Analysts remain divided on the impact of Greece defaulting on its debts. Alan Skrainka, chief investment officer at Cornerstone Wealth Management, said the relatively small size of the Greek economy means "it offers very little risk for the global economy or for the rest of Europe." But Bill Lynch, director of investment at Hinsdale Associates, says there is still "a lot of nervousness in terms of how all this is going to play out."
- European stock markets close sharply lower
- EC chief Jean-Claude Juncker feels 'betrayed' by Greek 'egotism'
- Osborne: UK 'prepared for the worst'
- Angela Merkel 'open to more talks' with Greece
Shares in Wall Street have extended their losses, closing down further as fears of the impact of a Greek exit from the eurozone intensify. The Dow Jones closed 2% lower at 17,596, with the S&P 500 losing 2.1% to 2,057. The tech-heavy Nasdaq also lost 2.1% to close at 2,057.
The European Central Bank is ready to use all available instruments to help Greece if needed, vice-president Benoit Coeure has said in an interview with French newspaper Les Echos. He also reiterates that if the Greeks vote "yes" in Sunday's referendum, he has no doubt that the eurozone will find ways to meet its commitments towards Greece.
Greek journalist Nick Malkoutzis tweets:
Interviewed on Greek television tonight, Alexis Tsipras says he does not believe that the country's creditors want Greece to leave the eurozone, mainly because the cost of such action would be huge. The Greek PM's aim for Sunday's referendum is to bring a continuation of negotiations with its lenders, he adds. The stronger it rejects the deal on offer, the stronger Greece's hand in talks becomes, Mr Tsipras says.
The BBC's Joe Miller reports from central Athens:
If a "no" vote on Sunday would indeed spell disaster for Greece, you wouldn’t know it from the rally in Athens’ Syntagma Square tonight. More of a carnival than a march, thousands of citizens filled the steps in front of the Greek Parliament, with a live band playing well into the night, and souvlaki stalls doing a roaring trade. Singing and dancing, young and old, they wanted to convey that they were not afraid of rejecting Europe’s proposals. “It will be painful for a few weeks, a few months,” one woman tells me, “but anything is better than the current situation”.
Quite a big turnout - an estimated 17,000 people - for a pro-Syriza rally in the Greek capital tonight.
Reader Alan Fowler writes:
As someone who is in Greece at the moment and talking to the locals I can assure you that the people (through no fault if their own) have not been informed of the impact of their vote and do not fully understand the consequences. They feel that if they vote 'no' they will get a better offer, rather than no new offer at all. When have you heard anyone in the Greek government explain to its people their plans for running the country with no bailout money. For the referendum to be fair they have to have the chance to evaluate the outcome of voting each way. This is the duty of the government.
Things really must be grim if Russia is getting worried. "Moscow is watching developments in the European Union very closely in the context of the financial crisis in Greece," said Kremlin spokesman Dmitry Peskov. "We are concerned about the possible negative consequences for the whole of the EU."
European Union President Donald Tusk has warned the Greek people that voting no in the referendum will not give their government more leverage to seek a better bailout deal: "Every government has a right to hold a referendum, therefore we respect the Greek decision. However, one thing should be very clear: if someone says that the government will have a stronger negotiating position with the `no' vote, it is simply not true. I'm afraid that which such a result of referendum, there will be even less space for negotiation."
More bad news for Greece: Standard & Poor's has cut its rating on the country's government debt further into junk territory - from CCC to CCC-, saying the probability of Greece leaving the eurozone was now about 50%. S&P said Greece is likely to default on its commercial debt during the next six months.
The BBC's Joe Miller is at tonight's rally in the Greek capital:
Catch up with the World Service's daily business show here:
Professor Robert Arnott of Oxford University responds to an earlier reader comment :
Tim Grover is quite wrong. The EU does not have the right to interfere in the internal affairs of its member states. The referendum is a Greek affair and from what I have read in the Athens press, the Troika's proposals have been fully reported. It is the Greek people that are fed up with being bullied and forced, mainly by the Germans, into something that is not socially or morally acceptable.
Reader Richard Bevan writes:
I have great sympathy with the Greek people; they have suffered a lot and the current situation is crippling their economy, but by calling a referendum with no clear plan as to the alternatives their Government has failed them. It’s time to stop posturing and act more like statesmen. Reforms are needed to make sure wealthy Greeks pay their fair share and to remove some of the byzantine complexities which make the Greek tax system unworkable. But as part of that the EU also needs to engage in substantive talks around debt relief (or rescheduling) otherwise, even if a deal is done, we will be back in the same position in a year’s time.
First Obama, now the Chinese premier wants Greece to stay in the euro. "China wants to see Greece stay in the eurozone and we urge relevant creditors to reach agreement with the Greek government at an a early time," Li Keqiang (pictured left) said after a summit with EU leaders in Brussels.
British banks can weather the Greek storm, George Osborne said today. "The UK banking exposure to Greece is dramatically less than it was in 2012," the Chancellor told MPs. "Less than 1% of the core tier-one capital of the UK banks is in Greek debt and I think they are well prepared for whatever eventualities unfold."
No great surprise, but a Greek government official says Greece will not pay an IMF loan repayment due on Tuesday.
The BBC's Joe Miller tweets:
BBC personal finance reporter Simon Gompertz tweets:
More from the Chancellor, George Osborne, who has told MPs that most people regarded the referendum called by the Greek PM Alexis Tsipras for Sunday as a vote on whether Greece should remain in the eurozone.
"This lunchtime as we just heard the Prime Minister chaired a meeting attended by the Governor of the Bank of England, myself, the Foreign Secretary and others to coordinate our response. Britain's attitude to the developing Greek crisis is clear - we hope for the best but we prepare for the worst."
The Treasury and the Bank of England stand ready to ensure the stability of the UK economy in the event that Greece does leave the eurozone, Mr Osborne added. There are also contingency plans in place to help UK citizens in Greece "if the situation deteriorates".
Chancellor George Osborne has told MPs that he hopes for the best on the Greek crisis but is preparing for the worst. No one should underestimate the effect of a Greek exit from the euro on the European and UK economies, he adds.
The Department for Business and the Treasury have issued lengthyguidance for UK businesses that trade with Greece following the introduction of capital controls. It warns: "Where countries have experienced disruption in the past, companies have experienced: delays on payments and deliveries; impacts on demand due to ongoing economic uncertainty."
Another reader, Tim Grover, emails:
I am Greek living and working in London for the last 20 years. My family are still in Athens. Mr Juncker is absolutely right. All Greeks are misinformed about the EU efforts and proposals. They are not informed about the options or about the consequences of a Yes/No choice. The referendum itself is unconstitutional ... The EU should intensify their efforts to inform Greek people of their proposals and the consequences."
Europe's stock markets ended the day sharply lower as the crisis in Greece escalated. The DAX 30 in Frankfurt shed 3.6%, the CAC 40 in Paris fell 3.7%, while the FTSE 100 in London closed down almost 2% at 6,620. Bourses in Lisbon and Milan both fell more than 5%, while Madrid was off 4.6%.
Not much sympathy for Greece from some of our readers this afternoon. John Dyer writes: "I realise that most people were not responsible for the borrowing but how many paid their taxes in full? How many had a non-job with the Greek government? No, some Greeks simply need to grow-up and accept their responsibilities." Dave Thompson, in response to Joe Miller's earlier post, writes: "Dmitris [the Greek chap interviewed in the cafe] seems to speak for the sad majority of older Greeks - that to them, this is in no way a problem of Greek making; instead it's a conspiracy of richer Western countries to destabilise them. The Greeks must reap what they have sowed."
Columbia University professor Jeffrey Sachs tells Bloomberg TV that Europe cannot force Greece to leave the euro because there is no formal mechanism to do so. He says Greece will now go into default, which he thinks is the right thing for the country to do: "Greece should default - and it should stay in the euro." Germany's refusal to allow debt reduction has resulted in a "full banking panic compounding the pain", however.
Francois Hollande and Barack Obama said they will work together to help restart talks with Greece, according to an aide to the French president. The US president and Germany's Angela Merkel discussed Greece yesterday, while US Treasury secretary Jack Lew spoke with Greek PM Alexis Tsipras.
The BBC's Joe Miller reports from downtown Athens:
Celebrated bond trader Bill Gross of Janus Capital tweets:
The BBC's Joe Miller reports from Athens: When Dmitris heard I was with the BBC, I thought he was going to wring my neck. But after launching into a series of invectives against David Cameron, the UK, and the richer European economies, he began to tell me about his life. Now in his late sixties, Dmitris had to close his stationery shop in February - after 43 years in business. His children are planning to leave Greece. "I want to stay in Europe," he says. "Just not this Europe."
Further to his tweet, Italian PM Matteo Renzi is agreeing with EU Commission president Jean-Claude Juncker in saying that a no vote by Greek voters in Sunday's referendum would point to the country's departure from the euro.
Italian PM Matteo Renzi tweets:
The BBC's Simon Gompertz reports that ABTA chairman, Noel Josephides, is near Mount Athos in Greece. He says "there doesn't seem to be any panic", with cash machines dispensing their €60 limits, while he has twice withdrawn €100. Asked whether businesses would reject cards because of worries they could have trouble prising the money out of their banks, Mr Josephides says hotels are accepting cards but one petrol station would only take cash. "This has always been a cash economy," he adds.