Greece's PM Tsipras defiant as banks shut, markets rocked

[webfact]

Tsipras defiant as banks shut, markets rocked
By DEREK GATOPOULOS and LORNE COOK

ATHENS, Greece (AP) — Anxious pensioners swarmed closed bank branches Monday and long lines snaked outside ATMs as Greeks endured the first day of serious controls on their daily economic lives ahead of a referendum that could determine whether the country has to ditch the euro currency and return to the drachma.

Greek Prime Minister Alexis Tsipras was defiant, urging voters to reject creditors' demands, insisting a "No" vote in next Sunday's referendum would strengthen Athens' negotiating hand.

"We ask you to reject it with all the might of your soul, with the greatest margin possible," he said on state television. "The greater the participation and the rejection of this deal, the greater the possibility will be to restart the negotiations to set a course of logic and sustainability."

Greece's bailout program ends Tuesday, when the country is unlikely to make a 1.6 billion euro ($1.8 billion) repayment to the International Monetary Fund. But Athens and creditors from the IMF and the eurozone failed to agree on the terms of an extension.

Tsipras called the referendum over the weekend, arguing that demands for tougher austerity measures could not be accepted after six years of recession.

The move shook world markets, saw Greek borrowing rates skyrocket, and set off a credit downgrade further into junk status from Standard & Poor's rating agency, which said it now sees a 50-percent chance of Greece leaving the eurozone.

That has stoked fears of a crippling bank run, a messy Greek debt default and an exit from the euro.

As the clock ran out on a Greece deal, Greeks were handed a daily 60 euros ($67) cash withdrawal limit, sending crowds of elderly depositors who do not have ATM cards rushing to closed bank branches.

"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 the 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," he said.

The sight of an economy on the precipice hit global markets hard Monday, driving stocks down in the United States and across Europe.

U.S. stocks had their worst day of the year, with the Dow Jones industrial average dropping 350 points to 17,596, while The Standard & Poor's 500 index sank 43 points to 2,057. The losses wiped out all the gains for the Dow and S&P 500 indexes this year.

In Europe, the Stoxx 50 index of leading shares ended 2.5 percent lower, while Germany's DAX slid 3.6 percent. There were also some early warning signs that Greece's problems may prove contagious — the borrowing rates of other highly indebted eurozone countries such as Italy and Portugal inched up slightly.

Investors are worried that should Greece leave the euro and say it can't pay its debts, which stand at more than 300 billion euros, it will be forced into a chaotic return to the drachma — developments that could derail a fragile global economic recovery, as well as raise questions over the long-term viability of the euro currency itself.

"The major market concern is that if Greece were to default and/or exit, then it might encourage others to do the same," said Gary Jenkins, chief credit strategist at LNG Capital. "Thus it puts the entire eurozone project at risk of collapse."

That message was hammered home by European leaders.

"It must be crystal clear what is being decided: It is essentially the question, yes or not to remaining in the eurozone," German Vice Chancellor Sigmar Gabriel said.

In Brussels, European Commission President Jean-Claude Juncker said he had felt betrayed by Tsipras' left wing government and called on Greek voters to oppose him.

"I'd like to ask the Greek people to vote 'Yes.' ... I very much like the Greeks, and I'd say to them, 'You should not commit suicide because you are afraid of death,'" he said in an emotional speech against a backdrop of giant Greek and EU flags.

Throughout Greece, massive queues formed at gas stations, with worried motorists seeking to fill up their tanks and pay with credit cards while they were still being accepted.

Although credit and cash card transactions have not been restricted, many retailers were not accepting card transactions Monday.

Electronic transfers and bill payments are allowed, but only within Greece. The government also stressed the controls would not affect foreign tourists, who would have no limits on cash withdrawals with foreign bank cards.

For emergency needs, such as importing medicine or sending remittances abroad, the Greek Treasury was creating a Banking Transactions Approval Committee to examine requests on a case-by-case basis.

Meanwhile, Greeks were dividing into two camps — with most of the opposition backing a "Yes" vote in the referendum.

"If you want to stay in the euro, vote yes ... If you want banks to open, vote yes ... And most important, if you want to stay in Europe, vote yes," former prime minister Antonis Samaras told lawmakers.

Rallies were planned during the week by the "Yes" and "No" camps, with a pro-government protest drawing 13,000 people outside parliament late Monday.

Chanting "Take the bailout and go!" thousands protesters gathered in Athens' main Syntagma Square to back a "No" vote

"The government tried too hard to get this agreement. But the creditors kept asking for more," said pensioner Stavroula Noutsou. "I don't know what else we are supposed to do."
____

Cook reported from Brussels. Elena Becatoros in Athens, Raf Casert in Brussels, Lori Hinnant in Paris and Pan Pylas in London contributed to this report.


-- (c) Associated Press 2015-06-30

[Tatsujin]

Cool, so next time I get a credit card statement, I just need to call on all the other people that have a credit card bill due and encourage them all not to repay the monies owed, then we can renegotiate the repayment terms!

[Usernames]

A Communist government. What did anybody expect?

[shirtless]

They are finished 1.7 billion needs to be repayed to the imf, if we think this is bad its only the tip of the ice berg we still have spain portugal iand Italy and off course the good old USA cant make their repayments Governments can no longer budget so expect some major problem and with their reckless spending we can all look forward to new taxes a corporations have bought our politicians and are draining our economys.we will be screwed as our governments no longer work for the people its now all about self enrichment at our expense.

[FangFerang]

My Greek friend explained it to me like this. "The one issue on the negotiations the government is fighting is....for their own pensions. The pensions and paychecks to government officials takes almost a third of the country's money. The government has been too greedy for too long, and no one will deal with people who are in a position to guard their own interests at the expense of not just their own country, but all their associates." (sic)

No wonder the EU doesn't want to just fork over money to them. The decisions makers are foxes watching the hen house. Unfortunately, they are willing to bankrupt their country in the name of greed. Government officials have overseas accounts, investments, gold and lots of alternatives in the event of a deep recession.

They took a page from the American playbook and went so far with it that they cannot dig themselves out of the hole.

[empireboy]

Cool, so next time I get a credit card statement, I just need to call on all the other people that have a credit card bill due and encourage them all not to repay the monies owed, then we can renegotiate the repayment terms!

Not a bad idea if you could get enough people together! Let me know if you get any takers... I might join ya ha ha!

[h90]

Cool, so next time I get a credit card statement, I just need to call on all the other people that have a credit card bill due and encourage them all not to repay the monies owed, then we can renegotiate the repayment terms!

if someone else illegally used your credit card you won't have to pay it.

[h90]

My Greek friend explained it to me like this. "The one issue on the negotiations the government is fighting is....for their own pensions. The pensions and paychecks to government officials takes almost a third of the country's money. The government has been too greedy for too long, and no one will deal with people who are in a position to guard their own interests at the expense of not just their own country, but all their associates." (sic)

No wonder the EU doesn't want to just fork over money to them. The decisions makers are foxes watching the hen house. Unfortunately, they are willing to bankrupt their country in the name of greed. Government officials have overseas accounts, investments, gold and lots of alternatives in the event of a deep recession.

They took a page from the American playbook and went so far with it that they cannot dig themselves out of the hole.

That is silly. This government is new in power and for the first time, they don't get any pensions yet. And the paychecks and pensions for government officials, meaning everyone who is state employee is a third isn't shocking number.

All the police, military, teacher, Greek has lot of state owned companies so the harbor worker, the airport staff, etc etc.

[bangon04]

""I don't have a card. I don't know what's going on. We don't even have enough money to buy bread," he said."

and he added - I do have a TV of course, and I have watched daily news items about the Greek default, and I voted for the current government because they promised me no more austerity etc but I thought it wasn't going to affect me - I still expect my pension to be paid as normal...

[Eric Loh]

Got to applaud the military for staying in the barracks and being apolitical. Thailand can learn from Greece on how to break a political impasse.

[NeverSure]

They took a page from the American playbook and went so far with it that they cannot dig themselves out of the hole.

Greece is the first followed by you can guess who in Europe and the UK will once again say "Oops. And then they came for me. Why didn't I see it?"

Actually, the straw that will break Europe's back and take it down will be the collapse of the UK. Some people don't seem to realize that the UK's national debt isn't much less than that of the US as a ratio to GDP, and the UK is going balls out trying to bail and support everyone around it while having no national sovereignty. It seems that every freeloader on the planet is allowed into the UK and it won't work.

First Greece, then others in the South and then... Crickets.

[Srikcir]

a "No" vote in next Sunday's referendum would strengthen Athens' negotiating hand.

No it won't but it will keep Tsipras IN government and that is what Tsipras is about - keeping power.

He'd rather rule a collapsed economy than languish on the political sidelines of a healthy economy.

[BuaBS]

They must exit the euro and stop repayment of any debt. It is the only way to solve this mess.

After a year of hardship ( which they are already in ) , Greece will be better off than the rest of the EU.

They can stop the ridiculous sanctions against Russia , trade with Russia, aggriculture for energy ,

Let the Russian pipeline in and let the Russians have a base . Get the former Soviet republics to come holiday , cheaper in devalued drachmas.

Staying in the EU & euro will nothing will be solved , and their economic pain will become bigger.

[nithisa78]

defiant....................that's a great strategy.

[Ulic]

This uncertainty is exactly what Greek Prime Minister Alexis Tsipras wants. A no vote so he can

be even more defiant and belligerent to the creditors. His goal is clearly to take Greece out of

the EU.

Edited June 30, 2015 by Ulic

[Eric Loh]

Tsipras kind of remind me of Mahathir, Malaysia PM during the Asian Financial Crisis. He did'nt bowed and defied IMF tough loan terms and introduced controversial currency controls which effectively isolated Malaysia from the global economy. Credit to him, he did brought Malaysia out of the crisis and he remained in power.

[Steely Dan]

Giving the V sign to creditors actually did Iceland a power of good. I think Greece should do the same, though I don't see it working out as well for them as it did for Iceland.

[mania]

It is cheeky for sure of Greece to default now after credit had been accepted same as someone doing the same to a credit card company.

But...if it is unsecured debt it is their option...It is rarely anyones option to dictate/change terms of repayment after an initial deal is struck.

But again this is a tangled knot anyway

The Euro in general is not IMHO a good idea

A country should never give up their own currency as it is giving up a part of their sovereignty/ ability to govern itself.

In the case of the Euro Greece is the G in PIIGS

The others being Portugal, Ireland,Italy & Spain

They will all have their turn if they have not already.

Who will prop it all up?

Euro was an interesting experiment but it will be on life support soon enough if the few need to prop the

many

All just IMO of course

Edited June 30, 2015 by mania

[hawker9000]

They are finished 1.7 billion needs to be repayed to the imf, if we think this is bad its only the tip of the ice berg we still have spain portugal iand Italy and off course the good old USA cant make their repayments Governments can no longer budget so expect some major problem and with their reckless spending we can all look forward to new taxes a corporations have bought our politicians and are draining our economys.we will be screwed as our governments no longer work for the people its now all about self enrichment at our expense.

Have you been asleep for the last 10 years? If there's ANYTHING the U.S. govt knows how to do (and at this point, it does seem like a short & shrinking list) it's print more money. There's some, largely abstract, risk of default whenever Congress seems like it's going to refuse to raise the debt ceiling, but really what it comes down to is a decision by the foreign owners of this debt as to whether or not they really want to be paid back with devalued dollars. (I think the answer to that is overwhelmingly No, and so these foreign owners have nothing beyond a purely rhetorical interest in threatening to sell out their holdings.) Anyway, here's who owns the U.S. debt.

Oh, and the U.S. helps fund the IMF! No portion of the national debt is owed to it! In fact, because IMF funding is partly in the form of credit lines from member nations, the U.S. actually earns some interest on the money it lends to the IMF. Here's some information.

But you have a good point about those other EU potential basket cases. Why is it so hard to understand? Socialism DOES NOT WORK! The more progressive, the less viable. The list of failures is long and growing. It's simply, predictably, and obviously an unsustainable approach to government. It leads inevitably to problems just like this that only intensify as the middle class is "progressively" bled dry. The elimination of the middle class (or its being precluded in the first place) is what builds an unbridgeable income gap between rich and poor and leads to class warfare, which is the actual socialist agenda. So many slow learners about still lapping up the snake oil though. Oh well. More pain coming, as the arrogant Greeks are already discovering.

Edited July 1, 2015 by hawker9000

[wooloomooloo]

Matters little how Greece got here. They took the cash and still their government is bankrupt, the banks are bankrupt, the people are bankrupt.

Lend them a further 200 billion Euros tomorrow and they'll be back for more in a few months.

Time to leave them to their own devices. Going to be a whole lot of pain either way.

Edited July 1, 2015 by wooloomooloo

[NeverSure]

Have you been asleep for the last 10 years? If there's ANYTHING the U.S. govt knows how to do (and at this point, it does seem like a short & shrinking list) it's print more money.

Who gives you this stuff, and you buy it? The US hasn't printed more money other than to replace money certified as worn out and destroyed from circulation.

The US, through all of the recent stimulus hasn't caused there to be more actual USD in the world. Who tells you this stuff?

The US Fed eases and increases "the money supply" by allowing banks to lend a higher percentage of their customers' deposits. That puts more money into circulation raising the money supply figure known as M2. All the Fed does is make more of the existing money available to the economy by stimulating loans from banks. The Fed also can control interest rates by changing rates at the Fed Discount Window and it lowers them to further stimulate borrowing.

That's it. Banks lend a higher percentage of their deposits at lower interest rates and this increased money in circulation is to stimulate activity.

End of.

[hawker9000]

Have you been asleep for the last 10 years? If there's ANYTHING the U.S. govt knows how to do (and at this point, it does seem like a short & shrinking list) it's print more money.

Who gives you this stuff, and you buy it? The US hasn't printed more money other than to replace money certified as worn out and destroyed from circulation.

The US, through all of the recent stimulus hasn't caused there to be more actual USD in the world. Who tells you this stuff?

The US Fed eases and increases "the money supply" by allowing banks to lend a higher percentage of their customers' deposits. That puts more money into circulation raising the money supply figure known as M2. All the Fed does is make more of the existing money available to the economy by stimulating loans from banks. The Fed also can control interest rates by changing rates at the Fed Discount Window and it lowers them to further stimulate borrowing.

That's it. Banks lend a higher percentage of their deposits at lower interest rates and this increased money in circulation is to stimulate activity.

End of.

Never got past Chapter One in the 8th grade economics primer, eh? No, sorry Player One, that's NOT "it", nor the "End of" anything except apparently your limited understanding.

Allowing banks to lend a higher percentage of their customers' deposits is not the primary means by which money is created (who tells YOU this stuff?). The FED, actually the FOMC, issues bonds to securities dealers, who auction them off, and then writes a check, drawn on the U.S. Treasury, to buy them back. This creates deposits in the accounts of the bond sellers. Changing the reserve requirement, the process to which you refer, is merely another means...

Some light, but recommended, reading..., and an excerpt:

"The Federal Reserve uses open-market operations to either increase or decrease reserves. To increase reserves, the Federal Reserve buys U.S. Treasury securities by writing a check drawn on itself. The seller of the Treasury security deposits the check in a bank, increasing the seller's deposit. The bank, in turn, deposits the Federal Reserve check at its district Federal Reserve bank, thus increasing its reserves" [ 1 ] When a bank increases it's reserves it can loan more money due to the magic of fractional reserve banking." (spelling corrections made by me)

If the "printing money" phraseology, known & loved throughout medialand for generations, is what's bringing out the pedantic in you, here's that part of the recipe. And an excerpt:

"Remember, the money printed at the Treasury and held at the Fed was NOT part of the money supply, since it is out of reach of private borrowers. But as soon as the Fed buys bonds with that money, it is deposited into commercial banks’ excess reserves and is therefore now in the commercial banking system and therefore part of the money supply. So, “printing money” does not immediately increase the money supply since newly printed money only ends up in the Fed; only once the Fed has undertaken an expansionary monetary policy (an open market bond purchase) does the newly printed money enter the money supply."

As you can see, the only thing needed is buyers for these bonds that the FED issues. And since government agencies can be and are regular buyers of these bonds, the government doesn't even need outside buyers like foreign governments, financial institutions, or even American citizens themselves!

[mania]

As you can see, the only thing needed is buyers for these bonds that the FED issues. And since government agencies can be and are regular buyers of these bonds, the government doesn't even need outside buyers like foreign governments, financial institutions, or even American citizens themselves!

This is something that always made me smile during all the bailouts...QE 1-2 etc etc

At that point they started buying their own markers..If I remember correctly it was at something like 80 billion per month

You have to laugh as it is so ludicrous

Would be similar to writing tons of IOU's & when time to pay...no problem we write another IOU

It is the World Reserve Currency for goodness sake & the one the world trusts? Why? Because perceived military strength makes folks think

if all else fails it may be the last to fall? Beats me & I gave up watching the circus of events years ago

Feel much better for it now

Edited July 3, 2015 by mania

[hawker9000]

As you can see, the only thing needed is buyers for these bonds that the FED issues. And since government agencies can be and are regular buyers of these bonds, the government doesn't even need outside buyers like foreign governments, financial institutions, or even American citizens themselves!

This is something that always made me smile during all the bailouts...QE 1-2 etc etc

At that point they started buying their own markers..If I remember correctly it was at something like 80 billion per month

You have to laugh as it is so ludicrous

Would be similar to writing tons of IOU's & when time to pay...no problem we write another IOU

It is the World Reserve Currency for goodness sake & the one the world trusts? Why? Because perceived military strength makes folks think

if all else fails it may be the last to fall? Beats me & I gave up watching the circus of events years ago

Feel much better for it now

Well, don't get too carried away. It's not like all the debt falls into that category. About 28% at the moment. And I don't know how that compares to other developed countries.

What the federal government is doing is essentially borrowing money from federal government trust funds, such as Social Security. The trust funds then earn some interest on what would otherwise be idle funds. Know-nothings like to bray about the money never being paid back, but its being paid back is where the "money printing" - and QE 1-2, etc. - comes in! It's paid back when the federal government buys back its debt (i.e., these bonds) with newly printed cash (not "IOU"s, i.e., more bonds).

So it all really comes down to this ability to print money. And as I originally said, nobody knows how to do that like Uncle Sam. The idea that the dollar's status as the World Reserve Currency is all down simply to "perceived military strength" though is old, tired, and pretty much a matter of just plain old America-hating/America-envy. 'One of those myths that only gets weaker with the repeating. (Which is NOT to say that the USD's said World Reserve Currency status is exactly "ironclad" and won't change, and might not even do so as the result of the massive debt.)

'Getting OT though. Someone made the point that the U.S. and other western countries were facing the same predicament as Greece due to their debt. I've been attempting to point out that the U.S. is on a somewhat different road to perdition. Philosophically, I guess it's all the same thing though, which is the ability to keep borrowing to finance greater & greater debt for purposes that were never worthwhile or sustainable in the first place from less & less enthusiastic sources. And the Greek train wreck has simply now occurred first, with a slowly dawning awareness that it won't be the only one...

Edited July 4, 2015 by hawker9000