Monday, 6 July 2015

Greek referendum - the result

Yesterday Greeks voted 'overwhelming no' and the question that most Greeks must be asking themselves is what happens now?

This 'no' vote could be catastrophic for the economy as it would mean that the cash-for-reforms deal that would give the Greeks access to the final €7bn tranche of a €240bn bailout fund would not be available. In turn, this would likely result in Greece defaulting on loans due on 20 July to the European Central Bank [ECB], which is currently propping up Greece's banking system.

The Prime Minister Alexis Tsipras and his government stay in place, but where can they turn to for support. If they want to start from the beginning as a new state, how are they going to pay for public services?

Leaving the eurozone means they need a currency, presumably they would return to the Drachma, but how long would it take to get the currency up and running?

What about supplies, every trader needs stock, Greece relies almost entirely on foreign imports for its pharmaceutical supplies. But since capital control imposed last Sunday brought the country’s banking system to a sudden halt, some suppliers have stopped delivering key medication because they cannot get paid. Foreign bank transfers have been banned by the Greek government and Greek credit is no longer accepted outside the country [as stranded Greek tourists found this week when their credit cards stopped working].

What happens when the food runs out?

It is possible that there are too many questions, problems, issues to answer in the short term and the likelyhood of civil unrest becomes more pertinent.

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