The Greek Debt Crisis has been the major topic of discussion in financial news for quite some time now; and the volume of articles, news segments, radio shows and more talking about the situation continues to grow. After the country was the first developed country to ever default on an IMF loan, the crisis has spiraled completely out of control. Now, the Greek government has brought the attention to its people; asking them to vote on what they believe is the right way to go about solving the economic crisis. Today, we'll talk about how Greek voters have reacted, how this is likely to affect the overall situation, and what we can expect to see from the Euro and financial markets around the world as a result.

Greek Voters Are Backing Tsipras

The strength of any country lies in its people; and the Greek people have proven that they are ready to follow their leader through hardship. After Greece defaulted on their IMF loan, they looked to their consumers to ask a big question…Should the bailout offer from Europe be accepted by Greece? At the time of writing this article, more than half of the ballots have been counted; with more than 60% of respondents voting “No”. This is a major political win for Tsipras; especially when you consider the fact that banks in the nation were closed as a result of the crisis at the time of the vote.

Is This Likely To Affect Negotiations At All?

This is where the mystery lies. The reality is that while the vote is proving to be a major win for Tsipras, there's no telling whether or not the rest of Europe is going to pay very much attention to the result. Here's the reality…

Tsipras will be making calls today and settling in for more negotiations. Using the vote from his consumers as ammunition in negotiations, he is going to ask the opposition for a new bailout that will hold banks open while negotiations continue. So, essentially, Tsipras will be asking the same parties that allowed the banks to close in the first place for more money. The big problem here is that instead of providing a new solution, Tsipras will be providing a new argument; the argument that “this is what the Greek people want”.

However, the bailout funds aren't likely to come. When you think about it, as horrible as this may sound, the fact that the banks in Greece are closed may prove to be a much stronger tool in negotiations than voter opinions. Using the fact that the banks in the nation are closed, the EU will be able to pressure Tsipras into a change of opinion; or so they hope. So, if they were to honor the request for a new bailout, they would be giving up much of their leverage in negotiations.

What We Can Expect To See Moving Forward

No matter how you slice it, this is a major issue; not only for Greece, but for Europe as a whole and Europe's trading partners. As I've mentioned in previous posts, Greece may only account for a very small percentage of the GDP as a whole in Europe. However, that small percentage is big enough to create big problems. Considering the fact that a deal isn't likely any time soon, the country will most likely be forced to start printing it's own currency. In which case, Europe would lose economic power as Greece would leave the Euro. This is likely to lead to more declines in the Euro; creating a wave of economic uncertainty that's likely to expand far wider than Europe itself. That's easy to see when you consider the fact that Europe is the United State's largest trading partner. So, when the value of the Euro falls, the trading partner isn't able to buy as much product from or invest as much money into the United States; leading to negative affects in the United States. With that said, I'm expecting to see more declines to come in Europe and financial markets around the world.

What Do You Think?

Do you think a deal will be made any time soon? If not, how do you think not having a deal is likely to affect the economy of Europe and other economies around the world?