Anyone with a connection to the Euro area countries must have been following with interest the mess that Greece has gotten itself into.
Greece voted for a new government in parliamentary elections earlier this year that promised to end the austerity and renegotiate its debts with IMF and Euro area countries.
EDIT: The Greek prime minister has just announced that there will be an extended bank holiday and that banks and the stock market will be closed at least on Monday. The country will introduce capital controls.
The ECB (European Central Bank) is likely to end its emergency lending to Greek banks today that would lead them to collapse and unable to dispose cash. There could be a long “bank holiday” when the government converts the bank deposits from Euros to Drachmas.
Tourists that are going to Greece should take precautions. It is likely that ATMs are out of cash and merchants could be unwilling to accept credit cards because the proceeds would be deposited to their bank accounts where withdrawals are not necessarily possible.
Of course the Greek government could allow withdrawals using foreign cards while limiting withdrawals using domestic ones.
The Guardian has live reports on their website about the developments in Greece. You can access their website here.
I am actually on my way to Mykonos to meet some friends there for the 4th of July holiday. I will stock up with a few thousand euros while in Frankfurt later today (Monday) to ensure that I can pay for expenses if cards are not accepted and ATMs are “malfunctioning” due to no cash to dispense.
It is probably not the best time to visit the country, but I would expect most of the disturbance limited to the mainland Greece and Aegean islands to be trouble free. Undoubtedly, many will cancel their planned Greek holidays for the summer further damaging the economy that is very dependent of the tourism.
It is really unfortunate that this happened to Greece, but the country should have never been allowed to join the Euro Zone in the first place. The government at the time literally cooked the books to meet the entry requirements.
Although the Euro countries and the IMF haven’t cut the principal of the Greek debt, they have lowered the interest rates and extended the maturity, effectively taken a haircut (not admitted).
It won’t be easy for Greece outside of the Euro. The new currency that the government must introduce will plummet against the Euro and the purchasing power of the Greece citizens will be cut.
I just don’t understand why the current Greek government is blaming the lenders for the mess they are in right now? Nobody certainly required Greek to put up with all the debt they are now saddled with. It is easy to make promises to constituencies while being able to borrow freely.