In a landslide, the Greek voters rejected the terms of the European Union bailout package on July 5th, 2015. The vote was whether or not to accept the terms laid out by European creditors, namely France and Germany, to get Greek finances in order as a condition for further loans from the European Central Bank.
The conditions included, among other things, stronger austerity measures (cuts to government spending on things like pensions and social welfare entitlements), and tax increases to strengthen the Greek government’s financial positions.
The rejection of the proposal means that European lenders will no longer be extending more lines of credit to the Greek government, which is quickly running short on funds. Greek banks have already been closed for a week, as they do not have capital requirements to extend loans. Greek citizens have been limited to 60 euro per day ATM withdraws, and hoarding of 20 Euro notes has led to an overall shortage (so even ATM withdraws have become problematic).
If Greece does exit the Euro and needs to begin printing its own money to manage its debt, most analysts predict that the purchasing power of its citizens will drop between 30 and 60% overnight, as the resurrected Greek currency is quickly devalued against the Euro, and could be a catalyst to even greater financial strife in the months and years to come.
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