In this weekly series, we break down seven different things every person needs to know from the world of finance news. We're taking complicated stories and making them simple, easy to understand, and quick to read. Perfect for the man who wants to be in the know, but doesn't have the time to obsess over global markets.
If you switched on CNN or opened a newspaper this week, you will have been confronted with the news in Greece. Here’s a boil-down for you on what’s happened in this historical week.
The people of Greece are voting on Sunday in a referendum that will likely determine their future in Europe. Here are seven takeaways to help you understand what’s going on.
1.) Greece Owes Money To 3 Different Organizations
- The European Commission (usually referred to as the Eurozone), the European Central Bank (ECB) and the International Monetary Fund (IMF).
2.) The Greek Government Opposes New Austerity Measures
- The governing party, Syriza, was elected last year with a mandate to oppose austerity measures like cuts to government spending.
3.) But No More Austerity = No More Money For Greece
- The creditors would not agree to giving Greece more money, if it didn’t agree to more austerity measures.
- Instead of caving to the creditors’ demands, the Greek government called a referendum for the people to decide whether or not to accept the creditors’ proposal.
4.) No Money = No Banks
- Banks have been shut all week because they literally do not have enough Euros to give to people that would want to withdraw their money.
5.) A “Yes” Vote Would Likely Keep Greece In The Euro
- On Sunday, the referendum is held. Although it’s not totally straightforward, a "Yes" vote would likely lead to a new deal between Greece and its creditors.
6.) A “No” Vote Would Create A Ton Of Uncertainty
- Greece would probably have to create a new currency, a humanitarian crisis could easily develop and Greece might have to leave the European Union.
7.) This Is Important Because Of Its Effect On Other European Countries
- Greece is a small country with a small economy; it is not economically important to the rest of the world. But if it leaves the Euro, it will undermine investor confidence in the Euro currency bloc and the potential for unintended consequences is high.