How would I vote if I were Greek and what sort of impact is this having on how traders make their decisions, these are two things we have tried to look at at eToro ahead of this weekend’s referendum.
Initially my thought would be of patriotism and not wanting to jump back into the tough austerity measures of the last few years. However, capital controls imposed over the weekend have made it incredibly hard for normal life to continue, with banks closed all week and a 60 euro cap on ATM withdrawals.
The question is, would I be happy to go on for an indefinite period of time in this current situation, or risk further crippling austerity measures, and as Alexis Tsipras calls it, the humiliation of the Greek people.
The new government has tried a tactic, but it’s clear they’re out of their depth, a yes vote would at least pave the way to get some politicians in with a grip on what is achievable. As has been said time and time again, socialism is great – until you run out of other people’s money to spend.”
I would vote YES, my view would be that the current government is not capable of achieving what is best for Greece and this time it may be the case of better the devil you know, instead of the risk of the unknown.
Using eToro’s OpenBook social trading network, we surveyed our clients – both in Greece and globally – as to how they would vote in this situation. Looking at the overall picture, there’s little between the two camps with a narrow majority in favour of accepting the reforms.
This is in line with the way the market is behaving – gold prices remain incredibly subdued, however with the precious metal trading at the bottom end of its long term range and many on risk off mode looking for safe havens the eToro sentiment reader is showing that 94% of clients trading gold are bullish.
It seems clear that the market doesn’t want to believe we have a Euro melt down coming round the corner, but traders are taking precautions just in case.
The picture for those with the all-important vote however is rather different.
The eToro clients in Greece, have voted 61% in favour of the NO vote, which would confirm the support for Alexis Tsipras’ mandate to continue to play hardball with the country’s creditors, but could also lead to Greece’s expulsion from the Eurozone.
The risk here has to be that either the market isn’t in tune with popular opinion in Greece, or that revised demands will be stomached by creditors. On the basis that the latter seems doubtful – why would a country like Spain continue to struggle whilst subsidising Greek pensioners? – it’s the former that looks more likely. What’s more, from the rhetoric we’ve seen in the last 24hrs, a no vote will see the rug promptly pulled from under the ailing Greek banking system.
It’s difficult not to think that very soon, we’re going to have made a Drachma out of a crisis.