36 hours to make or break. Greece will either step up and dance to the tune of the Troika or she will default and potentially exit the EU/EUR. That is what we face. Stocks have been absolutely battered at the open down between 4-5% depending on which country you look at. The world has not faced such a situation since the great depression as uncertainty surrounding Greece continues to plague the markets. The USD closed around EUR 1.1175 on Friday and immediately gapped below 1.10 at the open in NZ. It has since recovered to 1.1077 as I write this. With the local banks and stock market closed for the week ahead of Sunday’s referendum and capital controls put in place, the Greek people have now been restricted to a partly €60 withdrawal in cash per day. This in itself will bring chaos to debtors and creditors who are waiting for payments this week so much so local businesses are now asking for payments in cash only and rejecting credit card payments. What an absolute shamble we are witnessing. 2015 and Greece is on her knees. How this has been allowed to happen is beyond me and the Greek people must bear the blame for what they are going through. After all it is them that voted in the Syriza party so they must now accept the repercussions of their moment of madness voting for Syriza. What they were thinking is just too difficult to answer. Did they really think they could bully the ECB and IMF into accepting THEIR terms? Absolutely not. Spain, Cyprus, Ireland, France, Germany et al all accepted that austerity was a must and change had to happen. They have all since turned the corner and are on the road to recovery, yet the Greeks stood firm and rejected austerity. Raising taxes on the rich will not solve the problems. France tried it and failed and went back to normality. Surely that in itself if clear enough for the Greeks to see. They need to reform their pensions and labour laws in addition to raising taxes (VAT included) and stopping the bribery and corruption that is so prevalent amongst the wealthy. I am afraid to say the Greek economy is coming to a complete standstill this week with the impact on economic activity so severe it will add years to put right.
Should the referendum produce a “no” vote to austerity and bailout Grexit will simply be too hard to avoid as the consequences unfold. Generations will be affected, financial ruin will ensue and g-d only knows how they will come back from this financial ruin. The Greeks have said they want to stay in the eurozone. Those that voted for Syriza MUST now see what a mistake they made with Tsipras and vote him and his pack out and into oblivion. And with everything going on PM Tsipras used words like blackmail and injustice urging his voters to vote NO to the creditors. After all it is their (ECB/IMF) fault Greece are in trouble. Amazing!!!!
The next 5 days will be some of the most crucial hours we are ever likely to witness. What will matter this week is the hardship the Greek people will have to endure. Either they will have had enough and decide to vote YES, or they will be so mad at how they are being treated they will vote NO. What is certain, is a no vote will lead the Greeks into a black hole so deep the earth’s crust will not be enough to stop it. I like so many others have watched in bewilderment as the Greeks have turned their backs on the ECB and IMF and in turn opened the door to potential financial ruin. With the referendum on Sunday, it looks pretty likely that the Greeks will default on their €1.6bn repayment due tomorrow. The current bailout programme also expires tomorrow and the one month extention request put forward by the Greek FM was rejected. And so the coming week will be fraught with rumours, tongue lashing and severe market volatility. I STILL think a deal will be reached and that the Greek people will see sense and vote YES which should hopefully bring in a new government as the world steps back from the financial atom bomb.
Let’s all pray our friends and family in Greece see the light and accept the game is up and change has to be accepted. Let’s pray we do not see Lehman Brothers (round 2) and a return to the hardships we all went through and witnessed in June 2007. One thing is certain, the FED is watching these events unfold with much interest given they are “supposed” to raise US rates in September. That date could be delayed if Grexit happens. One thing is for certain, the events that will unfold over the coming week will be like NOTHING we have ever seen before. The only definitive thing we know is financial markets are going to be ripped here there and everywhere. GOOD LUCK and G-d Speed
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