On Sunday, some 61% of Greeks voted ′No′ on the ′#Greferendum′ as to whether or not Greece should accept the Eurozone conditions for a bailout. Rejecting further austerity measures, the vote was a success for Prime Minister Alexis Tsipras who had threatened to resign if the vote favored ′Yes′. The news was not as good for Greek Finance Minister, Yanis Varoufakis, who did resign as a result of the ′No′ vote winning. Now the question is, what is next? The banks are still closed in Greece and even their ATMs are expected to run out of cash either Monday or Tuesday. Panic buying of staples is underway as the European Union decides whether to give in a bit and ease additional austerity demands, or keep a hard line and cut off further aid? Will Greece stay in the EU? Or will they seek out help from Russia and or China?
The response from financial markets has not been good as every European exchange is in the negative. Here in America, the Dow Jones is opening over 100 points in the red. There is much talk about how Greek banks and the government plan to dip into the private, savings accounts of citizens for funding. No word yet on the green light being given to start printing drachmas to replace the Euro. But if the showdown between Greece and the EU gets uglier, then that may be the next step.
Last week Greece began this game of chicken by defaulting on their loan payment to the International Monetary Fund, or IMF. For several weeks, the European Central Bank, or ECB, has been pumping extra Euros into Greece to prevent chaos. Now the Greeks have voted in favor of chaos. Not only may Greece soon leave the EU, but other cash-strapped nations may follow suit. Spain has a national election coming up, Portugal and Italy are deep in red ink. France is not doing so well, either, and the UK economy is still sluggish. Germany is about the only EU member doing okay and that could easily change if a Greek contagion puts all of Europe in a recession. Should that happen, the US, China and other global markets will decline as well.
As the Greeks vote ′No′ on Sunday, the message they are sending is quite clear. They do not want to do anymore in terms of sacrifice to pay their own bills. Rejecting the European Union bailout plan has now set the marbles in motion. Greece may leave or be forced out of the Eurozone. But without help from somebody, like Russia or China, the Greeks might be looking at a civil war. As the banks run out of cash, which could happen as early as today, panic could take hold in the streets. Will cooler heads prevail? We shall have an answer very soon.