Greece says ‘No’ to bailout. What happens now?

 

Posted Monday, July 6th 2015
Greece says ‘No’ to bailout. What happens now?
On Sunday, a majority of the voters in Greece decided to back up Greek Prime Minister, Alexis Tsipras, by rejecting the conditions that Europe imposed for a bailout. Vote counts registered at 61.3% for ‘no’ and only 38.7% for ‘yes.’

In light of the results, German Chancellor Angela Merkel and French President Francois Hollande agreed to a dinner meeting Monday evening to discuss the consequences of yesterday’s occurrence. As for Greece, Prime Minister Alexis Tsipras will need to find a replacement for Finance Minister Yanis Varoufakis, who resigned this morning. All the while Tsipras must decide what to do with banks, which will be shut down all week.

Although Greece will not be leaving the Euro overnight, it is likely there will be increased pressure to begin printing their own money in the coming weeks as they will not be able to meet the European Central Bank standards.

A new currency in Greece would directly impact Greek citizens as they would see an initial 30% or 40 % drop in their purchasing power.

Worst case scenario, the Greek economy would collapse, which would consequently force the government to seek another bailout. Best case scenario, after a few months Greece’s new currency would maybe be able to reach a new equilibrium, which would potentially be kept afloat by savings, tourism, and any foreign-held Euros.

I.J.V