European Commission President Jean-Claude Juncker just revealed how difficult the time ahead for Greece and its creditors will be after 60% of the nation rejected the bailout conditions.
Juncker unleashed a number of home truths to Greece and its Prime Minister Alexis Tsipras after the country overwhelmingly voted “No” — or “OXI” — in the country’s bailout referendum Sunday, including that there will be no deal reached today and that all parties must discuss “what ‘respecting Greek vote’ means.”
“The Greek Prime Minister knows that the question asked in the Greek vote was no longer valid,” said Juncker in a speech this morning. “I’m very saddened that the Greek government left the negotiating table. I’m against a Grexit but we must discuss what ‘respecting the Greek vote’ means. The solution [on Greece] cannot be found today — that would be to simplistic.”
Greeks had to vote either “Yes” or “No” to bailout conditions given to the government before June 30. However, the situation radically changed when Greece defaulted on its €1.6 billion (£1.1 billion, $US1.8 billion) payment to its creditors that day.
Now, a “No” vote means Greece is now likely to default on almost all its remaining debt and run out of money because the European Central Bank will not lend the country anymore cash.
On July 6, in a research note entitled “Greece: Time for the Adults to Speak,” BAML’s analysts pretty much say the “No” vote was pointless, as all it did was make the country’s economy worse.
That means Greece is even more desperate for cash than it was before the vote and therefore in a much weaker negotiating position. Greece has another payment due to the European Central Bank coming up later this month. ATMs are close to running dry.
On July 5, Barclays’ analysts warned that this will mean Greece will run out of liquidity as of July 20, and therefore certainly default on its debt, maybe exit the EU, abandon the euro and therefore will re-adopt its old currency, the drachma and use IOUs to recapitalise its banking system.