As Greece slipped deeper into its financial abyss Tuesday, President Obama said U.S. markets and the U.S. economy are weathering the crisis and that the problem is contained mostly to Europe.
“So far, I think the markets have properly factored in the risks involved,” Mr. Obama said at a White House press conference. “For the American people, this is not something that we believe will have a major shock to the system.”
U.S. financial markets rebounded Tuesday despite the expiration of Greece’s bailout program and the failure of last-ditch efforts by negotiators in Europe to strike a new bailout deal. That meant Greece was losing access to billions of euros, and was on course to become the first developed nation to miss a loan payment to the International Monetary Fund.
A European Union official said Greece’s creditors would not agree Tuesday night to a new bailout deal or extension and instead, starting Wednesday, would focus on another plan for the country. The IMF confirmed hours later that Greece had formally missed a scheduled $1.7 billion payment and was cut off from any more money.
“We have informed our executive board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared,” said IMF spokesman Gerry Rice.
The EU official, who spoke on the condition of anonymity because the announcement was not official, said the eurozone’s finance ministers would reconvene to discuss “a follow-up agreement.”
German Chancellor Angela Merkel, whose country is Greece’s largest creditor, ruled out negotiations until after Greeks vote on a proposal from creditors in a referendum Sunday. Leftist Greek Prime Minister Alexis Tsipras has told voters to reject the offer.
Greece’s latest offer involves a proposal to tap Europe’s bailout fund — the so-called European stability mechanism, a pot of money set up after Greece’s rescue programs to help countries facing financial shortfalls. Despite a small economy, Greece’s problems have loomed large for the future of the euro, the health of the European economy, and for possible spillover effects to larger countries that also use the euro such as Spain, Portugal and Italy.
On the streets of Athens, long lines formed again at ATMs as Greeks struggled with the capital controls imposed Monday after a weekend bank run. Cash withdrawals have been limited to about $66 per day, and banks are to remain shut until at least Monday.
The elderly have been hit particularly hard, with tens of thousands of pensions unpaid as of Tuesday afternoon. Many also found themselves completely cut off from any cash because they do not have bank cards.
The crisis has roiled global markets as investors fret over the repercussions of a debt default and a Greek exit from the euro. These developments could derail a fragile global economic recovery and raise questions over the long-term viability of the euro currency.
Mr. Obama said administration officials are encouraging European leaders and banking officials to press ahead to “find a pathway towards a resolution.”
“It is an issue of substantial concern,” Mr. Obama said. “It is an issue primarily of concern to Europe. And if Europe’s not growing the way it needs to grow, that has an impact on us. … It’s something that we take seriously, but it’s not something that I think should prompt overreactions.”
At his news conference with Brazilian President Dilma Rousseff, Mr. Obama also reflected on his recent victories in Congress and in the Supreme Court, including trade negotiating authority that will help him reach a massive free trade agreement with nearly a dozen Pacific Rim nations.
“We were able to get a package of trade legislation that I believe will serve the American people, American workers and American businesses well going into the future,” Mr. Obama said. “In many ways, last week was simply a culmination of a lot of work that we’ve been doing since I came into office.”
He said he has a long list of goals for his remaining 18 months in office, including criminal justice reform, increased spending on infrastructure projects and executive actions such as one Tuesday that will allow about 5 million more workers to qualify for overtime pay.
“We are going to squeeze every last ounce of progress that we can make as long as I have the privilege of holding this office,” Mr. Obama said. “What we’re going to do is just keep on hammering away at all the issues that I think are going to have an impact on the American people. Some of them will be left undone, but we’re going to try to make progress on every single one of them.”
The president also said he enjoyed seeing the exterior of the White House lit up in rainbow colors Friday night to celebrate the Supreme Court’s ruling that legalized same-sex marriage, although he had to view it on TV inside the residence because of security concerns and the crowds outside.
“To see people gathered in the evening outside on a beautiful summer night, and to feel whole and to feel accepted, and to feel that they had a right to love — that was pretty cool,” Mr. Obama said.
⦁ This article is based in part on wire service reports.
• Dave Boyer can be reached at dboyer@washingtontimes.com.
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