The following is a special post on the current crisis in Greece. I hope now to return to the regular monthly schedule of the blog, subject of course to further developments in Greece or elsewhere. —Sam Williams
On Sunday, July 5, the Greek people gave their answer to the blackmail of the “troika” of the European Commission, European Central Bank and International Monetary Fund. It was the answer workers and oppressed throughout the world wanted to hear. Oxi! In Greek, no!
The financial markets, so convinced they would have their way, were shocked by the no vote and fell sharply in pre-opening trading. Later, markets were calmed somewhat when Greek Finance Minister Yanis Varoufakis, who had become a symbol of resistance to the troika demands, announced he was resigning in order to smooth the way for renewed negotiations with the troika.
However, the price of oil, which had gradually recovered from its crash late last year, reaching over $60 a barrel, fell sharply on news of the Greek vote, closing at $52.53 on July 6. This indicates fears of a near-term recession and consequent drop in demand for oil. If the price of oil were to remain down, it would increase pressure on the oil-producing countries, especially Russia and Venezuela. The recession in the U.S. oil industry would also deepen.
As is usually the case in a crisis, the interest rate on U.S. government bonds fell as money took refugee in the relative safety of U.S. Treasuries. We can be sure the central banks, led by the U.S. Federal Reserve, have plans to step in if panicky reactions develop in the markets and things seem to be getting out of hand.
The capitalists had figured that with Greek banks closed for a week the threat of starvation—not through lack of food but of money—would teach the Greek people a lesson once and for all. Wall Street and the other big capitalists had been having things go their way at least since the 1980s. But they were not to have their way on July 5.