Greece has reached the point of financial insolvency that the government will close all the banks tomorrow in an effort to prevent what’s called “a run” on them, where a panicked population rushes to their banks and withdraws all their money, and the banks have to shut down for lack of funds.
If this happens, their banking system collapses. Paychecks can’t be issued if there’s no money in the banks to cover them, all personal and business finance must either be done in cash or not at all. Chaos will ensue, along with looting and rioting when people have no money to buy food. A banking collapse makes this unavoidable.
Greece has been a poor nation now for a very long time, and a poorly managed one as well. The formation of the European Union attempted to take all of Europe under it’s single flag and single currency, but each nation held onto their own forms of welfare and socialist entitlements. Greece has perhaps more entitlements than any other European nation and can afford them the least. Not a good combination, and when some of these entitlements were taken away as part of the demands made by the EU, in exchange for bailout loans, the people rioted. Now, there will be no more bailout money, Greece is about to default on a $1.75 billion debt payment, which will end any further emergency loans and possibly force their removal from the Eurozone.
Originally, Greece was included in the EU because of the dreams of the EU’s founders, who wanted a trade bloc to rival the United States, Russia and China in size. But Greece proved to be a bad apple in the barrel, with it’s poverty and welfare entitlements, so then the EU tried to fix it by pouring money into Greece. It didn’t work and now, if Greece collapses monetarily, the Euro may end up doing the same thing as other, poorer EU nations also default on their payments or return to their own former currencies. This could actually lead to war in Europe as military intervention to prevent other nations from leaving the Union is a distinct possibility.
For a more detailed explanation of what’s going on in Greece, from the BBC, click here.