Billionaire Wilbur Ross warns that Greece could easily spiral into social unrest if its economic future goes over a financial cliff.
Greece shuttered its banks for the week and imposed limits on cash withdrawals — developments that have reinforced fears the country is heading for a messy exit from the euro that could shake the world economy,
the Associated Press reported.
Investors are fretting about the uncertainty posed by the events in Greece. Though many experts say the global economy — even Europe — is in better shape to withstand a potential Greek exit from the euro, some point out that its implications are not fully clear.
Greece's crisis escalated over the weekend after Greek Prime Minister Alexis Tsipras said the country will hold a referendum on a bailout plan proposed last week by the country's creditors.
And
Ross told CNBC that he fears violence could break out if the situation lingers and deteriorates.
"Once there's social unrest, which there will be before too long if this thing continues, no tourist is going to want to go to [Greece]," Ross said.
"If the Greek people understand how limited those concessions that are requested are, and contemplate going into the abyss on other side, they're never going to pick the abyss."
Last year, the chairman and CEO of WL Ross & Co. and other international financiers invested $1.8 billion in Eurobank, becoming the biggest shareholder of Greece's third-largest bank, CNBC reported. He said Monday he made the bet thinking the current government would not be in power.
Ross said there are lines at Eurobank branches, but surprisingly they're "not totally out of control yet."
In response to the referendum proposal, Greece's eurozone partners refused to extend the country's bailout program, which expires on June 30, and the European Central Bank capped its emergency support for the country's banks, the AP reported. That prompted the Greek government to announce limits on money withdrawals and transfers. Daily cash withdrawals are capped at 60 euros ($67) per account.
"The images of queues at ATMs in Greece are stripping traders of what little confidence they have left in the nation, and the financial earthquake that happened in the eurozone over the weekend can be felt around the world," said David Madden, market analyst at IG.
"Of all the market sell-offs we have witnessed due to Greece this one is the worst in years, and traders who thought a Greek exit wasn't on the cards are quickly reassessing their point of view," he added.
Other prominent financial voices were saying what many Joe Public investors were quietly grumbling. Let's get it over.
International investor Jim Rogers is urging Greece to just embrace the inevitable and “go bankrupt, get it over and start it over.”
“If you ask me what they should do – is just go ahead and go bankrupt, get it over with and start it over. But all this calling names and blaming other people is not going to do any good,”
he told RT.com.
“Greece is a tiny part of the European economy and it’s nothing, it’s insignificant for the world economy. It’s a lot of headlines and a lot of noise; it will cause the markets to be disrupted for a while. But three months from now, none of us will remember if Greece goes bankrupt.”
With Greece's bailout program expiring in less than 48 hours, hopes of a last-minute breakthrough were fading fast. Greeks — used to lengthy talks with creditors before a eleventh-hour deal materializes — were left stunned.
"I can't believe it," Athens resident Evgenia Gekou, 50,
told Reuters on her way to work. "I keep thinking we will wake up tomorrow and everything will be OK. I'm trying hard not to worry."
(The Associated Press and Reuters contributed to this report).
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