Worldwide markets facing fallout from Greece debt crisis
ChannelMix
2015-06-29
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Long lines formed at ATMs and bank branches across Greece Monday as the nation’s financial crisis worsened, limiting cash withdrawals and causing global markets to plunge.
Senior citizens looking to collect their monthly government benefits swarmed closed bank branches Monday in the hope of getting their checks, and lines formed at ATMs as bankers gradually began dispensing cash again following the imposition of strict controls on capital.
Greece has imposed restrictions on money withdrawals and banking transactions to keep its financial system from collapsing due to a run on the banks.
The government has imposed a stringent daily limit of 60 euros ($67) on cash withdrawals from ATMs this week. The banks and the country's stock market have been closed for the week after Prime Minister Alexis Tsipras' surprise call for a referendum next Sunday on creditor proposals for reforms Greece should take to gain access to blocked bailout funds.
Tsipras is advocating Greeks reject the creditor proposals, in the popular vote, which increasingly has the look of a vote on euro membership itself.
The referendum asks Greeks to vote on a simple question: "Should the proposal which was submitted by the European Commission, the European Central Bank and the International Monetary Fund at the Eurogroup of June 25, 2015, which consists of two parts that together consist of their comprehensive proposal be accepted?”
Without a deal to extend the bailout program expiring on June 30, Greece will lose access to the remaining 7.2 billion euros ($8.1 billion) of rescue loans, and is unlikely to be able to meet a 1.6 billion-euro debt repayment to the International Monetary Fund due the same day.
The uncertainty drove Greeks to banks and supermarkets Monday as fears of disruptions to gas and medicine supplies grew, Reuters reported.
"I came here at 4 a.m. because I have to get my pension," said 74-year-old Anastasios Gevelidis, one of about 100 retirees waiting outside the main branch of National Bank of Greece in the country's second largest city of Thessaloniki.
"I don't have a card, I don't know what's going on, we don't even have enough money to buy bread," Gevelidis said.
As global markets plunged following one of the most dramatic weekends in Greece's five-year financial saga, the country woke up to a changed financial landscape that many in the markets fear could be a prelude to a messy debt default and a damaging Greek exit from the euro.
Mounting concerns about Greece drove markets down Monday. U.S. stocks fell, while major indexes in Europe took much bigger losses.The Standard & Poor's 500 index was down 26 points, or 1.2 percent, to 2,076 as of 12:23 p.m. Eastern. The Dow Jones industrial average fell 220 points, also 1.2 percent, to 17,723, and the Nasdaq composite fell 72 points, or 1.4 percent, to 5,009.
"Whenever you see any kind of bank line there is in the back of investors' mind the thought: `What if it spreads? What if people panic?' " said Karyn Cavanaugh, senior market strategist at Voya Investment Management. "What's going on in Europe, of course it's going to roil markets in the short term." But for U.S. investor, she said, "the long-term impact is not that big of a deal."
Investors around the world are worried that should Greece leave the euro and say it can't pay its debts, which stand at more than 300 billion euros, the global economic recovery could be derailed and questions would grow over the long-term viability of the euro currency itself.
President Obama and French President Francois Hollande discussed the Greek debt
crisis by telephone, White House spokesman Josh Earnest told reporters Monday.
"The President reiterated to President Hollande something that we have indicated in the past which is that it's important for the parties sitting around the negotiating table to develop a package of reforms and financing that would allow Greece to return to growth and debt sustainability within the Eurozone," Earnest said.
Earnest also wanted to make it clear that the Greek crisis is not a direct threat to the U.S. economy. "The fact is the U.S. exposure to Greece is small in terms of our direct exposure and for that reason - and this was true even at the previous height of the Greek crisis back in 2010 and 2011 - that Greece does not pose a major direct risk to our banking system," Earnest said.
But for many elderly Greeks who don't have bank cards and make withdrawals in person at bank branches, Monday's reality is much more frightening. "Nobody knows anything. A bank employee came out at 8 a.m. and told us `you're not going to get any money,' but we're hearing that 70 branches will open," Gevelidis said.
Senior citizens looking to collect their monthly government benefits swarmed closed bank branches Monday in the hope of getting their checks, and lines formed at ATMs as bankers gradually began dispensing cash again following the imposition of strict controls on capital.
Greece has imposed restrictions on money withdrawals and banking transactions to keep its financial system from collapsing due to a run on the banks.
The government has imposed a stringent daily limit of 60 euros ($67) on cash withdrawals from ATMs this week. The banks and the country's stock market have been closed for the week after Prime Minister Alexis Tsipras' surprise call for a referendum next Sunday on creditor proposals for reforms Greece should take to gain access to blocked bailout funds.
Tsipras is advocating Greeks reject the creditor proposals, in the popular vote, which increasingly has the look of a vote on euro membership itself.
The referendum asks Greeks to vote on a simple question: "Should the proposal which was submitted by the European Commission, the European Central Bank and the International Monetary Fund at the Eurogroup of June 25, 2015, which consists of two parts that together consist of their comprehensive proposal be accepted?”
Without a deal to extend the bailout program expiring on June 30, Greece will lose access to the remaining 7.2 billion euros ($8.1 billion) of rescue loans, and is unlikely to be able to meet a 1.6 billion-euro debt repayment to the International Monetary Fund due the same day.
The uncertainty drove Greeks to banks and supermarkets Monday as fears of disruptions to gas and medicine supplies grew, Reuters reported.
"I came here at 4 a.m. because I have to get my pension," said 74-year-old Anastasios Gevelidis, one of about 100 retirees waiting outside the main branch of National Bank of Greece in the country's second largest city of Thessaloniki.
"I don't have a card, I don't know what's going on, we don't even have enough money to buy bread," Gevelidis said.
As global markets plunged following one of the most dramatic weekends in Greece's five-year financial saga, the country woke up to a changed financial landscape that many in the markets fear could be a prelude to a messy debt default and a damaging Greek exit from the euro.
Mounting concerns about Greece drove markets down Monday. U.S. stocks fell, while major indexes in Europe took much bigger losses.The Standard & Poor's 500 index was down 26 points, or 1.2 percent, to 2,076 as of 12:23 p.m. Eastern. The Dow Jones industrial average fell 220 points, also 1.2 percent, to 17,723, and the Nasdaq composite fell 72 points, or 1.4 percent, to 5,009.
"Whenever you see any kind of bank line there is in the back of investors' mind the thought: `What if it spreads? What if people panic?' " said Karyn Cavanaugh, senior market strategist at Voya Investment Management. "What's going on in Europe, of course it's going to roil markets in the short term." But for U.S. investor, she said, "the long-term impact is not that big of a deal."
Investors around the world are worried that should Greece leave the euro and say it can't pay its debts, which stand at more than 300 billion euros, the global economic recovery could be derailed and questions would grow over the long-term viability of the euro currency itself.
President Obama and French President Francois Hollande discussed the Greek debt
crisis by telephone, White House spokesman Josh Earnest told reporters Monday.
"The President reiterated to President Hollande something that we have indicated in the past which is that it's important for the parties sitting around the negotiating table to develop a package of reforms and financing that would allow Greece to return to growth and debt sustainability within the Eurozone," Earnest said.
Earnest also wanted to make it clear that the Greek crisis is not a direct threat to the U.S. economy. "The fact is the U.S. exposure to Greece is small in terms of our direct exposure and for that reason - and this was true even at the previous height of the Greek crisis back in 2010 and 2011 - that Greece does not pose a major direct risk to our banking system," Earnest said.
But for many elderly Greeks who don't have bank cards and make withdrawals in person at bank branches, Monday's reality is much more frightening. "Nobody knows anything. A bank employee came out at 8 a.m. and told us `you're not going to get any money,' but we're hearing that 70 branches will open," Gevelidis said.
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