As Greece enters a second week of severe financial restrictions. Banks are shuttered this morning and in danger of collapse within days, ATMs only allow small withdrawals.
Greek citizens voted this weekend against additional austerity measures that would have enabled additional support from the European Union to assist this bankrupt nation in getting back on its feet.
The margin of defeat for the austerity measures was wider than expected 61% against vs 39% for them. Greece now faces uncertainty as to its membership in the EU and the joint currency it uses.
While Greece vowed to quickly restart negotiations with the EU, Finance Minister Yanis Varoufakis, who had clashed with European officials in the bailout talks, announced his resignation today. Representatives from the EU have commented with the vote against additional austerity measures there really is not much basis for continued negotiations.
Experiencing a long recession and high unemployment rates, and with Banks dangerously low on capital, Greece defaulted on its IMF loan repayment, becoming the first delveloped nation to do so. Greece may be forced to start issuing its own currency and would be the first to leave the 19 member euozone, established in 1999.
Author’s comment – We mentioned before Greece’s socialist problem with citizens dependent on programs the government has to pay for. This is an addiction as strong as any opiate and it is no surprise the citizens rejected the austerity measures. Withdrawal symptoms will be severe.
It is clear to us Greece will now experience a further economic collapse, any currency they issue will suffer from extremely degraded exchange rates. Indeed private companies are already preparing their own private currencies. This will begin an economic free for all. Greece has a four month supply of oil and pharmaceuticals, look for either a severe meltdown or monumental concessions within that period of time.
We predict unless someone steps up to bail them out, Greece will drop to third world status.
This is the nature of socialism, it’s a negative feedback system always requiring injections of capital to sustain itself and never becoming productive.