people confront the past from depression to deep-freeze. china -- a self correction. stocks will have a 30 year golden age. right. sunday, obama and merkel speak on greece. this monday, janet yellen and mario draghi will most likely chat. this is "bloomberg surveillance ." it is monday, june 29. i'm john tom keene. joining me, vonnie quinn. you and i, carl, in the last two hours have talked about not overselling a market plunge. >> it looks like we have a fairly solid buffer in place, so obviously we did see a reaction in the euro and a reaction in equity markets. that seems to be deteriorating

as the world wakes up and processes the news. tom: we are doing better than we were 12 hours ago. vonnie: the dax is down 3.75% now. most of the euro down 1.4% versus the yen. why is that? tom: we saw that from thomas jordan of the swiss national bank. in a moment we will give you insight and perspective all throughout "bloomberg surveillance, including with our erik schatzker. here are top headlines. vonnie: the government of greece is doing whatever it can to make sure it's banking system does not collapse. it is also moving toward an exit from the euro. greek banks will be closed for six days, and the government has imposed capital controls to keep money from pouring out of the country. the ecb has now frozen the limit on how much emergency aid it will give to greek banks.

>> this decision today led the european central bank to not increase the liquidity to greek banks and force the bank of greece to recommend measures for a bank holiday and limit bank withdrawals. it is more than clear that this decision had no other goal but to blackmail the will of the greek people. vonnie: next sunday, greeks will vote on whether to open the door to more bailout aid. alexis tsipras is urging greeks to vote no. the manhunt for two escaped convicts in upstate new york is now over. david sweat is in critical condition after police wounded him sunday in a rural area near the canadian border. he has been on the run since june 21. fellow escapee richard matt was killed in a competition with law enforcement friday. diplomats in vienna are on the verge of reaching an agreement

on iran's nuclear program. the european union's foreign policy chief says the two sides are close to a deal. the u.s. and other global powers want to make sure iran is not trying to build a nuclear weapon. in exchange, they will ease economic sanctions. sanctions will not be lifted until after -- the shanghai composite index down more than 3% today. that marks and end to china's largest all market ever and overshadows the central bank's attempts to revise confidence by cutting interest rates over the weekend. tens of thousands nationwide joined gay pride parades yesterday, buoyed by the supreme court ruling that made gay marriage legal.

in chicago, a gay couple were married on a parade float. you just have to enjoy those scenes. tom: they was raining. it was miserable. then it cleared up. i am doing a data check right now. i thought i was doing in inflammatory, historical data check. that is not the case. futures are now -23. two-year yields, prices up you'll down. euro, 1.11. on to the next screen, if you would. the vix there is where it was last week. the greek 10-year is a higher yield. the u.s. two-year that 0.64. carl riccadonna, help me out.

this is what would have happened if the euro had never happened. here is germany and greece joined at the hip, and this is the weight has been since 1999. here are three ugly moments of the 1990's. indonesia, russia, and mexico are you mentioned argentina. here is what mexico actually did in their depreciation. this is the distance greece would have to travel. carl: this is the question greek voters have to decide on sunday of next week. there will be a significant evaluation of the currency, very high inflation. it is a lot of economic pain. tom: in our discussions with jeff sachs of columbia this morning, it is a double-barreled when will they restructure. vonnie: you see different proposals. william hill is not taking bets

anymore because they are only betting on greek exit. we do not know what the drachma would be. with market decisions. tom: part of the mystery this morning, the fed and the european central bank involved in this as well. we begin our coverage with erik schatzker in athens, hans nichols from brussels. we had terrific market coverage earlier with our london broadcast. erik schatzker, the funds are on the run. what is the back story the streets of athens this morning? erik: the backstory is pretty much simply this. athenians and greeks woke up this morning to the inevitable. it was almost inevitable after sippers called the referendum on friday that capital controls would have to be implemented to prevent the economy from spiraling out of control and allow the government some azure of control, -- some measure of control over the financial

system, which otherwise would have sustained a greater run on the bank than what we see happening now. it is a run on the way in the capital controls allow it to happen. greeks are allowed to withdraw 60 euros per day and all payments and transfers out of the country armband -- are banned outside specific situations. tom: what is the response of the other political parties? how have they responded to the sippers -- the tsipras referendum? erik: it is 1:00 in athens already. things 10 to start a bit late and greece. it was not until 3:00 in the morning that the government had capital controls put in place starting with the bank holiday

today, lasting until at least next monday. the big question hanging over everybody's minus -- do the banks even reopened -- on everybody's mines -- to the banks even reopened next week? what is the probability of a greek exit from the eurozone? mohamed el-erian puts it at 85%. he is at the top. then you have michael michael lead us -- luigi speranza from bnp, at 20%. they kind of average out to 50, but that is neither here nor there. tom: we now moved to berlin, where hans nichols has perspective from a week in brussels. it has been a tumultuous weekend. does merkel have the german people behind her this morning? hans: we will find out in a little bit. in some ways, she does not need to bring the german people

along because negotiations are off. she would have had a hard time selling a third deal that included debt relief. it does not look like we are anywhere near that. if you think there will be a new government near athens and then in august we come back for a third negotiation, then her task will be more difficult because there is a fair amount of public rancor and frustration with the greeks. we heard from someone in the finance ministry who said there would be no problem with the referendum in april. they do not understand why they are doing this at the end of june. vonnie: yesterday late afternoon, john paul juncker tweeted out a link to the press directed to the people of greece , in greek and in english. is this to counter alexis tsipras' push for a no vote? hans: absolutely.

the greek public is not a u.s. jury under sequestration. you can try to influence them and it will go both ways. you will hear a variety of sweeteners. one quick note on the tweet that was put out -- a close ally of mr. tsipras took a picture of that document, held it up tweeted it out, and said "the so-called nonexistent ultimatum." a lot of european officials want to see greece somehow come back into the fold, but we will have a lot of attempts here especially in germany and elsewhere in europe, to try to convince the republic before they vote that they should vote yes. carl: a question here from carl. what is your sense of unity among the hard-liners in the euro zone between the germans and maybe the softer line taken by the french and the dutch and some of the other ministers?

hans: the germans have been vindicated in their skepticism that series of was serious about a deal. in some ways, the french are stemming more like the germans. -- are sounding more like the germans. tom: john, you mentioned this was intervention. we will see a lot more like this. would you presume we will see central banks organized action this morning? john: it depends on a number of things. it is the issue of duration. the swiss national bank facing continuing pressure on the swiss franc. the reaction was a pretty obvious one. they intervene. for me and everyone else, the question is duration how long it goes on for. you can have spreads widen, but if that goes on for four days then we start to think about the ecb's role in all of this.

and aggressive widening of spreads may just do it. and for you guys in new york what does janet yellen do? everyone participating in the first rate hike since 2006, if that comes in september, it will give everyone a lot to think about as well. tom: coming up, we will continue coverage against stable markets. although we see seismic moves from where we were friday as well. gina martin adams is with us from wells fargo. janet yellen has to be watching this tick by tic. she has the advantage of stanley fischer, doesn't she? gina: she has the advantage of stable markets this time as well. we are just having this conversation about greece, which strikes me. in former episodes of greek potential contagion, we would

have seen the benefit. we have not seen that this time around. markets have been extremely stable, so we have to go through a hotel of disabling market performance -- through a disabling market performance. tom: our twitter question. i was going to put it on the new york mets p pitcher. but who is to blame for the greek crisis? stay with us. "bloomberg surveillance." ♪

tom: good morning, everyone. greece in crisis. the markets are fairly stable but political economics are genuine.

let's get to top headlines with vonnie quinn. vonnie: the financial system has another crisis to deal with. this one in her to rico. -- in puerto rico. puerto rico hopes to defer a debt payment while negotiating with creditors. hedge fund buyers have been accumulating puerto rican bonds. according to the financial times, investors put $1 billion in two and eps that tracks cyber security stocks. so far in 2015, the bts is up 24%. and space x is vowing to find out what caused one of its rockets to explode shortly after launch. it was a little more than two minutes into its flight yesterday when it was what. that's when it blew up.

pretty phenomenal photograph there. tom, market makers anchor erik schatzker coming up next. tom: we will have any comments angela merkel makes as well. erik schatzker is in athens. erik? erik: i am here with miranda from ef consultants, also an advisor to a prime minister in the early 1990's. thank you very much. whose court is the ball in right now? is the situation in the control of the europeans, or does mr. sippers have control? miranda: i think the europeans want to give greek an opportunity for a last-minute agreement for the program expires at the end of tomorrow. erik: so mr. sippers needs to

make them -- so mr. tsipras makes them an offer? if the program expired and also greece defaults on a 1.7 billion euro payment to the imf do tomorrow, what happens? miranda: it will be hard for the european central bank to accept the collateral so there is a question as to whether the liquidity provided by the ecb will continue after tuesday. erik: is that is the case, is the greek banking insolvent after tomorrow night? miranda: yes, it does. erik: if the european creditors refused to accept greek bank assets as collateral, this banking system is done and there is no way -- i do not want to put words in your mouth, but

there is no way these banks could reopen on schedule next week? miranda: that would be very hard. erik: what are the implications of that situation? ben bernanke blames the great depression on the collapse of the banking system. is that what we are looking at next week? a depression? miranda: yes, there would be chaos. there would be unrest. they are running a primary deficit right now. there would be chaos beyond that. erik: what is the probability that that happens? what are the chances of that right now? miranda: i would hope that -- erik: we are all hoping. miranda: mr. tsipras believes firmly that europeans need greece as much as recently, which is sadly not the case.

i think he is just trying to push the blame to voters. erik: tom, vonnie, that is miranda xafa laying it out in stark terms what could happen. tom: coming up in our next hour, mohamed el-erian will join us and also jeffrey sachs will join us without question, the most talked about op-ed of the week. he was scathing about sho euble and the germans. this is "bloomberg surveillance ." good morning. ♪

tom: good morning, everyone. we will have quotes for you when there is something of substance. you have many people speaking including with our morning must-read, vonnie quinn. vonnie: there are so many great editorials today. i wanted to look at one from the former ecb board member, in "the financial times." vonnie: that is definitely more than -- tom: a very thoughtful essay.

carl riccadonna is with us from bloomberg economics. an amazing quote saying that he cannot rule out -- carl: absolutely. come sunday of next week, if they reject the demand, we will close to that stage. vonnie: the greeks might be used to navigating small stretches of water, can they navigate their past in the euro area? jamie murray, thank you for joining us. how does greece get to sunday and the referendum, given that they are probably going to default tuesday? jamie: we know the consequences with defaulting in the imf do not get serious for a little while. the biggest problem is the bailout was not extended to get to the referendum, so that makes

the referendum difficult because we do not know what they are voting on. vonnie: ok we are going to continue on in a moment. stay with us. tom: we need your response. we have already had a huge response. who is to blame for the greek crisis? futures deteriorate, -22 down to -26. dell futures down -208. stay with us. "bloomberg surveillance." good morning. ♪

tom: good morning, everyone. lots to inform you about greece. let's begin with mohamed el-erian, formerly with pimco writing up a storm this weekend for bloomberg view.

tom: this morning that is the great debate from mohamed el-erian. he will join us in our 7:00 hour on the idea of the return of the greek drachma. let's get to top headlines with vonnie quinn. vonnie: the german spread now 193 basis points, widening today. greece will be forced out of the euro. greece has closed banks until next monday to keep them from collapsing. a nationwide address, alexis tsipras tried to reassure the greek people. alexis tsipras: the deposits of

citizens in greek banks are absolutely secure. equally secure our the payment of salaries and pensions. any difficulties which may arise must be dealt with calmly and with resolve. the more calm way we difficult -- we do with difficulties the vonnie: milder the consequences will be. vonnie: next sunday, -- the current bailout program expires tomorrow. david cameron says the u.k. cannot hide from terrorists. at least 15 british nationals were killed. among those killed when a gunman opened friday at a resort. cameron says terrorists "have declared war on us to cope the fbi is warning of a possible terror attack targeting the fourth of july holiday. the chairman of the house counterterrorism subcommittee peter king, spoke on abc. peter king: i would say there is

more concern now since september 11. isis have a multilevel operation. there could be some coordination between those out there. vonnie: there is no specific threat of attack. the field of republican presidential candidates keeps getting larger. ohio governor john kasich plans to announce he will run for the white house. bloomberg news reports he will make the announcement july 21. there are 13 republican candidates already. there will be 14 after tomorrow. that is when new jersey governor chris christie will announce he is entering the race. in pro basketball, lebron james reportedly will become a free agent again. but relax, cleveland fans, he is not expected to go somewhere else. espn says james will decline the option on his contract with the cavaliers but will not leave

with any other team spirit that would set him up to get a bigger, long-term contract next summer when the nba's new tv contracts kick in. tom: you have lived it in ireland. chancellor merkel with truly historic headlines going back to the post-world war ii period. "if the euro fails, europe fails here." more and more, it is less of a future with greece. jamie joins us from london. i am going to ask you a blonde question. how much will be greek drop depreciate -- i will ask you a blunt question. how much will the greek drachma depreciate? jamie: we will have a referendum that will feel like an in-out vote. based on the question, they will

probably stay in. carl: if they do accept the austerity measures, does the alexis tsipras government go to a no-confidence vote? who is likely to be the next prime minister? jamie: it seems very likely. it is possible you could have a unity government. which of those it will be is up for grabs. the trouble is they will still have to negotiate some sort of position. the offer on the table last week is not technically still on the table. tom: jamie, thank you so much. carl? carl: the majority of wall street economists were shifting toward the view that the initial fed interest rate increase would occur in september. about half of monetary policymakers were leaning toward a similar outcome. however, against the backdrop of an economy very near full employment and she degree -- and gdp growth accelerating, the

question is whether a deteriorating situation in greece can derail or delay the fed liftoff and potentially by how much. joining us from wells fargo's gina martin adams. what is your position on this question? gina: there is already at the virgin's -- there is already a divergence from what economists are predicting and what the market is showing. while wall street economists may have been expecting the september hike, the futures market was not already. i tend to side with the futures market over the economists. the futures market has been more correct, and right now it is suggesting the most likely first rise is december. the futures market is anticipating some struggle this summer. the inability of the fed to get to that first hike in september. tom: i am baffled by the idea that this is the central bank that can work in a vacuum and

not ignore what we witnessed in the last 48 hours. do you agree, carl? carl: i have to wonder what the feedback mechanism is here. i'm interested in gina's opinion, but my opinion is watch dollar euro. there was a strong dollar back in march, and if we go back to an environment of a strong dollar -- tom: but we do not have that yet. is the dollar your litmus paper on how janet yellen will act? gina: there are three things to watch. the dollar is absolutely one of them. in each of the last three greek crises, the dollar has spiked. what is interesting about this experience -- tom: i looked at bulgaria. i wake up in the morning and i have to check the bulgaria five-year cds. it has not moved. gina: all of these peripheral economies are not paying more

for credit protection. so the market is not anticipating any credit protection out of greece. vonnie: with the risk of sentiment steps around the world, they are saying the greeks could do without a jobs report this week. a good jobs report and wage growth. gina: the last nine weeks we have not seen a 1% up or down week in the s&p 500. we have this historic sleepy market. carl: it is going to be harder for the fed to sell the notion of waiting until december if we get a further decline in the unemployment rate. tom: i was chagrined about the 2% and 1% moves are we a market that has just forgotten? china is having a correction, we are not.

have we forgotten about those moves? gina: i think we have been a little bit asleep at the wheel. the limited volatility across the financial markets in support of the market being asleep at the wheel -- now that volatility is moving, we should see more in the price index. carl: subsequently, what do you see? gina: i think it will be very slow, in the least -- at least in the initial stages. there is nothing forcing the hand of the fed at this point, considering the economic data they follow. unless the economic data sees some momentum -- which is unlikely -- there is nothing forcing the fed to move faster. vonnie: gina martin adams is with us. she will be with us for the entire hour. we're talking about the original sins in the euro area. taking a clear picture of the real winners and losers.

that leads to the twitter question of the day. who is to blame for the greek crisis? @bsurveillance. we are going to continue speaking with gina martin adams on "bloomberg surveillance." ♪

tom: that morning, everyone.

greece in crisis. ian bremmer and many others commenting over the weekend. this was desperation. "when you play a horrible hand you usually lose." let's get to our single best chart with vonnie quinn. vonnie: the single best chart on greece. it comes from the bank of cyprus. the chart focuses on the winners and losers of the euro crisis comparing real gdp of germany to greece. it shows how greece has decoupled from the rest of europe since 2010. tom: very good. no question about it. you see the absolute diametric oppositions. the former central bank governor of cyprus within and before the

crisis, a noted federal reserve researcher. if you hear the phrase "toolbox," you probably got it from his acclaimed research decades ago. he joins us this morning. professor, simply here, is greece different? if iceland was an island, if cyprus was an island, could capital controls work if greece were attached to continental europe? >> very happy to be with you. capital controls are a terrible thing. it is really prove of the failure of the euro. it cannot -- it can actually work, and how does it work. investors people from accessing their accounts, so they may not even have the resources to buy

food so they work by creating terror. this is why it is such a terrible thing to be doing. tom: if we get a drop my. if greece detaches itself from the euro, how much will the drop my depreciate? >> really right now i think all of us should try to salvage the situation. it is best for everybody for greece to stay in the euro area and my hope is that u.s. authorities would help europe get out of this mess. as they have twice in the 20th century. tom: if they get out of this mess, that informs a restructuring. what will be the catalyst to get to a restructuring? athanasios: this is where

understanding the original sin become so important. greece is in trouble for two reasons. number one, it hasn't responsible government -- it has an irresponsible government that overspent since 2010. in 2010, the german element effectively used the imf to protect its own banks and load up the greek people with a lot of debt that they could not service right now. if we understand the treatment the government of germany played , we can understand there is a lot of blame going to berlin, and the restructuring that is necessary right now is all about the german government realizing they should accept art of the responsibility for the damage they have done. tom: this is exactly what jeff sachs was talking about in his article over the weekend. carl: the amount of austerity here is having a very severe impact on the greek economy.

i have a question for announcer: athanasios:. is there a path to capital controls that does not result in depression for the greek economy? athanasios: i think the greek economy is already experiencing an incredible recession. this would lead to a depression very quickly. it is a terrible situation that needs to be avoided. we need to stop the madness as fast as we can. vonnie: if germany did lemnd the money to greece, and then germany bears the responsibility, is prime minister tsipras right to hold a referendum and encouraging no vote? athanasios: there is a lot of blame to go around.

unfortunately, for greece to get out of this mess, it needs to have a responsible government in greece. it is quite unfortunate that the current government in greece has not been behaving responsibly. calling the referendum was a mistake. it will be in the interest of the greek people and the global economy for the sippers government to reorganize -- for the tsipras government just to reorganize and stop this. tom: governor, one more question. what is in the toolbox this morning from mario draghi and janet yellen? athanasios: the ecb has said repeatedly and mario draghi had said it in london, that they would do whatever it takes within their mandate. they have the tools. they can start affecting assets.

if that becomes necessary, it is not clear that it will become necessary. they are looking for good outcomes were no intervention will be required. tom: thank you so much. the governor of the central bank of cyprus. much more going on right now. we give way a little bit in the last number of hours. we have continued speakers in europe. angela merkel is speaking as well. jean-claude juncker is speaking at this moment. we will have much more for you. mohamed el-erian joins us. jeffrey sachs will join us as well in our next hour. stay with us. from new york city this morning, "bloomberg surveillance." ♪

tom: good morning, everyone. the talking heads talk. we just heard from merkel, and jean-claude juncker speaking as well. many other people suggesting maybe it ends with the

festivities we have seen over the weekend. we will continue to bring you all the headlines. i will say the tape has deteriorated in the last 20 minutes. dow futures minus one. vonnie: investigators in taiwan say a cigarette probably caused the fire that burned 500 people at a water park. more than 400 people are still hospitalized. half of them in serious condition. apple is installing a new feature on the iphone. apple suppliers have started making phones that include so-called forced touch. the senses how hard users are pressing down on the screen. it allows you to adjust the strength of the pressure to

bring up different functions. "jurassic world" is the first really to make $500 million in north america. tom: we will have to go at gunpoint. there are other stories besides greece this morning. the letter on the verge of reaching agreement on a nuclear program of iran. this is a big, big deal pushed aside maybe by the financial crisis in greece, the european union's foreign policy chief and they are close to a deal. but many doubt it. we are getting down to crunch time. what is the new new for the state department and john kerry? was a different tact that we are taking this trip to the and a -- to vienna?

>> in the building behind us where all the negotiations are taking place, he had really intense talks with the head of the international atomic energy agency. it will have to monitor any deal that comes out with iran, and we will have to answer questions at the -- that the international community has about a legend passed military research iran has done. we know he is negotiating -- community has about a legend -- about alleged past military research iran has done. tom: when you are good at is understanding what the other side of the table is doing. which audience is iran playing to right now? is it a domestic audience a european audience? is it maybe the united states? in the redndira: the only audience

they have to play to at this point is their domestic audience. they have to show that they are respecting the red lines of ayatollah common a -- come in a -- ayatollah common. the iranians are not backtracking and trying to take a different stance. one thing that happened yesterday with the eu foreign policy chief she gave some of the most optimistic remarks saying that there will be a deal. it probably will not be on june 30, but a few days later she expects there will be a deal and it will be a good deal. we are hearing positive noises out of the europeans. tom: this is the basic idea that iran is a real country with a real middle class. carl: are the iranians prepared to allow the snap inspections

that the u.s. congress is mandating for them to approve from the u.s. perspective? indira: that is the million-dollar question. we know from april 2 and switzerland, according to the u.s. fact sheet, the iranians already agreed to that. since then, we heard the ayatollah saying not so fast. i think there will be tough negotiations going on in terror on and we will find out when they come back tomorrow, how close they can come, the two sides, one to the other. snap inspections are a key issue, and also when things will be relieved. tom: jean-claude juncker continues to speak in europe and he goes to the game in a moment, "it is not a game, it is not a bluff." let me do a forex report. the markets get ugly at 8:00

p.m. last night, then stability, and a new bout of fragility. i am watching the euro and the swiss national bank intervening about an hour and a half ago. please stay with us. we will have much more on greece. good morning. ♪

announcer: this is "bloomberg surveillance." tom: in the dead of night

greece imposes capital controls on its banks. overnight, zurich intervenes. the greek people confront a path from depression to a "deep freeze." china spends a plunging bear market, calling it a self correction. "stocks will have a 30 year golden age." you have to believe janet yellen and mario draghi will have a chat. good morning, everyone. this is "bloomberg surveillance ." we are from our world headquarters in new york. vonnie quinn is with me this morning. brendan greeley is off. carl riccadonna is with us. i think we agree. we would emphasize that markets are stable indeed, if not adjusted. carl: the circuit breakers and buffers seem to be effective. we saw moves in equity markets. they have been giving back some losses as well.

it is not good news by any means, but things are contained. tom: and jeff sachs will join us. let's get to top headlines. vonnie: germany's chancellor is still calling for compromise in the greek debt crisis. angela merkel told lawmakers in berlin this morning if the euro fails, europe will fail. the six-day shutdown of greek banks and stock trading pushes the country to the brink of exiting. the government is trying to stop money from leaving the country. one finance minister is cautiously optimistic. >> i hope greece will institute a temporary measure, and by next week we should be able to resume talks on better grounds that will ensure that greece remains in the eurozone. vonnie: greece will vote on a

plan next week to unlock bailout money. two killers who broke out of a new york prison -- one is in critical condition. david sweatt was wounded by police when he was recaptured. he spent 22 days on the run. diplomats in vienna are close to an agreement on iran positive the program. the european union's foreign policy chief says the two sides are on making a policy deal. sanctions would be lifted. iran has agreed that -- chinese stocks are in a bear market. the shanghai market index fell 3% today. this ends china's largest bull

market ever and overshadows the central bank's attempt to cut interest rates over the weekend. tens of thousands nations wide -- tens of thousands nationwide joining gay pride parades yesterday after the supreme court ruled gay marriage is legal. in chicago, a gay couple were married on a parade float. those are top headlines. tom: i thought we were going to get snow yesterday morning. it was such weather until the skies cleared for the parade. right now we need to look at athens and greece. erik schatzker is in athens. hans nichols was in brussels all last week. a quick data check there. let's get right to our good reporters in europe. erik schatzker again, if it happens this morning.

hans nichols is in berlin. i am seeing the same cadence the same pace of the headlines under juncker, merkel, and others this morning. when will the story for germany change or adapt? or will they never adapt or just -- or adjust? hans: what i just heard from merkel was the same games but she was speaking to her own party. that sounded like a chancellor who was preparing her party. preparing them for ultimately making concessions. she says if the euro fails, europe fails. that is part of angela merkel's line. it was interesting that she set it to her own party, given the current situation. she was not piling on greece. tom: all the different acronyms and ways that greece will do this or that -- is it just as

simple as greece will be in or greece will be outside the euro? hans: no, it is much more complicated. even if you get a yes vote on sunday and you have the majority of the greek public saying that they like the ultimatum, these terms you have given them. they also said the facts have changed on the ground. that offer may not be operative for the fact that it got economic -- as it got economic consumption, it was assumed they would have economic growth. who does angela merkel even speak with? after the election, you have it tsipras government fall. we are not even at the beginning of the end. tom: erik schatzker is trying to stay in athens until july 5. not a bad tour of duty at all.

how is the political debates within athens politics? erik: the party that held power historically is still in opposition to alexis tsipras. what he still has the popular mandate. polls suggest he has the support of the greek people, and his coalition is holding together. so there might be opposition and there might be somebody willing to sort of take control of a caretaker government for a period of time. it is not really clear that is going to happen. tsipras for now, is firmly in control. if you walk the streets of athens, as i did this morning it still feels like a slow-motion train wreck, which is to say there are lines forming at atm's. people in line seem pretty chill

about the fact that only 60 euros will be withdrawn a day. people have been drawing cash for several weeks to pa had themselves. carl: what is the story in the streets? are the day to day operations of life functioning? erik: in short, yes, but i would have is day one of a government-imposed bank holiday. there is money for now in the cash machines. vendors, restaurants, hotels for the time being are taking credit cards. nobody is demanding cash upfront. it is an economy that is functioning more or less on a normal pace, but it is monday. we will see where things stand friday. 60 euros a day does not sound like another -- like a lot of money to us, but it is enough

for people in the country to live on, provided they have cash in the bank. what will be more important is the specter of insolvency. whether that happens tomorrow with the end of the bailout program and the likelihood of a default by greece, or whether it happens next week, that is unclear. if we get to the point where the financial system is insolvent, all that's are off. we could be looking at something much darker than we are seeing right now. tom: thank you both so much this morning. tobias decided to join us after working a 26-hour day yesterday. i think of the work steven englander published as well. let me cut to the chase. should our american viewers and listeners adjust their equity holdings because of the song and dance going on in europe?

>> the simple answer is no. there are soon witnesses -- there are some weaknesses because the markets are interconnected. think of it in three different ways. there are moves away from cyclicals because that is a safe haven trade. the dollar becomes stronger treasuries become stronger. if i were a u.s. economic data analyst, in europe, greece is even smaller. there are some effects but probably not that dramatic. tom: how will fed policy adjust? and within that, the idea of whatever any central bank does? how does it hold on to the bond market and the equity market? they cannot work in a vacuum can they? >> they cannot. the couple months ago, the dollar strengthened. you saw the fed the more vocal because as the dollar strength

titans a bloomberg, the u.s. economy starts getting in the way of their normalization policy. there is concern about a secondary effect but does the dollar keep getting stronger and stronger? that has negative publications. tom: carl, you want to jump in here? carl: what would be a signal to you that your thesis is wrong? >> probably two different things. watching for debt in europe. are you seeing broader contagion? number two, when the spread start to widening. ♪

tom: good morning, everyone. "bloomberg surveillance." carl riccadonna is in with us this morning for brendan greeley. vonnie quinn. this is the smartest detailed note on greece i have seen over the weekend. carl reber -- carl has been -- carl weinberg.

tom: these are the tea leaves carl riccadonna, that people are looking for. clearly sending a message from madame lagarde. clearly there will be no default. carl: they have to get the on the referendum on sunday. they could make until july 12. there is some wiggle room. vonnie: they would be angry, though. tom: tobias at citigroup nailed the call. i would suggest that what we are seeing within this language is a concerted global effort to get germany to come to their senses. there is no other way to put that. carl: the germans should know

about too much austerity and extreme conditions. that was the effect back to world war i. vonnie: it is the german market that is having the most reaction. if you look at the german 10 year yield -- tom: jump in here. we go germany germany, germany, greece, greece, greece. there are other members of the euro. i am assuming they are is limited -- they are as limited as everybody else. >> i never understood angela merkel. she has been the most popular leader -- why she hasn't talked to the german people. if it hits europe, it will hit your jobs, too. i am not a political advisor to germany, but more -- it is pretty simple when you put it

that way. your jobs are on the line if europe has a problem. tom: buying time until after the july 5 referendum, coming together for restructuring. jeffrey sachs will join us coming to us from ecuador. his op-ed this weekend was skating. leslie get the tweet that went out. the u.s. has shown -- let's get the tweet that went out. germany has been strenuously resisted.

tom: one and the advantages -- one of the advantages of bloomberg, using timing, talking about weeks, days, seconds. we are in the last milliseconds to talk about solutions. many disagree with mr. juncker, that there is a timeline here to come to a successful conclusion. a raging debate as greece is in crisis.

let's get to top headlines and we begin with vonnie quinn. vonnie: greece is not only the country in the global financial system. the governor of puerto rico says its public debt cannot be paid. the u.s. commonwealth is in a $72 billion hole. they want to delay payments while negotiating with creditors. investors are betting big on companies that fight cyber crooks. "the financial times" says more than $1 billion this year has been spent on funds that attract cyber security. space x is trying to determine why i rocket exploded. the unmanned falcon roman numeral line rocket exploded yesterday two minutes after its launch. -- the unmanned falcon ix rocket

exploded yesterday two minutes after its launch. tom: it has been repeated as well. there is some careful scrutiny. nasa had some choice comments out as well. right now, we are talking about jeffrey sachs sachs of columbia university. that comes as no surprise. jeffrey sachs rises to the defense of the united states and the imf. tom: joining us from ecuador this morning, jeffrey sachs.

jeff sachs, you were involved in 1985 with bolivia. they were able to come out of immense crisis. help us here with what greece needs to do. do you just presume a new greek drachma? jeff: this is really a very sad mess. this is one of those circumstances that never should have happened. it shows very poor economic banishment from the european side. unfortunately, a lot of intransigence, especially from germany, but also from other partners, who decided a few months ago that they would not really negotiate with this left-wing government in greece that they just wanted to push greece out of the euro. ironically, they cannot push greece out of the euro. they can push greece into panic, but they cannot push greece out

of the euro because there is no exit from the euro mechanism. tom: the basic idea here is currency depreciation or restructuring, or the dreaded jeff sachs word, "forgiveness." do you see any indication of a catalyst to forgiveness of debt? jeffrey: here is the basic point. macroeconomists in washington at the imf, and treasury, have looked at this and they see the case for debt reduction. germany has held that there will be no debt relief. that is what has brought us to this juncture and it is extraordinary that with this breakdown we have the u.s. treasury secretary, jack lew publicly saying that greece needs debt relief and europe immediately saying no way. what is going to happen is that

greece will go into default because they cannot pay. but what is happening on top of the default, which could have been handled cooperatively and consensually, is now a full-fledged banking panic and this is adding just misery to a country that has the scale of great depression already. tom: i go over to ireland which had a very different emotional sequence than what we are seeing in greece right now. vonnie: absolutely. and ireland got out of it but not without a huge amount of pain. i would ask you -- is there no other solution -- if there is no other solution, what happens yeah cap jeffrey: in my opinion, my belief is that greece should default. it should stay in the euro. this is not contradictory, it

just means that there should be relief on this mountain of bad debt, and if europe will not give the relief cooperatively, greece should take the relief by simply saying we cannot pay. recognizing that the vast majority of the debt is moved to public institutions in europe. this is not even private market assets we are talking about, or liabilities. this is actually money they greece owes to various european facilities and other governments. they should work to get the banks open and operating again within the euro. tom: professor sachs, thank you so much for your op-ed this weekend. and thank you for joining us this morning from ecuador. our twitter question of the day -- i am going to say this right now. we have had a record response to our twitter question, which shows the seriousness of this crisis. who is to blame for the greek

crisis? we need your informed opinion @bsurveillance. stay with us worldwide on greece. this is "bloomberg surveillance ." ♪

tom: we welcome you. markets are stable, but i want to suggest a deterioration in the last hour, futures -28, went up to -21-ish. let's get caught up with monday's headlines.

here is vonnie quinn. vonnie: the head of the european commission says he wants greece to stay in the euro. jean-claude juncker is telling reporters in brussels it was greece that broke off the talks. greek banks have been shut down for six days while the country tries to stop money from leaving. the finance minister of cyprus thinks there is a way out. >> we know the situation is not the same, but the remedy could be similar in connecting a program of positive change with the shortcomings of the greek economy which are holding the economy back, soon restoring confidence. vonnie: greece will vote next sunday on a plan that will unlock bailout money, but the prime minister of greece is calling for the basel to be defeated. mourners our honoring the

victims of a mass shooting at a beach. police say the student who slaughtered 38 people friday acted alone but may have had help before the attack. the fbi is watching for a u.s. threat during the fourth of july weekend. the chairman of the counterterrorism panel in the house. peter king: i was more concern than any time since september 11. there is a multilevel sense of operation. it is not just the long wolves through there can be some corporation -- there can be some cooperation between the mobile that are out there. vonnie: tourists are now fleeing tunisia. what is the -- if three is a crowd, what is the republican presidential race? john kasich is expected to announce his bid x month. new jersey governor chris christie will make his bid

official tomorrow. and stephen met made his first pitching start for the mets yesterday. he had three hits and a record quarter runs batted in. -- and a record four runs batted in. tom: i watched every minute of it. it was absolutely stupendous. it is amazing to see a picture -- a pitcher. here is a first baseman who basically became a picture. all i could think of was "the natural." it was just great. it was like a roy hobbs kind of thing. vonnie: i read about the maker of the louisville slugger, how he had died. tom: i got my copy a stremme skied that at home. carl riccadonna is going to help

me with this here is where we are going. here is greece now, and this is a depreciation. here is greece. if the euro had not happened, one guess of what the drama would have done. the euro happened. here are three depreciation in the 1990's. indonesia russia, mexico. if you look at the path of mexico, it is amazing how they end up in the same place. this is the euro advantage that greece has had. carl: an absolute advantage, and they have a question of two pains. one is accepting whatever austerity the eurogroup is going to and them to accept. the other is to exit the eurozone, devalue the currency, and have significant financial problems. they get there one way or the other. tom: restructuring and out rate

debt forgiveness -- that is a massive amount for germany. carl: if they cannot pay their bills, they will go to recession. maybe the eurogroup will put another referendum forward but with the public election, time is limited to put the terms on the table. tom: maybe we'll get some market movement that will catalyze this. this is the path to get greece from here to what mexico has experienced. just one idea or what would have happened if the euro had never happened. all of this -- the path from depression down to deep freeze. those are the words of a professor of economics this morning. 8:00 p.m. out of asia nevertheless deteriorating modestly.

carl riccadonna and i really talking here about a lack of panic, a lack of hysteria as well. nymex crude is a bit weaker on economy worries. vonnie: this is "bloomberg surveillance." i'm vonnie quinn, along with tom keene. tom: good morning, everyone. greece will find a way forward. they do so with a new european calculus. it is a mass with new unknowns. mohamed el-erian has written copiously over the weekend on these different moments in the crisis of greece. he joins us to consider the german and the irish response as well. we have spent an immense amount of time talking about germany. what will be the reaction of the other euro members? mohamed: i think they are going

to look at this and wonder what will happen next to them. it is important to understand the nature of the contagion that is going on. it is not economic. it is not financial. this is purely technical. the next step -- decrease continues on the road to an exit -- is a re-denomination of the currency. that is a different element of contagion. they are going to look forward and be thinking how do we reduce our exposure to contagion, and what can't institutions particularly the ecb, due to help us? tom: you have been out front on the idea of a new currency. what do they get wrong? mohamed: there are two narratives. there is a political narrative, where everybody says we would like greece to stay in the eurozone. then there are the facts on the ground.

greece is going through what economists call a sudden stop. when you close the banking system, you trigger cascading failures throughout the economy. when that happens, it is very difficult for politicians to remain in control of the economy. my call about what happens next comes from having observed what happens in the past, recognizing that it is very hard to control your own destiny once you are in a sudden stop. tom: dr. el-erian uses "sudden stop" in the ecumenical sense. vonnie: that is one of the reasons why it is so urgent to have that not occur. tobias levkovich is with us. he pointed out that german jobs are at stake if greece leaves the euro because germany has been sending money to greece and will not get it all back if they

default. why would she not want to do that? mohamed: even if you deliver a massive debt reduction to greece, there are no guarantees that greece will come through with reforms. so you have the situation were neither side trusts the other. in a negotiation, where you do not have trust, it is difficult to take the first step. so you have this typical game in which you cannot get a cooperative outcome. that is the tragedy of greece. it is not hard to solve from an engineering perspective, but it is hard to solve when the two sides do not trust each other. carl: if greece decides to exit and rip up there that note this sunday this poses potentially a capital problem for the ecb, does it not? mohamed: there will be losses throughout the system. i am not too worried about the ability of europe to navigate

this. a lot has been done in the last three years to ensure that europe can navigate a greek exit here there was one league of uncertainty, the re-denomination. it is not clear what happens when you go from a currency you do not own -- the euro, to currency you do own and you denominate contracts. that is the big uncertainty. otherwise, europe has the tools. tom: how many degrees of freedom this angela merkel have right now. mohamed: few, because she does not control facts on the ground in greece. facts have changed on the ground. this is a different greece. it is now in the intensive care unit. it will emerge from the intensive care unit, but it will be much smaller in terms of the size of its economy, and it is likely to be a different economy . it is important to understand the facts have changed on the

ground. tom: thank you so much, early -- particularly your comments to bloomberg view over the weekend. our twitter questions -- a stunning response -- who is to blame for the greek crisis? stay tuned for "bloomberg surveillance." ♪

tom: what is a pictat

speaks of the real economy echo forget finance investment. even forget tobias levkovich. what matters? number of bodies employed. of course, germany doing well greece doing better than germany on a rate of change basis 10 years ago, and then things change. germany continues with good employment growth, and greece considers depression. that is perhaps the chart of the sad days. two different economies and cultures have some challenges to say the least, getting to july. vonnie: one person who knows a lot about crises -- and i am not talking about stephanie ruhle cohost of "market makers." stephanie: you do not get the

name doctorate in by accident. obviously, he is not alone. we will sit down with marc faber . he believes if this is when we see greece truly leave the euro what this it mean not just for greece but will this seal the deal for greece to make their relations between china and russia even closer. is that something on a global platform that re-really want -- that we really want? what do you think it is going to be like if you get in bed with vladimir putin? vonnie: there are already worries now because there are already parts forming in different parts of asia. stephanie: we have some positive news out of china over the weekend. vonnie: is it, though? stephanie: if you look on a broader basis, is the overall market -- the u.s. stock market if it is not doing as poorly as

we thought will they look at this as a moment to love you and's -- to love u.s. investment even more? vonnie: i know you have been looking at puerto rico as well. stephanie: i spent a decent amount of time down there. i spent time with the governor of puerto rico last year. some of the biggest real estate units are simply saying it is an absolute disaster. you have a tremendous amount of government infighting from the house of representatives and the senate and the governor. this is a governor i would never use the term "a local guy, but he he's not someone who has the kind of experience to handle a situation like that. they have $73 billion and operating on a $9 billion budget, and they simply have no money. they have a serious situation.

they are going to get burned with all these hedge funds down there. vonnie: market makers coming up at 10:00 a.m. eastern. stephanie: incorrect, 8:00 a.m. eastern. tom: looking forward to thoughts on the dynamics globally of what we are seeing out of greece. what we want to know is the dynamics of your toward a response -- who is to blame for the greek crisis yeah cap stay with us, particularly those of you in europe. good morning. "bloomberg surveillance." ♪

tom: in the last 10 minutes, real improvement to the tape. -24, up to -21. i will take it. she is wearing blue in sympathy with greece. for those of you on radio this morning, vonnie quinn is dressed in support of greece. top headlines this morning. vonnie: one and 1000 people in washington state are forced to flee a wildfire. officials say it is out of control right now, more than 12 hours after it started. it destroyed a dozen buildings most of them homes. high temperatures and wind are feeding the flames. iphones are getting a new feature. apple suppliers are making

phones with forced touch it senses how hard users are pressing on the screen. the movie dinosaurs are proving hard to kill off. "jurassic world" is the box office champion for the third straight weekend. it has gone to $500 million in america faster than any film ever. tom: it has a unique audience but you have to believe that globally it will be phenomenal. what is the next dinosaur movie? are they going to do "jurassic surveillance"? will they do it like "star wars"? games are about the number of players. the arch consideration for europe this morning.

there are simply too many players. europe is fighting on too many fronts. in february an exceptionally prescient indication was written on europe. it each side goes to war with the same number of troops, colonel blotto is a frustrating game that no one can win. tom: justin, this goes back to research that i have seen from harvey mudd at oxford. what is visible and tangible is not always the way the game is played, is it? justin: they clearly have not looked for greece because the idea would then be to break up europe into a bunch of different people to negotiate with.

they tried that early on. they would not talk to the eurogroup. varoufakis wanted to visit every individual finance minister, but the eurogroup decided to stick together. i think greece pre-much miscalculated. tom: who has the power now come and how does the obama administration adjust and react to the power that is going to be played out july 5? justin: this is one of those weeks where when you do not really understand something it is useful to be able to say that nobody understands it. i have been watching everything reading everybody's assessments of the very unlikelihood that greece will exit the euro. tom: but nobody knows. here is the 10 year chart. i will put this out on bloomberg radio plus some of the classic greek, and german spread. we are elevated way above where we were when times were calm

er. this goes to barry at berkeley, who said this is nothing about economics, it is 100% politics. vonnie: exactly. and 406 basis points are what that adds up to. justin, you talked about different fronts and the blotto game. china would be another front and russia would be another front. the different members of the euro area. just in that would be the next step. -- justin: that would be the next step. i do not think greece has succeeded at all. i think varoufakis and tsipras came in with his hope that maybe through some combination of

bluster and whatever else they could force a substantially better deal that they could sell to the people. tom: out of this comes adversity and opportunity. will you find an opportunity among european multinationals because of the fanfare of one small country? >> it is more about the currencies. european nationals are truly multinational, and they are doing probably 80% -- tom: if we get through parity and we see a stronger ribbonlike dollar -- >> in terms of the growth rate it is not disastrous. people are missing that the u.s. economy is showing decent progress. housing, auto sales, commercial construction picking up. we are starting to get that kind of trend that is favorable and

that will be much more dominant for u.s. investors. in europe, you have some very powerful companies in europe. their headquarters are -- 80% of the businesses are occurring in europe, and greece is really small. vonnie: will we see an inflow of emerging markets back into the united states? >> there is still a surge of emerging markets. the u.s. can grow, but it is not like we will get fabulous growth either. by year end, we are looking at 2100. tom: we have so much going on. did you know there is a jobs report on friday? carl: thursday. tom: can you get us started on our four-day work week? what are we looking for? carl: watch for the unemployment

rate to move slower. that is the september story for janet yellen and company. tom: justin, can you come back another time when we have more time? justin: yes, i work right here in the building. justin fox thank you so much. did we have a small response today echo? vonnie: we had one or two. tom: did verify this tweet in yet -- did varoufakis tweet in? vonnie: does so blown, juncker, 26, eurogroup ministers, on july 1 at all year's own heads of state. it has been amateur hour in athens as of this hour.

tom: clearly the zeitgeist from over the weekend from a lot of people. not so much decisions, but the line which and rhetoric. this is not halle versailles this is not claimants wilson. vonnie: from brendan greeley -- greek haircuts now call the issue into question. carl: the haircut means there has to be debt forgiveness for greece to move forward. tom: restructuring or forgiveness. is there a difference? are you with us tomorrow? carl: i will be back on wednesday. vonnie: as you know, we have an agenda every day where we take a look at things later on in the day and what we will be keeping

an eye on. i will be watching how currencies react because that is probably one of the more interesting markets. we saw the euro below $1.10, now well above $1.11 again. a lot of volatility there. i will be watching the dollar index. carl: i think you watch the u.s. equity market reaction and see if it is large as it was in asia. i do not think that is going to be the case. tom: tobias, are you going to load the boat this morning? tobias: i never believe in loading the boat. you can get it on properly weighted. tom: thank you so much. what is my agenda? how about the real economy? this is about finance, politics about the headlines across bloomberg. what it is really about is the

imploding economy. it is real simple. nicholas economy these saying it is a decrease. we will talk tomorrow with

♪ >> live from bloomberg headquarters in new york it with erik schatzker stephanie ruhle. stephanie: good morning, it is

monday, june 29. you are watching "market makers. " i would eat my way back in i am not. scarlet: erik schatzker is on assignment read we will get to him in just a minute you. stephanie: he thought he was on vacation and then he was sent over to greece. a busy morning not just in greece, but markets are reacting to greece sitting down their banks and imposing the capital controls. scarlet: on top of that you have the drama in chinese stocks. they moved into a bear market even after the central bank tried to revive confidence over the weekend. we will speak with marc faber. we are also minutes away from an interview with the athens chamber of commerce. stephanie: that is get more details on today's top stories across the globe.