Greece and China: A Climactic End in Sight

Heading into last week, I said the global market was suffering from schizophrenia – unable to resolve the disconnect between a relatively strong U.S. stock market and a slew of volatile global risk factors.

Now it seems global markets are having a full blown psychotic break.

Over the weekend, Greece voted “no” to the latest bailout proposal, leaving the country’s future in limbo. Now everyone is speculating on the odds that Greece will leave the euro. The country has already defaulted on its debt to the IMF, and it now faces a $3.9 billion payment to the European Central Bank on July 20. If it fails to pay – and it can’t without a deal in place – it’s game over for the Greek banking system. The only thing keeping them afloat right now is a steady stream of ECB emergency funds.

The country’s finance minister has resigned in an effort to wipe the slate clean and start over with fresh negotiations with Greece’s creditors. But it’s hard to see Germany suddenly having a change of heart here, and with every passing hour Greece’s banks get bled a little drier as Greek savers take out whatever funds they can and stuff them under the mattresses.

At this point though, everything’s still up in the air in Greece.