Michael Snyder
The Economic Collapse
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...
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...
Read more
The Economic Collapse
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.So would they actually let Greece go bankrupt?
"Europe either folds or Greece goes bankrupt; over to you Merkel."
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...
Read more
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