MUMBAI: It was a day of carnage across global markets on Monday after Greece backed out of debt repayment talks with its creditors. The country is set to default on its euro 1.73 billion loan payment to International Monetary Fund due today. Greek Prime Minister Alexis Tsipras's government has created political and financial uncertainty by announcing July 5 as referendum for voters to decide whether to accept a bailout deal offered by international creditors. If there is a 'no' vote i.e. if voters favour default and leave, it will put the euro 7.5 billion bailout disbursement at stake.
LONDON: Euro zone stocks headed on Monday for their biggest fall since 2011, with southern European banks in particular getting pummelled, after Greece shut its banks and imposed capital controls amid deepening crisis. Some 30 billion euros ($33.30 billion) in market capitalisation was wiped off euro zone banks as investors dumped financial stocks, fearing the ripple effects of a potential Greek exit from the euro zone. The blue-chip Euro STOXX 50 index sank 3.9 per cent, with benchmark indexes in Portugal and Italy down 4 to 4.5 per cent.
LONDON: Growing nerves over Greece have been the talk of financial markets for the past week, but online betting firms see only around a one-in-five chance it will leave the euro zone this year -- a lower likelihood than earlier this year. British-based bookmakers Ladbrokes and William Hill ceased taking bets on Greece becoming the first country to leave the euro weeks ago, but on prediction markets sites, which allow punters to bet against each other, the debate is in full swing.
Earlier today, we reported that Germany is preparing a contingency plan to deal with the fallout from a Greek default, the odds of which analysts are now putting at even money. According to Die Zeit, Berlin is looking at options to keep the Greek banking sector solvent (i.e. make sure there are still euros in the ATMs) even in the event Athens misses a payment to the IMF next month.
German Chancellor Angela Merkel is coming under growing pressure from within the ranks of her own party bloc to give up on Greece for the sake of the euro.
Members of Merkel’s Christian Democratic bloc are openly challenging her stance of keeping Europe’s most-indebted country in the 19-nation currency region. Even some officials in the Finance Ministry are leaning toward the conclusion that the euro area would be better off without Greece, two people familiar with the matter said.
BERLIN (Reuters) - Back in May, as the euro zone veered deeper into crisis, Nobel Prize-winning economist Paul Krugman penned one of his gloomiest columns about the single currency, a piece in the New York Times entitled "Apocalypse Fairly Soon".
By Peter Boone and Simon Johnson
In every economic crisis there comes a moment of clarity. In Europe soon, millions of people will wake up to realize that the euro-as-we-know-it is gone. Economic chaos awaits them.