ATHENS, Greece – Anxious pensioners swarmed closed bank branches Monday and long lines snaked outside ATMs as Greeks endured the first day of serious controls on their daily economic lives ahead of a July 5 referendum that could determine whether the country has to ditch the euro currency and return to the drachma.
As strict capital controls took root after Prime Minister Alexis Tsipras’ surprise weekend decision to call a referendum on international creditors’ latest economic proposals, Greece’s population tried to fathom the sheer scale of the effect on their day-to-day existence.
After a breakdown in talks between Greece and its creditors, the country is amid one of the most acute financial crises seen anywhere in the world in years. It’s running out of time to get the money it needs to stave off bankruptcy.
That has stoked fears of a crippling bank run, a messy Greek debt default and an exit from the euro. As a result, the country’s government imposed strict capital controls, none more onerous than a daily allowance of a measly $67 at the ATM.
The sense of unease was palpable among the crowds of pensioners who lined up outside bank branches hoping they might open. Many elderly Greeks don’t have ATM cards and make cash withdrawals in person and so found themselves completely cut off from their money.
“I came here at 4 a.m. because I have to get my pension,” said 74-year-old Anastasios Gevelidis, one of about 100 retirees waiting outside the main branch of the National Bank of Greece in the country’s second-largest city of Thessaloniki.
“I don’t have a card. I don’t know what’s going on. We don’t even have enough money to buy bread,” he said.
The capital controls come ahead of a big $1.7 billion payment Greece has to make to the International Monetary Fund. It’s unlikely to be able to pay that without financial assistance.
Greece’s bailout program with its European creditors officially expires Tuesday, meaning the country will not have access to any of the money still available if it doesn’t secure a deal.
For months, the left-wing-led Greek government, elected in January on a promise to bring an end to the hated austerity that it blames for an acute economic recession, has failed to agree on a package of spending cuts and reforms demanded by creditors in exchange for access to the remaining $8.1 billion in rescue loans.
Tsipras is advocating Greeks reject the proposals in the referendum, which increasingly has the look of a vote on euro membership itself.
Throughout Greece, massive queues formed at gasoline stations, with worried motorists seeking to fill up their tanks and pay with credit cards while they were still being accepted.
Although credit and cash card transactions have not been restricted, many retailers were not accepting card transactions Monday.
Electronic transfers and bill payments are allowed, but only within Greece. The government also stressed the controls would not affect foreign tourists, who would have no limits on cash withdrawals with foreign bank cards.
For emergency needs, such as importing medicine or sending remittances abroad, the Greek Treasury was creating a Banking Transactions Approval Committee to examine requests on a case-by-case basis.
Tsipras announced the capital controls in a televised address Sunday, blaming eurozone finance ministers for their rejection of an extension request to the bailout program.
The referendum decision, which has been ratified by Parliament, shocked and angered Greece’s European partners.
In Greece, citizens were dividing into two camps – with most of the opposition backing a “Yes” vote in the referendum.
“If you want to stay in the euro, vote yes ... If you want banks to open, vote yes ... And most important, if you want to stay in Europe, vote yes,” former prime minister Antonis Samaras told lawmakers.
Chanting “Take the bailout and go!” thousands of pro-government protesters gathered outside parliament late Monday to back the government’s call to vote “No.”
“The government tried too hard to get this agreement. But the creditors kept asking for more,” said pensioner Satroula Noutsou. “I don’t know what else we are supposed to do.”
Crisis wipes out 2015 gains for Dow, S&P 500
NEW YORK – Fears that Greece’s troubles could spread through the global financial system shook markets on Monday, driving U.S. stocks to their worst day of the year.
Investors fled from stocks in Europe and the U.S. and retreated to the safety of government bonds. Measures of volatility spiked. In many ways, it looked similar to previous episodes in Europe’s long-running debt crisis, except that this time, investors said, they weren’t quite as worried.
A series of events over the weekend left Greece close to defaulting on its debts.
Jeff Carbone, a senior partner at Cornerstone Financial Partners, said the real worry isn’t so much Greece, a country with an economy roughly the size of Missouri’s. “It’s the contagion risk. If Greece goes, who’s next? This isn’t about Greece; it’s what happens next.”
The Standard & Poor’s 500 index dropped 43.85 points, or 2.1 percent, to 2,057.64. The Dow Jones industrial average lost 350.33 points, or 2 percent, to 17,596.35, and the Nasdaq composite fell 122.04 points, or 2.4 percent, to 4,958.47.
The losses wiped out all of the gains for the Dow and S&P 500 indexes this year.
In Europe, Germany’s DAX lost 3.6 percent while France’s CAC-40 lost 3.7 percent. The FTSE 100 index of leading British shares fell 2 percent. Greece’s stock market was closed. Investors bought German and British government bonds, which are seen as safe havens, and sold bonds issued by Greece’s government, sending those yields sharply higher.
“We are really looking at a situation where the market doesn’t know what the fallout is going to be,” said David Lafferty, chief market strategist at Natixis Global Asset Management. “But the U.S. market feels that it is relatively contained at this point.”
Over the weekend, the European Central Bank refused to extend its emergency support for Greece’s banking system. That prompted the Greek government to close banks and announce limits on withdrawals. Pictures of long lines at bank machines in Athens appeared on television screens around the world.
