...]

Stupid Is As Stupid Does By Cognitive Dissonance     The other night, Mrs. Cog and I streamed a movi [...]

Event Update For 2018-06-17http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2018-06-16http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2018-06-15http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2018-06-14http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2018-06-13http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

NYC plans to undertake the swindle of the civilisation by suing the companies that have enabled it t [...]

MbS, the personification of the age-old pre-revolutionary scenario in which an expiring regime attem [...]

You know things have taken a turn for the desperate when women have started to drive. Or rather, whe [...]

From Filmers to Farmers is re-launched on the astounding open source blogging platform Ghost! [...]

The blogging scene is admittedly atrocious. Is there really no option for a collapse blogger to turn [...]

Daily Doom Photo

man-watching-tv

Sustainability

  • Peak Surfer
  • SUN
  • Transition Voice

"Fossil fuels are reaching up to pull us into their grave." Approaching the vernal equinox [...]

Is it Hot Enough Yet?"Fudging the dates to make it seem like we will cross the 2 degree threshold in 2018, however, [...]

Waiting for Korowicz"Notice how even greater fragility is being designed into the system."The first named stor [...]

Crow Fritters"Try to imagine half the numbers of commercial passenger flights in 2025 as today, or half the [...]

The Russians Aren't Coming"What exactly is our strategy for the Malthusian predicament?"  In his autobiography, Holl [...]

The folks at Windward have been doing great work at living sustainably for many years now.  Part of [...]

 The Daily SUN☼ Building a Better Tomorrow by Sustaining Universal Needs April 3, 2017 Powering Down [...]

Off the keyboard of Bob Montgomery Follow us on Twitter @doomstead666 Friend us on Facebook Publishe [...]

Visit SUN on Facebook Here [...]

To fight climate change, you need to get the world off of fossil fuels. And to do that, you need to [...]

Americans are good on the "thoughts and prayers" thing. Also not so bad about digging in f [...]

In the echo-sphere of political punditry consensus forms rapidly, gels, and then, in short order…cal [...]

Discussions with figures from Noam Chomsky and Peter Senge to Thich Nhat Hanh and the Dalai Lama off [...]

Lefty Greenies have some laudable ideas. Why is it then that they don't bother to really build [...]

Top Commentariats

  • Our Finite World
  • Economic Undertow

NextEra Energy is the big Wind and Solar owner in the US. There was an article recently in the WSJ a [...]

Also, company depending on government subsidies to have any hope of success. But still not clear tha [...]

One unfortunate side effect of cheap energy is that it has created more free time for humans to do d [...]

You know the book 1984 (which was published in 1949 and was required reading when I was in school) i [...]

The price of oil is too high for India: https://www.bloombergquint.com/markets/2018/03/28/india-to-c [...]

FRM - Too true. I suspect that was what Steven Hawking understood when he warned us that it was capi [...]

Good point. You can bet that The Power That Be will make the military and demilitarized police the f [...]

Apparently Argentinian truck drivers are now striking as well. https://www.bloombergquint.com/busine [...]

Our big brains are actually quite good at making things simple. At least they used to be when we had [...]

RE Economics

Going Cashless

Off the keyboard of RE Follow us on Twitter @doomstead666...

Simplifying the Final Countdown

Off the keyboard of RE Follow us on Twitter @doomstead666...

Bond Market Collapse and the Banning of Cash

Off the microphone of RE Follow us on Twitter @doomstead666...

Do Central Bankers Recognize there is NO GROWTH?

Discuss this article @ the ECONOMICS TABLE inside the...

Singularity of the Dollar

Off the Keyboard of RE Follow us on Twitter @doomstead666...

Kurrency Kollapse: To Print or Not To Print?

Off the microphone of RE Follow us on Twitter @doomstead666...

SWISSIE CAPITULATION!

Off the microphone of RE Follow us on Twitter @doomstead666...

Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money

Off the keyboard of RE Follow us on Twitter @doomstead666...

Merry Doomy Christmas

Off the keyboard of RE Follow us on Twitter @doomstead666...

Peak Customers: The Final Liquidation Sale

Off the keyboard of RE Follow us on Twitter @doomstead666...

Collapse Fiction

Useful Links