July 2015

Greek Referendum to Decide Country’s Fate 

On July 5th a referendum will allow the people of Greece to either approve or reject a bailout offer from its creditors. The country is so highly indebted it is unable to service its periodic debt payments from bailout packages in 2010 and 2012 after the country plunged into recession.

After months of back and forth negotiation neither Greek Prime Minister Alexis Tsipras nor the country’s creditors are willing to blink. The creditors are demanding pension reforms and tax increases to release bailout funds while Tsipras is unwilling to offer material concessions.

With today being the June 30th deadline for a €1.6B payment to the International Monetary Fund (IMF) it appears the country in likely to trigger a technical default. In the history of the IMF no advanced economy has ever missed a payment on an IMF loan. With over €323B in public debt, Greece may be the first country to raise this undesired title (BBC News, 2015).

After announcing the Greek Referendum this past weekend, Alexis Tsipras signaled Greek banks would not be opening until after the vote. Withdrawals from banking machines have been limited to €60 per day to stop the potential of a run on already poorly-capitalized banks.

Odds are being pegged at close to 55-45 on a European supported “yes” we will accept the bailout terms versus a Tsipras supported “no” we will not accept the bailout terms. In the scenario of a “no” vote it is difficult to ascertain whether Greece will stay in the Eurozone. Odds are favoring an exit should this outcome occur, but this is speculation.

The referendum implications will be widespread, but limited (outside of Greece). The Greek economy makes up just 2% of the Eurozone and a miniscule 0.5% of global GDP. The debt load owed to the official creditors: International Monetary Fund (IMF), European Central Bank (ECB), and European Financial Stability Facility (EFSF) is a combined ~€100B and not overly burdensome considering the Eurozone is a €10 trillion economy (RBC Global Asset Management, 2015). In quantitative terms the bailout should not cause large ripple effects outside of the country, but in more qualitative terms the outcome may not be as optimistic. There is potential for contagion, a decrease in market confidence, and precedent setting.

At Morrison & Partners Wealth Strategies we are monitoring the situation carefully. Given the relative size of Greece in the global economy we are more inclined to increase market positions as we would view any sell-off as being short-term in nature.


BBC News. (June 30, 2015). Greece debt crisis: Athens seeks new last-minute deal. Retrieved from BBC News at

RBC Global Asset Management. (June 29, 2015). Eric Lascelles – An Update on Greece.

This newsletter was prepared solely by Bruce Morrison who is a registered representative of HollisWealth™ (a division of Scotia Capital Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada). The view and opinions, including any recommendations, expressed in newsletter are those of Bruce Morrison only and not those of HollisWealth. TM Trademark of The Bank of Nova Scotia, used under license. Morrison & Partners Wealth Strategies is a personal trade name of Bruce Morrison.