In Greece those working in strenuous occupations for 25 years and contributing overall for 35 years could retire as early as 55. In 2006, over a third of new pensioners in the country’s main private-sector fund (IKA) belonged to these trades, which remarkably included far from arduous jobs such as hairdressing. And, since a relatively generous minimum pension was available for anyone with at least 15 years’ contributions and there was also a minimum-income top-up payment, it made sense for many to stop contributing once they had reached that threshold of 15 years, by dropping out into the black-market economy.
This is coming to our shores. In fact it's already here. Say you have a 401K. Your retirement plan goes up or down depending on the market. Government employee pensions are paid by the taxpayers and are guaranteed. No matter what they get their money. This is unsustainable and the reason many big cities in America are going broke.
"The problem with socialism is that you eventually run out of other peoples' money."
Long lines formed at ATMs and bank branches across Greece Monday as the nation's financial crisis worsened, limiting cash withdrawals and causing global markets to plunge.
Senior citizens looking to collect their monthly government benefits swarmed closed bank branches Monday in the hope of getting their checks, and lines formed at ATMs as bankers gradually began dispensing cash again following the imposition of strict controls on capital.
Greece has imposed restrictions on money withdrawals and banking transactions to keep its financial system from collapsing due to a run on the banks.
The government has imposed a stringent daily limit of 60 euros ($67) on cash withdrawals from ATMs this week. The banks and the country's stock market have been closed for the week after Prime Minister Alexis Tsipras' surprise call for a referendum next Sunday on creditor proposals for reforms Greece should take to gain access to blocked bailout funds.
Tsipras is advocating Greeks reject the creditor proposals, in the popular vote, which increasingly has the look of a vote on euro membership itself.
The referendum asks Greeks to vote on a simple question: "Should the proposal which was submitted by the European Commission, the European Central Bank and the International Monetary Fund at the Eurogroup of June 25, 2015, which consists of two parts that together consist of their comprehensive proposal be accepted?"
Without a deal to extend the bailout program expiring on June 30, Greece will lose access to the remaining 7.2 billion euros ($8.1 billion) of rescue loans, and is unlikely to be able to meet a 1.6 billion-euro debt repayment to the International Monetary Fund due the same day.
The uncertainty drove Greeks to banks and supermarkets Monday as fears of disruptions to gas and medicine supplies grew, Reuters reported.
"I came here at 4 a.m. because I have to get my pension," said 74-year-old Anastasios Gevelidis, one of about 100 retirees waiting outside the main branch of National Bank of Greece in the country's second largest city of Thessaloniki.
"I don't have a card, I don't know what's going on, we don't even have enough money to buy bread," Gevelidis said.
As global markets plunged following one of the most dramatic weekends in Greece's five-year financial saga, the country woke up to a changed financial landscape that many in the markets fear could be a prelude to a messy debt default and a damaging Greek exit from the euro.
Mounting concerns about Greece drove markets down Monday. U.S. stocks fell, while major indexes in Europe took much bigger losses.The Standard & Poor's 500 index was down 26 points, or 1.2 percent, to 2,076 as of 12:23 p.m. Eastern. The Dow Jones industrial average fell 220 points, also 1.2 percent, to 17,723, and the Nasdaq composite fell 72 points, or 1.4 percent, to 5,009.
"Whenever you see any kind of bank line there is in the back of investors' mind the thought: `What if it spreads? What if people panic?' " said Karyn Cavanaugh, senior market strategist at Voya Investment Management. "What's going on in Europe, of course it's going to roil markets in the short term." But for U.S. investor, she said, "the long-term impact is not that big of a deal."
Investors around the world are worried that should Greece leave the euro and say it can't pay its debts, which stand at more than 300 billion euros, the global economic recovery could be derailed and questions would grow over the long-term viability of the euro currency itself.
President Obama and French President Francois Hollande discussed the Greek debt crisis by telephone, White House spokesman Josh Earnest told reporters Monday.
"The President reiterated to President Hollande something that we have indicated in the past which is that it's important for the parties sitting around the negotiating table to develop a package of reforms and financing that would allow Greece to return to growth and debt sustainability within the Eurozone," Earnest said.
Many elderly Greeks don't have bank cards and make withdrawals in person at bank branches, and so find themselves completely cut off from their money. "Nobody knows anything. A bank employee came out at 8 a.m. and told us `you're not going to get any money,' but we're hearing that 70 branches will open," Gevelidis said.
The finance ministry said the manner in which pensions would be paid would be announced later Monday afternoon. Deputy Minister of State Terence Quick said special arrangements would be made for pensions, telling private Antenna television that pensions would be dispensed in full as many pensioners don't have bank cards.
The daily withdrawal limit wouldn't be enough to cover many basic necessities. "What can I do first with 60 euros? I owe 150 just to the pharmacy," Gevelidis said.
Although credit and cash card transactions have not been restricted, many retailers were not accepting card transactions Monday morning.
Electronic transfers and bill payments are allowed, but only within the country. The government also stressed the controls would not affect foreign tourists, who would have no limits on cash withdrawals with foreign bank cards.
The capital controls are meant to staunch the flow of money out of Greek banks and spur the country's creditors to offer concessions before Greece's international bailout program expires Tuesday.
The accelerating crisis has thrown into question Greece's financial future and continued membership in the 19-nation shared euro currency -- and even the 28-country European Union.
The euro hit its weakest level against the pound since 2007 as international markets reacted to the Greek crisis, Sky News reported Monday.
Asia was the first to tumble, with stocks falling more than 3 percent in Hong Kong and Japan.
European stock markets later dived on opening, with the CAC 40 in Paris and the German DAX both losing 4.3 percent. Banking stocks in Spain, Italy and Portugal bore the brunt of the sell-offs in their respective countries, as the problems in Greece infected investor confidence for the first time since 2011 -- the height of the eurozone debt crisis.
As the FTSE 100 in London fell 2.2 percent, British Prime Minister David Cameron said he sees Sunday's referendum in Greece as essentially a vote on remaining in the eurozone -- and that it is for the Greek people to decide.
Cameron told the BBC that if the Greeks vote no on budget savings and reforms that the country's creditors had proposed in exchange for loans, he would "find it hard to see how that is consistent with staying in the euro."
"The images of queues at ATMs in Greece are stripping traders of what little confidence they have left in the nation, and the financial earthquake that happened in the eurozone over the weekend can be felt around the world," said David Madden, market analyst at IG.
Among the major markets in Europe, the CAC-40 stock index in France was down 3.6 percent at 4,877 while Germany's DAX fell 3.5 percent to 11,088.
Tsipras announced the capital controls in a televised address Sunday night, blaming the eurogroup, the gathering of the eurozone's finance ministers, and its decision to reject an extension request for the bailout program. He has asked again for the extension to allow for the referendum.
French Finance Minister Michel Sapin said talks with Greece could resume at any time, while Pierre Moscovici, the European commissioner for economic affairs, said negotiations were cut off when an agreement seemed within reach.
The situation now largely rests on a `yes' vote in Greece, Moscovici said.
The referendum decision, ratified by Parliament after a marathon 13-hour session that ended in the early hours of Sunday, shocked and angered Greece's European partners. The country's negotiations with its European creditors have been suspended, with both sides accusing each other of being responsible for talks breaking off.
Greece is dividing into two camps ahead of the referendum. A demonstration is planned in Athens later Monday by those against the proposals from the creditors. Another one is planned for Tuesday by those who want to make sure that Greece's position in Europe is not threatened.
Tsipras also blamed the European Central Bank's Sunday decision not to increase the amount of emergency liquidity the lenders could access from the central bank -- meaning Greece has no way to replenish fast-diminishing deposits.
"It is now more than clear that this decision has no other aim than to blackmail the will of the Greek people and prevent the smooth democratic process of the referendum," Tsipras said. "They will not succeed."