The Greek debt crisis took a turn for the worse on June 28. The government announced that all banks would be shut down and a limit would be placed on how much can be withdrawn from ATMs in a day. The stock exchange will also reportedly be shut down. Greece is quickly slipping toward defaulting on its loans and heading towards an exit from the Euro zone. The trigger for the rapid escalation of the Greek crisis, was the government's decision to pull its negotiators out of bailout talks on June 26. Prime Minister Alexis Tsipras rejected a draft proposal from the European leaders and the International Monetary Fund (IMF) and said that he would present it as a referendum to the Greek people on July 5. People line up outside a bank to withdraw money before it closes | Source: Reuters

Global financial chaos

The Lehman collapse caught everyone by surprise, leading to the meltdown of global markets. Investors are now concerned that a similar situation is imminent because of Greece.

If Greece leaves the euro zone, it could lead to a collapse of the latter's financial system given the huge amount of debt owed to members of the European Union by Greece. It could also lead to a domino effect in other economies, particularly that of Spain and Italy, which are considerably larger than Greece and could have a bigger impact on the GDP of the zone.

A collapse of the euro zone will have major effects on the global economy, as a massive percentage of global exports are consumed by countries in this zone.

The repercussions of the Greek crisis are already being felt in parts of the world. The Indian stock exchange, Sensex, opened on a negative note on June 29. It exercised caution throughout the day as investors were worried about the Greek crisis. The BSE Sensex fell 166.69 points to close at 27,645.15. NSE Nifty shed 62.70 points to end at 8,318.40.

At this point one can only hope that the Tsipras government in Greece knows what it is doing. It is all very well to take a stand against bullying by the Euro zone members, but it should not affect the financial stability of the entire region.