A ‘No’ vote by the Greeks is a “catastrophic scenario” for markets, an analyst says while on the streets of Paris, people say the Greeks may have voted in a “selfish” way.
PARIS, FRANCE (JULY 6, 2015) (REUTERS) – Shares fell in Europe and Asia, the euro stumbled and yields on weaker euro zone economies’ bonds rose after Greece overwhelmingly voted against conditions for a rescue package.
Although there was no rout and contagion was limited, a French shares analyst said this was a “catastrophic scenario” for markets.
“It’s a catastrophic scenario for the markets, it could not be worse because in case of a new disagreement between the creditors and the Greek government we are moving towards a Greek request to exit the eurozone and the problem is that the treaties, and the way the eurozone is made do not allow that a state could enter and then ask to exit the eurozone. It’s up to Greece to request this exit,” said Arnold Scarpaci, Associate Portfolio Manager at Investment Fund Company Montaigne Capital.
The euro zone’s blue-chip share index fell 1.7 percent on Monday after Greek voters rejected austerity measures demanded in return for a debt deal, raising concerns about the country’s possible exit from the euro zone.
The uncertainty fuels risk aversion but the regional asset price fall was moderate as Sunday’s referendum outcome was not entirely surprising and investors have got tired of the twists and turns of Greece’s debt crisis, dealers said.
On the streets of Paris, people said the Greeks had voted rather selfishly and the ‘No’ vote may not have a favourable impact in the long term.
“They (the Greeks) are being offered two bad choices — it’s like telling them ‘Do you want to have your hands or your arms chopped off?’ They voted maybe in a selfish way, they saw what was in their best interest. Now will it be in their interest in the short term, middle term, long term? I don’t know but I think those responsible are maybe the different states, the different monetary institutions which led them to this situation,” said passer-by Jean-Pierre Depasse.
“It’s too bad for the Greeks, I think they made the wrong choice, doubtless driven by a difficult life and they told themselves ‘We won’t accept being knocked around and have a even more difficult daily life’ but in the long term I think it’s really too bad for them,” said Olivier Briand.
The vote leaves Greece in uncharted waters: risking a banking collapse that could force it out of the euro. Without more emergency funding from the European Central Bank, Greece’s banks could run out of cash within days.