Mar­kets slump af­ter Greece shuts banks

Cred­i­tors don’t rule out 11th-hour debt deal, hop­ing to avert ‘Grexit’

The China Post - - FRONT PAGE -

World mar­kets tum­bled Mon­day as Greece shut its banks and im­posed cap­i­tal con­trols to halt a panic-driven run on ATMs, a day be­fore Athens risked de­fault­ing and pos­si­bly crash­ing out of the euro.

But in a nar­row ray of hope, cred­i­tors left the door open for a last- ditch debt deal to try and avert a Greek eu­ro­zone exit which would raise se­ri­ous ques­tions about the fu­ture of the EU.

Call­ing for a com­pro­mise, Ger­man Chan­cel­lor An­gela Merkel warned that “if the euro fails, Europe fails.”

Euro­pean Com­mis­sion head Jean Claude Juncker Mon­day urged Greece to vote “yes” in a ref­er­en­dum on bailout pro­pos­als or leave the euro.

A vis­i­bly emo­tional Juncker launched a blunt at­tack on Greek premier Alexis Tsipras, say­ing he felt “be­trayed” by the left­ist gov­ern­ment’s be­hav­ior and adding it was time for them to tell vot­ers “the truth.”

Global stocks f ell, with Frank­furt and Paris los­ing more than three per­cent af­ter a slump in Asia, as in­vestors feared a ‘ Grexit.’ The euro stead­ied af­ter hit­ting a onemonth low un­der US$ 1.10 on Sun­day.

Athens is­sued a de­cree to close banks un­til July 6 — the day af­ter a ref­er­en­dum on cred­i­tors’ bailout pro­pos­als — with a 60- euro ( US$ 65) limit on ATM with­drawals. For­eign tourists, a vi­tal en­gine of the Greek econ­omy, will be ex­empt.

How­ever, the dras­tic mea­sures — de­signed to pro­tect the bank­ing sys­tem against the threat of mass panic — sent Greeks rush­ing to with­draw their daily al­lowance.

Jit­tery housewives, shop­pers and busi­ness own­ers formed long lines at cash ma­chines across Greece on a day dubbed “Black Mon­day.”

‘No money, no hope’

“No money, no hope, how did we get in this sit­u­a­tion? This is Black Mon­day,” un­em­ployed Chris Bakas, 28, told AFP as he stood sweat­ing in the Athens sun, star­ing at an ATM screen.

On the city’s his­toric Syn­tagma square, the scene of fierce ri­ots in the past over bit­ing aus­ter­ity mea­sures im­posed by the coun­try’s in­ter­na­tional cred­i­tors, tourists snap­ping pho­to­graphs of the par­lia­ment build­ings said they felt the ten­sion in the air.

Prime Min­is­ter Alexis Tsipras had urged re­straint on Sun­day af­ter an­nounc­ing the re­stric- tions.

“Any dif­fi­cul­ties that may arise must be dealt with calm­ness. The more calm we are, the sooner we will get over this sit­u­a­tion,” Tsipras said, adding Athens had again re­quested a “pro­lon­ga­tion of the ( bailout) pro­gram.”

The Athens stock mar­ket has mean­while been shut un­til July 7.

The rapid es­ca­la­tion of the Greek debt cri­sis came af­ter the Euro­pean Cen­tral Bank froze the level of its emer­gency life­line for Athens on Sun­day, de­spite a grow­ing bank run.

EU com­mis­sioner of eco­nomic af­fairs, Pierre Moscovici of France, de­clared Mon­day that “the door is al­ways open to ne­go­ti­a­tions” for Greece, adding ne­go­tia­tors had been “a few cen­time­ters” from a deal when talks col­lapsed.

‘Worst-case sce­nario’

“With ne­go­ti­a­tions halted, the Greek sit­u­a­tion has rapidly moved to the worst- case sce­nario and in­vestors who jumped to the con­clu­sion last week that a deal was done will be suf­fer­ing sig­nif­i­cant losses this morn­ing,” said strate­gist Alastair Ge­orge at Edi­son In­vest­ment Re­search.

The Frank­furt- based ECB’s gov­ern­ing coun­cil on Sun­day and left un­changed its emer­gency liq­uid­ity as­sis­tance — keep­ing open its life sup­port for Greek banks and, by ex­ten­sion, the Greek state. But it pledged no ex­tra cash for banks.

The move fur­ther raised the stakes in Greece’s fes­ter­ing debt cri­sis af­ter five months of tough bailout talks cul­mi­nated on Fri­day night with Tsipras’s shock call for a ref­er­en­dum.

Un­less cred­i­tors heed Tsipras’s re­newed re­quest for a bailout ex­ten­sion, Greece’s res­cue plan will for­mally ex­pire Tues­day.

This will al­most cer­tainly mean Greece will de­fault on more than 1.5 bil­lion eu­ros (US$1.7 bil­lion) due to the IMF that same day.

The week­end’s rapid- fire events in the Greek saga set off a flurry of diplo­matic ac­tiv­ity.

In Ber­lin, Merkel is still pre­pared to hold talks with Greek Prime Min­is­ter Alexis Tsipras de­spite the break­down in debt ne­go­ti­a­tions at the week­end, her spokesman said.

French Pres­i­dent Fran­cois Hol­lande added that Paris was “al­ways avail­able” for ne­go­ti­a­tions with Athens — and that a bailout deal re­mained pos­si­ble.

AP

Peo­ple stand in a queue to use an ATM of a bank in cen­tral Athens, Sun­day, June 28.

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