IN A NUTSHELL: MUST READ
Greeks Vote No: Unsure To What Exactly
Greece overwhelmingly voted “no” in a referendum yesterday that may or may not have been on Euro membership. The referendum was seen differently by almost everyone involved. The Germans (and most other Europeans) saw it as a referendum on the Euro. Greek PM Tsipras and his supporters repeatedly stated that a “no” vote was only a “negotiating tactic” that would allow him to get a better deal. The referendum got ugly in the final hours with Greek Finance Minister Varoufakis accusing the Germans of “terrorism” (presumably another “negotiating tactic”). So basically, the Greeks have voted “no” but they won’t be leaving the Euro anytime soon… a bit like your friend who says bye but keeps talking for another 20 minutes before hanging up. Varoufakis had just resigned from the finance ministry as of this morning because the PM judged his “absence” as being “helpful to reaching an agreement.” Go figure.
So what now?
This part is tricky. The ball is in Europe’s court, and we don’t expect Europe to be in the world’s best mood (who would be after being called a terrorist). French President Hollande and German Chancellor Merkel are meeting today to discuss what to do. The European Central Bank (ECB) will also meet to decide what support it will give Greek banks (they have been closed for a week). Tsipras says he will meet with parliamentary opposition to come up with a plan. All is not lost. It is still possible that everyone tones down the rhetoric and that they can agree on a new plan.
What should you be watching?
- Bank closures: Depending on the ECB meeting we will know if/ when banks will open.
- Deposit “haircuts”: Nice way of saying the government will take your money. Again, depending on the ECB meeting we will find out if banks will need to help themselves to Greek deposits.
- Eurozone meeting: For anything to happen, one of these has to be scheduled… they don’t have a great track record of getting stuff done.
- Salaries: The Greek government will have to pay them next week, and it doesn’t have much money on hand. Private companies have already started issuing private currencies to pay employees. The government might soon follow.
- July 20: That’s when the Greeks have to pay back the ECB. If they miss this deadline, the ECB will cut the cord with the Greek banks and, well… it gets ugly.