A failure of Greece's politicians to accept new austerity measures Monday rippled through the currency markets of London, the government halls of Budapest and the pits of the New York Stock Exchange.
Greek political leaders from the country's three majority coalition parties were scheduled to present a decision Monday on austerity measures to the troika of global institutions -- the European Union, the European Central Bank and the International Monetary Fund -- that the country is depending on for a second bailout.
The troika wants Athens to enact further tax increases, more cuts on government services and a lowering of the country's minimum wage as preconditions to receiving a new €130 billion ($170 billion) loan. Greece needs that loan to meet €14.5 billion ($19 billion) in bond obligations coming due in early March, and will likely face an involuntary default and possibly expulsion from the common currency unit if it fails in securing those funds.
Argument About the Deadline, Minimum Wage
But despite that potentially catastrophic outcome, Greece's political leadership has pushed back against the troika conditions -- especially slashing the minimum wage.
An early morning statement from Panos Beglitis, a spokesman for one of the political parties in Greek's ruling coalition there is no deadline was rebuffed by European Commission spokesman Amadeu Altafaj, who told a news briefing we have gone beyond the deadline already, according to Reuters.
Shortly afterwards, German Chancellor Angela Merkel told a different news conference there can be no deal if the troika proposals are not implemented. They are on the table, time is of the essence. Something needs to happen quickly. A lot is at stake for the entire Eurozone.
According to various sources, the most contentious point of discussion preventing a decision from moving forward was the requirement that Greece lower its minimum wage, which currently averages €871 ($1,140) per month, to a level around €550 ($719) a month.
The rhetoric regarding this point reached a boiling point Monday.
Antonis Samaras, the chief of the country's main conservative party said creditors are asking for more recession than the country can take, according to The Guardian.
The leader of the one of the country's populist parties, Giorgos Karatzaferis, was even more effusive, stating he was not going to contribute to the explosion of a revolution (by supporting) a wretchedness that will then spread across Europe.
Ripples, Ripples Everywhere
The impasse in Athens was blamed for the euro falling more than one percent early Monday to $1.3028. The currency did recover, rising back over $1.31, later in the day, but was still weaker against both the dollar and the yen.
The uncertainty also affected the national currency of Hungary, the most-indebted country in Eastern Europe, whose leaders are negotiating their own IMF-backed bailout. In addition, the spread on yields for Spanish 10-year notes, especially when compared to benchmark German bunds, widened Monday.
Equity markets were also depressed worldwide. In the U.S., the benchmark S&P 500 was down 4.37 points, or 0.32 percent, to 1,340.53.
Further developments in Athens are likely to keep world markets enthralled this week.
Greece's two main trade syndicates have called for a 24-hour strike Tuesday in protest against further austerity measures. Meanwhile, Greek banks are looking to this week as the one in which their future will essentially be decided as -- holding massive amounts of heavily devalued Greek debt -- they will need to be re-capitalized or nationalized soon.
All in all, the developments have created a pressure-cooker atmosphere for the Greeks.
In comments to Reuters after what he called a very difficult conference call Sunday, Greek Finance Minister Evangelos Venizelos admitted that there is great impatience and great pressure not only from the three institutions that make up the troika but also from euro zone member states.