The
Greek prime minister, Alexis Tsipras, addresses the nation after its
historic 61% no vote. He tells Greeks they made a ‘brave choice’ and
that ‘democracy cannot be blackmailed’. But he adds the vote did not
give a mandate to split from the European Union entirely but to
strengthen Greece’s negotiating position.
"Minister no more": Greek finance minister Yanis Varoufakis resigns
In another extraordinary development the Greek finance minister has just announced his resignation.
In a move likely to spark further concerns about the role of other
European leaders in Greece’s internal politics, Varoufakis said he was
made aware of a preference by “some European participants” of his
absence throughout the continuing negotiations.
The post was made on Varoufakis’ blog and there is nothing to suggest
it is not authentic. It has also been cross-posted on his Twitter
account. Here’s the post in full:
The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage.
Like all struggles for democratic rights, so too this historic
rejection of the Eurogroup’s 25th June ultimatum comes with a large
price tag attached. It is, therefore, essential that the great capital
bestowed upon our government by the splendid NO vote be invested
immediately into a YES to a proper resolution – to an agreement that
involves debt restructuring, less austerity, redistribution in favour of
the needy, and real reforms.
Soon after the announcement of the referendum results, I was made
aware of a certain preference by some Eurogroup participants, and
assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that
the Prime Minister judged to be potentially helpful to him in reaching
an agreement. For this reason I am leaving the Ministry of Finance
today.
I consider it my duty to help Alexis Tsipras exploit, as he sees fit,
the capital that the Greek people granted us through yesterday’s
referendum.
And I shall wear the creditors’ loathing with pride.
We of the Left know how to act collectively with no care for the
privileges of office. I shall support fully Prime Minister Tsipras, the
new Minister of Finance, and our government.
The superhuman effort to honour the brave people of Greece, and the famous OXI (NO) that they granted to democrats the world over, is just beginning.
The UK government is also prepared to do whatever necessary to
protect the country from the impact of a possible exit from the Eurozone
for Greece. This from AFP is the latest update:
Britain will do “whatever is necessary to protect its economic
security”, a government spokesman said Monday after Greeks voted
overwhelmingly against austerity in a referendum that could send them
crashing out of the eurozone with unknown consequences.
“This is a critical moment in the economic crisis in Greece,” a
Downing Street spokesman said. “We will continue to do whatever is
necessary to protect our economic security at this uncertain time. We
have already got contingency plans in place and later this morning the
Prime Minister will chair a further meeting to review those plans in
light of yesterday’s result.”
The front pages of newspapers across Europe are a combination of fear, hope and (on occasion) somewhat comical absurdity.
Here’s a short sample of a few of them, starting off with a rather extraordinary one from Efsyn featuring Dutch politician Jeroen Dijsselbloem:
Kicking the can down the road has been the cliche of choice over a
slow euro crisis that has steadily strangled the life out of the Greek
economy. But at some point Europe
was bound to run out of road. That happened on Sunday night, when it
emerged that the Greek people had said no to continuing to engage with
their creditors on the same suffocating terms.
Just over a week ago, Alexis Tsipras staked his future on forcing
this denouement. The eight days that followed his midnight declaration
of a plebiscite, to accept or reject the creditors’ terms for the latest
slug of overdraft, have witnessed many extraordinary things. The Greek
parliament licensed a hasty referendum on a question that had already
been overtaken by events. A ballot paper written in jargon
posed a ludicrously technical question, opening up a void for emotion
to fill. Mixing talk of “terror” from their partners with haze about
what would happen after a no, Mr Tsipras and his finance minister, Yanis
Varoufakis, aimed squarely for the heart rather than the head.
Meanwhile, Greeks faced the fiercest financial controls ever seen in
modern Europe: bank doors were shut, supplies disrupted, and citizens
queued at every cashpoint for their ration of notes. In countries such
as Germany, where history engenders suspicion of referendums, it may
have looked like a paradigm case of how not to do democracy.
As the sun begins to rise now in Greece on “the morning after”
Syntagma Square appears empty. That may well change as another highly
politically charged day is set to get underway across Europe
John Cassidy in the New Yorker has outlined some useful analysis on the implications of the no vote:
Whether they will be offered one within the euro zone remains to be
seen. Although the result was a great political triumph for Tsipras and
Syriza, it doesn’t automatically translate into a victory in the
showdown with the European Union and the International Monetary Fund.
Greece is still broke, and its banks are still closed. If the Europeans
want to force the Greeks out of their currency club, they have the means
to do it at any moment. All they have to do is turn off the credit that
the European Central Bank has been providing to Greece’s banks. Indeed, the E.C.B.’s governing council will decide on Monday what to do next.
With Angela Merkel, the German chancellor, and François Hollande, the
French President, due to meet in Paris on Monday afternoon, and an
emergency summit of all European Union
leaders scheduled for Tuesday, it seems highly unlikely that the E.C.B.
will render these deliberations pointless by immediately torpedoing the
Greek financial system. In all likelihood, there will be at least one
more round of talks between the two sides, and, quite possibly, more
than one. Greece’s next big payment to its creditors isn’t due until
July 23rd, which is more than two weeks away. If the country’s banks can
somehow be propped up until then, there is time for more deliberation.
We’ve written a lot about the market reaction to events in Europe,
but the political fallout in Greece is still likely to unfold rapidly
over the next few days.
Prime minister Alexis Tsipras is convening a meeting of key political leaders at 10am on Monday in Athens, according to Enikos. Overnight the Greek opposition leader Antonis Samaras resigned following the referendum decision.
How Tsipras proceeds throughout this week will continue to shape how events unfold across Europe.
China’s response to the Greek referendum and the market uncertainty has been to engage in a series of complex manoeuvres aimed at stimulating the market.
It’s not yet clear how successful the measures - which involve a
variety of investments and buyouts aided by the central bank - will be
in preventing setbacks for their markets.
Reuters have a good take on the different measures that have been employed here:
Chinese stocks jumped on Monday after Beijing unleashed an
unprecedented series of support measures over the weekend to stave off
the prospect of a full-blown crash that was threatening to destabilize
the world’s second-biggest economy.
In an extraordinary weekend of policy moves, brokerages and fund
managers vowed to buy massive amounts of stocks, helped by China’s
state-backed margin finance company, which in turn would be aided by a
direct line of liquidity from the central bank.
Investors, who had ignored official measures to prop up the market as
equity indexes slid around 12 percent last week, finally reacted, with
the CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen jumping 4 percent, while the Shanghai Composite Index .SSEC gained 3 percent. [.SS]
Blue chips, the explicit target of the stabilization fund, outperformed stocks on the small-cap ChiNext indexes.
The rapid decline of China’s previously booming stock market, which
by the end of last week had fallen around 30 percent from a mid-June
peak, had become a major headache for President Xi Jinping and China’s
top leaders, who were already struggling to avert a sharper economic
slowdown.
In response, China has orchestrated a halt to new share issues, with
dozens of firms scrapping their IPO plans in separate but similarly
worded statements over the weekend, in a tactic authorities have used
before to support markets.
My colleague Justin McCurry has filed a more comprehensive take on the Asian market reaction to the Greek referendum - which largely saw falls across the board but with limited losses.
China is the exception - it saw a boost on open this morning - but
that is attributed to the enormous and unprecedented government measures
implemented over the weekend to try and stop a market crash.
This from Justin:
Analysts said that regional market panic was unlikely, even after
Athens appeared to take a step closer to a “Grexit” by roundly rejecting
the bailout terms set by its international creditors But they added
that negotiations this week would be critical.
“The Greece ‘no’ vote is a surprise,” Shoji Hirakawa, chief equity
strategist at Okasan Securities, told Bloomberg News. “But the key is
that the direction is going toward more talks after this.”
Other analysts said markets had not expected Greek voters to reject
the terms of the bailout so emphatically – a move that could see further
losses on Monday and trigger an investor rush to US Treasuries or other
government bonds that are seen as largely immune to market turbulence.
...
In one of the day’s more colourful commentaries, analysts at Japan’s
Mizuho Bank said the Sunday’s “Greferendum” had turned out to be a
“Grief-erendum”.
On what most had expected to be a tricky day for markets around the
world, dealers stressed that uncertainty over Greece’s future had not
rocked markets as badly as some might have expected.
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