Greek Stock Market Rebounds But Companies Still Plan For Euro Exit
After a $22 billion boost for Greece's four largest lenders, Greek stock markets rose on Monday after a 22-year-long low. While the support may have temporarily rescued the country from eurozone exclusion, Forbes reports that Greece isn't in the clear just yet as CEOs still prepare for the worst— that Greece will exit the eurozone with the country's civil unrest to follow.
- "Those preparations include sweeping cash out of Greece every night, cutting debts, weeding out badly paying customers and readying for a switch to a new Greek drachma if the country is forced to abandon the euro."
If Greece does not adhere to its austerity promises, other countries in the 17-nation eurozone will stop bailout funds. ABC News describes how it would "unleash chaos":
- The government would be unable to pay hospital workers, police and teachers, pensions would dry up, and a potential panic run on bank deposits would destroy the tottering financial system. Eventually, the country could be forced to abandon the eurozone, reverting to a vastly devalued form of its old drachma currency.
Much will depend on the election next month and whether the pro-bailout parties will win, said Sergios Melahrinos, analyst at Solidus Securities, to ABC. Elections in May proved inconclusive as angry voters opposed the bailout while still wanting to stay in the eurozone. But recent polls showing favor for the pro-bailout parties is likely what caused the boost in Greek's stock market Monday.
Greece isn't the only one with problems.
Spain also struggles on the verge of financial crisis as its nationalized banks are requiring more bailout funds than initially anticipated.