Greek Crisis Crushes Stock Futures

US futures are open and stocks are getting crushed.

Shortly after futures opened at 6:00 pm ET, S&P 500 futures were down 1.7%, or 37 points, to around 2,060.

fut_chartFinViz

Dow futures were off 298 points, or around 1.7%, while Nasdaq futures were also off 1.7%, or around 79 points.

fut_chart (2)FinViz

 

Stocks were following the lead of the euro, which was dropping hard against the dollar, falling 1.7% to below $1.10 while losing more than 2% against the Japanese yen and falling to its lowest level against the British pound since 2007.

The drop in stocks comes after a wild weekend of headlines out of Greece that saw talks between Greece and its creditors break down, Greece call a referendum vote on the latest bailout terms for next Sunday, while Greek banks and the Athens stock exchange have been closed for at least the next week.

Greece also has a €1.6 billion payment due to the IMF on Tuesday, which it appears they will miss.

Greek debt crisis: Banks to stay shut, capital controls imposed

Greeks are queuing for cash, but only 40% of ATMs have money in them, the BBC’s Gavin Hewitt reports

Greek banks are to remain closed and capital controls will be imposed, Prime Minister Alexis Tsipras says.

Speaking after the European Central Bank (ECB) said it was not increasing emergency funding to Greek banks, Mr Tsipras said Greek deposits were safe.

Greece is due to make a €1.6bn (£1.1bn) payment to the International Monetary Fund (IMF) on Tuesday – the same day that its current bailout expires.

Greece risks default and moving closer to a possible exit from the eurozone.

Greeks have been queuing to withdraw money from cash machines over the weekend, and the Bank of Greece said it was making “huge efforts” to keep the machines stocked.

Greek banks are expected to stay shut until 7 July, two days after Greece’s planned referendum on the terms it had been offered by international creditors for receiving fresh bailout money.

The Athens stock exchange will also be closed on Monday.

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Greece’s capital controls

  • A maximum of €60 (£42; $66) can be withdrawn from an account in one day
  • Overseas transfers of cash prohibited, except for vital, pre-approved commercial transactions.

Capital controls – how do they work?

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Eurozone finance ministers blamed Greece for breaking off the talks, and the European Commission took the unusual step on Sunday of publishing proposals by European creditors that it said were on the table at the time.

But Greece described creditors’ terms as “not viable”, and asked for an extension of its current deal until after the vote was completed.

“[Rejection] of the Greek government’s request for a short extension of the programme was an unprecedented act by European standards, questioning the right of a sovereign people to decide,” Mr Tsipras on Sunday said in a televised address.

“This decision led the ECB today to limit the liquidity available to Greek banks and forced the Greek central bank to suggest a bank holiday and restrictions on bank withdrawals.”

 

End The Greek Ponzi Scheme: Cut Greece Loose

 

Now come Greeks bearing the gift of confirmation that Margaret Thatcher was right about socialist governments: “They always run out of other people’s money.” Greece, from whose ancient playwrights Western drama descends, is in an absurdist melodrama about securing yet another cash infusion from international creditors. This would add another boulder to a mountain of debt almost twice the size of Greece’s gross domestic product. This protracted dispute will result in desirable carnage if Greece defaults, thereby becoming a constructively frightening example to all democracies doling out unsustainable, growth-suppressing entitlements.

In January, Greek voters gave power to the left-wing Syriza party, one third of which, The Economist reports, consists of “Maoists, Marxists and supporters of Che Guevara.” Prime Minister Alexis Tsipras, 40, a retired student radical, immediately denounced a European Union declaration criticizing Russia’s dismemberment of Ukraine. He chose only one cabinet member with prior government experience — a leader of Greece’s Stalinist communist party. Tsipras’ minister for culture and education says Greek education “should not be governed by the principle of excellence … it is a warped ambition.” Practicing what he preaches, he proposes abolishing university entrance exams.

Voters chose Syriza because it promised to reverse reforms, particularly of pensions and labour laws, demanded by creditors, and to resist new demands for rationality. Tsipras immediately vowed to rehire 12,000 government employees. His shrillness increasing as his options contract, he says the European Union, the European Central Bank and the International Monetary Fund are trying to “humiliate” Greece.

How could one humiliate a nation that chooses governments committed to Rumpelstiltskin economics, the belief that the straw of government largesse can be spun into the gold of national wealth? Tsipras’ approach to mollifying those who hold his nation’s fate in their hands is to say they must respect his “mandate” to resist them. He thinks Greek voters, by making delusional promises to themselves, obligate other European taxpayers to fund them. Tsipras, who says the creditors are “pillaging” Greece, is trying to pillage his local governments, which are resisting his extralegal demands that they send him their cash reserves.

Yanis Varoufakis, Greece’s finance minister, is an academic admirer of Nobel laureate John Nash, the Princeton genius depicted in the movie “A Beautiful Mind,” who recently died. Varoufakis is interested in Nash’s work on game theory, especially the theory of co-operative games in which two or more participants aim for a resolution better for all than would result absent co-operation. Varoufakis’ idea of co-operation is to accuse the creditors whose money Greece has been living on of “fiscal waterboarding.” Tsipras tells Greece’s creditors to read “For Whom the Bell Tolls,” Ernest Hemingway’s novel of the Spanish Civil War. His passive-aggressive message? “Play nicely or we will kill ourselves.”

Since joining the eurozone in 2001, Greece has borrowed a sum 1.7 times its 2013 GDP. Its 25 per cent unemployment (50 per cent among young workers) results from a 25 percent shrinkage of GDP. It is a mendicant reduced to hoping to “extend and pretend” forever. But extending the bailout and pretending that creditors will someday be paid encourages other European socialists to contemplate shedding debts — other people’s money that is no longer fun.

Greece, with just 11 million people and 2 per cent of the eurozone’s GDP, is unlikely to cause a contagion by leaving the zone. If it also leaves the misbegotten European Union, this evidence of the EU’s mutability might encourage Britain’s “Euro-skeptics” when, later this year, that nation has a referendum on reclaiming national sovereignty by

withdrawing from the EU. If Greece so cherishes its sovereignty that it bristles at conditions imposed by creditors, why is it in the EU, the perverse point of which is to “pool” nations’ sovereignties in order to dilute national consciousness?

The EU has a flag no one salutes, an anthem no one sings, a president no one can name, a parliament whose powers subtract from those of national legislatures, a bureaucracy no one admires or controls and rules of fiscal rectitude that no member is penalized for ignoring. It does, however, have in Greece a member whose difficulties are wonderfully didactic.

It cannot be said too often: There cannot be too many socialist smashups. The best of these punish reckless creditors whose lending enables socialists to live, for a while, off other people’s money. The world, which owes much to ancient Athens’ legacy, including the idea of democracy, is indebted to today’s Athens for the reminder that reality does not respect a democracy’s delusions.

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Greece Is Now ‘Lose-Lose Game’

 

 

(Bloomberg) — The chances of Greece leaving the euro area are now 50-50 and the country could go “down the drain,” billionaire investor George Soros said.

“It’s now a lose-lose game and the best that can happen is actually muddling through,” Soros, 84, said in a Bloomberg Television interview due to air Tuesday. “Greece is a long-festering problem that was mishandled from the beginning by all parties.”

Greek Prime Minister Alexis Tsipras’s government needs to persuade its creditors to sign off on a package of economic measures to free up long-withheld aid payments that will keep the country afloat. Since his January election victory, the leader has tried to shape an alternative to the austerity program set out in the nation’s bailout agreement, spurring concern that it may be forced out of the euro.

The negotiations between Tsipras’s Syriza government and the institutions helping finance the Greek economy — the European Commission, European Central Bank and International Monetary Fund — could result in a “breakdown,” leading to the country leaving the common currency area, Soros said in the interview at his London home.

“You can keep on pushing it back indefinitely,” making interest payments without writing down debt, Soros said. “But in the meantime there will be no primary surplus because Greece is going down the drain.”

“Right now we are at the cusp and I can see both possibilities,” he said.

The start of quantitative easing by the ECB at a time when the U.S. Federal Reserve is considering raising interest rates “creates currency fluctuations,” said Soros, one of the world’s wealthiest men with a $28.7 billion fortune built partly through multi-billion dollar trades in currency markets, according to the Bloomberg Billionaires Index.

Ukraine Risk

“That probably creates some great opportunities for hedge funds but I’m no longer in that business,” he said. The war in eastern Ukraine between government forces and rebel militia supported by Russia’s President Vladimir Putin concerns Hungarian-born Soros the most, he said.

Without more external financial assistance the “new Ukraine” probably will gradually deteriorate and “become like the old Ukraine so that the oligarchs come back and assert their power,” he said. “That fight has actually started in the last week or so.”

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Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

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Stock Market Magic: Building Your

Apprentice Millionaire Portfolio :

All you need to succeed in today’s stock

market [Paperback]

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