Stocks Tumble on Greek Debt Crisis

A rough day for stocks as Greek debt fears spur selling across the globe. Greek banks are closed for the week as the financial system tries to preserve dwindling cash reserves.
7:08 | 06/29/15

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Transcript for Stocks Tumble on Greek Debt Crisis
The closing bell ringing on a rough day on Wall Street and across global markets the cattle Greece. Or thankful for it. Prices he. Near the down. Hunting for 850. Points or 2% following people moves in Europe and in Asia. Tonight Greek citizens are taking to the streets to protest new capital controls means Greece can only. Withdraw sixty euros a day and austerity measures likely on the way now with prime minister Alexei product. Calling for a referendum on Sunday to vote on the measures the problem is the government run out of money tomorrow. Hi everyone I'm Caroline Costello in new York new this hour credit rating from S&P claiming there's a 5050 chance. That the country X it's the Euro zone. Joining me now with the latest on what is happening in Greece and the markets is ABC's chief business and economics correspondent Rebecca Jarvis. Rebecca negotiations were ongoing this week and then all of a sudden. Greece's eurozone partners said enough is enough so what happened. This is then. Five years enough is enough and it's been this game of chicken where you're up. Has constantly got degrees since that you need to put restraints on he needs pass austerity measures Greece has passed. Minimal austerity measures they've continued down the road to do more and more. But now this is the final game you have Greece tomorrow has a payment on that that Greece cannot make. Without the help of Europe. Then you have this referendum that you mentioned on Sunday where Greece's PM it's saying to its people. We get to decide if people either we we have by Europe's austerity measures and get their bailout funds or we decide to go it alone the going alone. Is the now that's where we don't really know what that looks like but you mentioned Aston peace as they now think there's a 5050 chance that Greece exits the Euro zone that Greece exits the Euro. That would be a very very significant thing burglaries it also is significant thing for the rest of Europe where what how batted six four of the Euro zone is. Greece does act it this is up to a lot of different opinions there's a lot of different opinions on this bid doomsday scenario. Is that Greece right now you mentioned this in the introduction you see people there's there's. Wouldn't call it runs on banks entirely with the banks have run out of money the people are waiting in lines they now are having to you only take out sixty. Euros a day from their bank account that's a big deal. If Greece leaves the Euro zone the fear would be that other countries in Europe which are also in pain right now Italy Spain. Ireland Portugal there was economies are also in pain if those countries if the people in those countries watched trees and they see this pretty scenario playing out and they start to get nervous about their own economies and and the people in those countries start going to there it's taking money out of their banks because they think something that is coming. That's the real doomsday scenario where you see this becoming much bigger. But at Sam's right now Greece's only to curse of the EU's GDP so as bad as it is for re right now outside of the near term stock shops that we're seeing today it's not a ripple effect scenario just yet okay and I mean if Greece does make this decision to exit the yours down. What happened that mean they go back to an old currency how does that have any value at this point how many have an economy or play in the global market. It's a bigger question it's it's not. It's simple it's not a simple questions even answer. We don't know what exactly will happen what what is clear is if they leave the hero and they have the drop if they start printing droplets that end. That currency is not have a lot about you and you'll all these people who currently have money in bank accounts in grief. They are in euros if those funds it converted into droplets and the people go to bank accounts and they try and retrieve their funds and there are now drop us. They're playing with cash that has little to no value and that's scary for the people who priest. Also it becomes a question of how Long Will it take to for Greece today it's up out of this hole it's really. A lose lose situation for this country right now because they already have 25%. Employment. They've already undergone dramatic cuts they've already hiked taxes there. It's not ate there between Iraq art history and and as you mentioned in you know the currency isn't backed by a gold or anything you know like we used to see back in the day here in the US if it's all about it trumpets yes trust exactly. People trust. A pump tree and made by that country's currency they by that country's debt. That's how that that's exactly how countries where that's how we operate in the United States when we want to do something. We can either hike taxes or we could issue debt. You do one of those two things to make money as a country. Well people believe in the United States so they buyer treasuries because they believe in what we stand Ford they believe it. The confidence in our currency the confidence in our economy exists. Whereas Greece. They don't have that out but it's right now. First off there about two people on their debt anyway so issuing new debt is not really a possibility. And second of all they go to this drop this old currency of theirs and now back to that. Indeed they are just eat it's really a bad situation. Stocks tumbling across the globe including here in the United States. What is your take on that at this expected. Or could this really get worse. Well I think it's going to be volatile no matter what because you have beast you beta announced Tuesday tomorrow is deep well day. And then Sunday is referendum date where the Greek people get to issues do they accuse austerity. Or do they choose to go for the unknown to go it themselves you. Earlier today the prime minister a priest went on national television in Greece and told his people about. To vote to go into that unknown but it into that unknown placed at to leave. You're up essentially. And again in. Who knows what apple why schedule the referendum. A week after her. The day the deadline for the big question it's it's because of timing it has to do with keeping just getting the resources and also right now increased right now there is a rally. That says there's a rally foreboding note to the referendum tomorrow there's a rally to vote yes the referendum by the way so there's people on both sides of this bear. How interesting that it is Rebecca Jarvis thank you so much really appreciate it. You can keep up with this story in real time a gallon ABC news at and storing this story for exclusive updates on the go and talented fellow in New York.

This transcript has been automatically generated and may not be 100% accurate.

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