The Greek debt crisis is affecting global markets; things are just getting started.
It seems like the event that Bob Allen has often warned us about is finally beginning. The New York Times reported yesterday, “Greece’s Debt Crisis Sends Stocks Falling Around the Globe.”
Global markets shuddered on Monday after Greece closed its banks amid fears that the country was headed toward default.
Stocks slumped on Wall Street, after markets in Europe were buffeted by worries that the Greek debt crisis would prove contagious and Chinese investors endured another topsy-turvy session.
The Dow Jones industrial average closed down 2 percent, the Standard & Poor’s 500 was down 2.1 percent, and the Nasdaq fell 2.4 percent. The losses wiped out all the gains for the Dow and S.&P. 500 indexes this year.
The Euro Stoxx 50 index, comprising the eurozone’s big blue chip companies, closed 4.2 percent lower, after being down about 5 percent at the opening. The FTSE 100 index in London fell 2 percent.
In Greece, banks and markets will be closed for the week, after Prime Minister Alexis Tsipras interrupted last-ditch debt negotiations early Saturday with the announcement that he was calling a referendum for July 5 on whether to accept the tough terms offered by international creditors.
Investors have been concerned by the probability that Athens will be unable to meet a 1.6 billion euro, or roughly $1.8 billion, loan repayment to the International Monetary Fund that is due on Tuesday, with uncertain consequences for Greece’s future in the eurozone and even in the European Union.
In this case “probability” means mathematical certainty. How was a nation that was at a crisis point due to debt supposed to be helped out by emergency loans—by more debt?!
All these years of “help” have done nothing to prevent what can’t be prevented. Greece cannot pay its debts.
Almost at the last paragraph we read:
Rajiv Biswas, chief economist for Asia at IHS Global Insight, said that if Greece defaulted and left the eurozone, the effects on Europe’s economy and on exporters in Asia would depend on whether European leaders could prevent financial troubles from spreading to Portugal, Spain and possibly Italy.
Just how successful were Eurocrats in getting Greece to stay? Why would they be any better at Portugal, Spain, or Italy?
What this tidbit tells us is that there are a whole series of dominoes waiting in line behind Greece. Spain will probably be next.
In the meantime, the American dominoes are trembling as well, beginning with Puerto Rico.