Greeks withdraw $894 million U.S. in cash out of bank accounts

[hack89]

Source: AFP

ATHENS, May 15, 2012 (AFP) - Some 700 million euros, equivalent to US $894 million, were withdrawn from Greek banks on Monday, President Carolos Papoulias said, warning that the situation would worsen in coming days.

"During a telephone interview with the governor of the Bank of Greece, George Provopoulos, he informed me that the banks' situation was very difficult . . . and that the banking system was currently very weak," said the president in a transcript released Tuesday.

"Withdrawals reached 700 million euros at 4:00 p.m (1300 GMT) on Monday," he noted, warning that the situation "would worsen in the next two days."

In February, former finance minister Evangelos Venizelos said Greeks deposited 16 billion euros overseas, including "32 per cent in British banks and 10 per cent in Swiss banks."

Read more: http://www.canada.com/business/Greeks+withdraw+million+cash+bank+accounts/6625826/story.html

---

Very bad sign - a domestic banking collapse will crush the Greek economy.

[DCKit]

1. Going their own way. I hope it works out. nt

[davidwparker]

49. Getting out of the Eurozone makes more sense than getting beaten down by EU banksters. n/t

[rdking647]

2. the greek economy is already crushed

they need to drop the euro. i think that will happen soon. they need to go back to the drachma and devalue it while defaulting on their debts. that will allow them to basically reboot their economy similar to what argentenia did a few years ago. they really have no other choice.

[grantcart]

3. Well they could change their constitution and allow taxation of their shipping billionaires and they

could then start enforcing taxes on the 40 of the public that is paying virtually no income taxes.

That would be a good start.

[freshwest]

4. Suspect the shipping billionaires did a Romney long ago. Without income, what taxes on the others?

[grantcart]

42. All income from shipping, all dividend income and all capital gains on Greek Stock exchange have no

taxes, and atleast for the shipping magnates it is enshrined in the contstitution. Self employed Greeks followed suit bribing 100s of local tax officials who have been proven without a doubt of having received bribes and who have become very wealthy. Even after the exact local offices have been identified which never collected any taxes, the government was unable to do anything as tax corruption has become so endemic to Greece.

Greece has pampered its billionaire shipping magnates and the upper middle class said what's good for them is good for me and they have a small tax base. If they leave the Euro they will still have no income but will face all of the additional problems and barriers. There is a reason that France and Germany have said "enough is enough".


http://en.wikipedia.org/wiki/Taxation_in_Greece

There are several cases of Tax exemptions under the Greek taxation system, these are as follows:
Proceeds from the sale of shares that are traded on the Athens Stock Exchange.
Income from ships and shipping.
A dividend received from a Greek company.
Capital gain from sale of a business between family members, as defined by law.

[freshwest]

48. Thanks very much, now I see why some in Europe are mad at them. They have been portrayed as victims.

With stories of suicides, people unable to live without their pensions, it's heartbreaking. The story of some of them was that they paid into their retirements put are not getting any now. Were those simply people who didn't benefit from 'don't tax me' schemes?

The right wingers here are using the Greek situation to scare Americans into harsh austerity measures without increasing tax revenue, it appears they are wanting to go down the same road as Greece but using it to shore up their argument with the failed trickled own theory to balance the budget. What you found out for me, and other aspects, shows we are not the same.

The other aspect someone showed me was about the control of currency. We have our own and they decided that joining the EU was a good thing. I can see why the portrayal of other countries as cold could be false.

It appears they are are being forced to protect themselves against a corrupt system. It seems the millionaires and other groups extorted the social democracies to get richer. Sounds sadly familiar to our own troubles.

I'd only heard about Greece many years ago, and it seemed they had a lot of governments 'fall' in the past such as Italy did. Of course governments falling in a parliamentary system doesn't mean the same thing as it would to us here.

But if the GOP keeps on with their threats to shut the government now, it may feel the same to us as it does there. Both of these are internal political problems.

Thanks again, I'm gaining a new appreciation for how complex all of this is and there seem to be no simple or fast solutions.

[grantcart]

51. to add to the problem is that a lot of the money that is invested and that will disappear if Greece

goes bankrupt are from pension funds from Germany and France.

A lot of working class people will see their retirement effected.

It is a huge complex strategy and those that are cheerleading for Greece just to walk away don't understand what is going on.

[freshwest]

55. I am starting to see similar things here. We're all connected, it's both a blessing and a curse.

I've really enjoyed your thoughtful replies on this thread which is much better than the sloganeering we are subjected to in the media and on the internet. We don't understand a lot of what is happening over there and in turn, don't understand what's being done to us now.

[hack89]

5. The creation of a new currency is what triggered the Argentinian fiscal crisis

In 1983, democracy in the country was restored with the election of president Raúl Alfonsín. The new government's plans included stabilizing Argentina's economy and the creation of a new currency (the austral, the first of its kind not to carry the word peso as part of its name), for which new loans were required. The state eventually became unable to pay the interest of this debt and confidence in the austral collapsed.

Inflation, which had been held between 10 and 20% per month, spiraled out of control. In July 1989, Argentina's inflation reached 200% that month alone, topping 5,000% for the year. During the Alfonsin years, unemployment did not substantially increase, but real wages fell by almost half (to the lowest level in fifty years). Prices for state ran utilities were increased substantially, as well as costs for telephone service and gas for cars.[3] Amid riots in 1989, President Alfonsín resigned five months before ending his term and Carlos Menem, who was already President-elect, took office.[4]

http://en.wikipedia.org/wiki/Argentine_economic_crisis_%281999%E2%80%932002%29

There are many other big differences:

Argentinian external debt was 50% of GDP. Greece's is about 150%.

Argentina's fiscal crisis came during a period of very high global demand for their agriculture products (soy in particular). They were bringing in export revenue at a record rate so they had the cash to cushion the crash. Greece does not have that luxury - they have a poorly performing economy fully integrated into a sick European economy.

[gmpierce]

7. That doesn't work either

Check this link: http://yanisvaroufakis.eu/2012/05/16/weisbrot-and-krugman-are-wrong-greece-cannot-pull-off-an-argentina/

[dmallind]

16. Argentine govt budget is 17% of GDP, Greek 40%

And every peso the Argentine government has borrowed has come from intergovernmental loans - mostly the pension fund. They know ine int'l credit market won't loan to deadbeats. How is Greece going to fund its much higher budget? They don't have anywhere near the tradeable resources or output Argentina has, and tourism will hardly be stable when the currency is worthless, inevitable social unrest is rampant, and anybody selling to tourists will be very likely to demand hard foreign currency at unofficial rates.

[davidwparker]

50. +1

[denverbill]

6. Time to confiscate and sell some of the billionaires land holdings.

They can take their money and hide it, but they can't hide their Greek real estate.

[hack89]

8. That solves nothing in the long term

besides making all those billionaires leave the country permanently.

[salib]

10. Just that would be worth it.

Good riddance.

In this case, the REAL Atlas could shrug. The people.

[Psephos]

41. The REAL Atlas IS shrugging.

No one pays their taxes in Greece, and the official economy is dying while the shadow economy grows larger every day.

[4th law of robotics]

9. Perhaps they could seize all their assets if they tried to leave

of course it would be difficult to keep them from fleeing with whatever wealth they can carry. You'd need to shut down the borders, build a wall maybe, enforce strict travel laws (you would need to carry your recent tax returns wherever you go, your "papers" in short).

Those that were unhappy with these temporary changes would of course be out to wreck the economy. They could be sent to distant parts and forced to work while they undergo training to make them realize why this is all for everyone's benefit and they should not be so selfish.

Elections naturally run the risk of giving power back to the greedy rich. So those would need to be temporarily curtailed. The people may not like that (having invented democracy and all) so probably you'd need to bulk up the army first. A few big parades and mass arrests ought to get everyone in line.

And in a few years when the emergency is over obviously all these temporary measures can be redacted.

[salib]

11. Hardly need to be so complicated

Let them go. Simply recognize that Greece is broke => Need to restart => Need to manage (take) ALL assets (wealth/property/etc.) => Spread it back out evenly.

Of course, "we" (this country and many others) would invade before that could happen. So-called national interests and all...

[4th law of robotics]

12. A) we're not going to invade Greece, no matter what they do with their property

B) Seizing assets against the law is a great way to become a credit-black hole. Why would anyone lend to you or invest in your country again knowing that the moment things become difficult all the money/effort they put in to it is forfeit?

And Greece will need credit, lots of it. They have shown they are unwilling to make the necessary changes to keep them out of this situation again. So they will default. And then if they can get credit they will have to pay ever greater interest (due to the higher risk) meaning the next default will be sooner. And repeat until they can't get any credit at any interest rate.

The alternative is too horrible for the Greek population to even consider: pay your taxes, in full, and work retire at a more reasonable age (like the rest of the continent).

The horror.

[harun]

19. They'll simply stop using the Euro and use their own currency

Then they can bail themselves out the old fashioned way, by printing more money (the U.S. model).

[former9thward]

27. The U.S. dollar is the world's reserve currency.

When the world does not respect your currency printing your way out of debt does not work. See the central African countries.

[4th law of robotics]

36. That has it's own problems.

Namely: run-away inflation making all that money worthless.

I agree they need to get out of the Euro (and I'm sure everyone else in the EU agrees). But simply printing money without changing anything else is not a great solution.

[harun]

40. I wasn't actually saying it was a solution. Just more nonsense and fake solutions.

Shifting the problem around and not actually dealing with it.

Guess I should have added the sarcasm tag

[4th law of robotics]

46. Gotcha

although it seems likely that is what they will try. It just won't work.

[salib]

32. Wow, fill us in on the conservative talking points

Thanks for that.

A) Not worth arguing about.

B) That is always the risk of depending upon the "full faith and credit" of the country in question. That is the point of bankruptcy. As long as there is the CHANCE of making a buck lending to Greece, or anyone else, as shown by our own banks' wild speculation in the credit crisis, and on the most dubious of terms and expectation of outcome as shown by CDO's, e.g., then there will be "credit" available for Greece. Actually, it could even be a better credit risk after "seizing assets against the law" than it is now and much better than going down the "austerity" rabbit-hole (speaking of "black holes&quot .

BTW, it is not against the law if laws are passed (and the constitution is changed) under due process (the people approve it appropriately), or of course if there is a revolution (see the Bill of Rights).

"The alternative" is just propaganda designed to squeeze what little is left before the disaster capitalists move on and shake down the rest of us.

[hack89]

13. That wealth is leaving Greece at a breakneck speed as we speak.

cash outflow from Greece is massive and growing daily. Don't you think every Greek from every social class is trying their hardest to protect their money?

[salib]

33. Some are "trying their hardest to protect their moeny" more than others

So-called disaster capitalism is just the same old rape, pillage and burn technique used by the sociopaths throughout history. I suspect, those types are trying a little harder. After all, it is all they have to care about. No messy empathy to get in the way.

Individually, all one can hope to do in a situation like this is often to simply get what you can (before someone else does) and minimize what others get from you. It is an ugly situation. Individually.

United, however, people can truly make something quite good out of it. I know, I know, "it will never happen." Right?

[hack89]

34. If the Greek people really cared to make something good out of it

then they shouldn't make tax evasion a national sport.

According to a remarkable presentation that a member of Greece’s central bank gave last fall, the gap between what Greek taxpayers owed last year and what they paid was about a third of total tax revenue, roughly the size of the country’s budget deficit. The “shadow economy”—business that’s legal but off the books—is larger in Greece than in almost any other European country, accounting for an estimated 27.5 per cent of its G.D.P. (In the United States, by contrast, that number is closer to nine per cent.) And the culture of evasion has negative consequences beyond the current crisis. It means that the revenue burden falls too heavily on honest taxpayers. It makes the system unduly regressive, since the rich cheat more. And it’s wasteful: it forces the government to spend extra money on collection (relative to G.D.P., Greece spends four times as much collecting income taxes as the U.S. does), even as evaders are devoting plenty of time and energy to hiding their income.

Read more http://www.newyorker.com/talk/financial/2011/07/11/110711ta_talk_surowiecki#ixzz1uPEt42My

[salib]

38. So, I guess that is a "no"?

You do not think the Greek people will get together an create something better?

[hack89]

39. There is no sense of unity that I can see

when a neo-nazi party records significant electoral support what am I suppose to take away from that? It clear who they blamed for the mess. It is not clear who they want to fix it or how they want to fix it.

One thing I take from rampant tax evasion and corruption is that there is not a strong sense of civic responsibility in Greece. If they didn't care then, what will make them care now?

[grantcart]

43. the Greek constitution protects all income from shipping from taxes.

This is why Germany and France are not going to give any more of their money to support a system that is rigged for the rich.

[Maine23]

47. Talk like that is whats driving people to empty their bank accounts..

Do you want 90% of the wealth to flee the country?

[Suji to Seoul]

14. That's only 3.88 times what Mitt Romney is worth.

Let's put that into perspective.

[hack89]

15. That much money every day will add up fast. nt

[L. Coyote]

17. That's $70 per capita.

Or, what a few millionaires have on deposit.

[PoliticAverse]

18. Prudent move. If Greece moves back to their own currency there'll likely be a major devaluation. n/t

[FarCenter]

20. Current tax receipts are less than current government expenditures

So although a devaluation would help fix the trade deficit, the impact on the economy would be much worse than just increased prices of imports.

[Xolodno]

21. The other question...

...how will this impact the rest of the Euro-zone. Everyone pulling their Euro's out will create an inflationary reaction in those nations they put their cash in. This could spook people in other nations, banks, etc. and there could be a mad rush to exchange into another currency...which will freak out even more and create a currency death spiral.....and which currencies will they buy? It will cause them to become more valuable. And in case of the US dollar, imports will become cheaper and exports more expensive thereby stunting the meager recovery that we have.

They could suspend currency trades with the Euro should this happen, but that would be the death knell for it.

[hack89]

22. If they are smart they would get the money out of Europe

do like the rest of the world and put it in US government treasuries.

[jakeXT]

24. lol nt

[hack89]

25. There is a good reason yields on US treasuries are so low. nt

[Xolodno]

26. I suspect...

...they will buy commodities instead...that or assets in nations they think are less likely to "confiscate".

[hack89]

28. There has been a surge in demand for US securities.

International demand for U.S. financial assets rose more than forecast in January as investors sought a haven from the debt crisis in Europe.

Net buying of long-term equities, notes and bonds totaled $101 billion during the month, compared with net purchases of $19.1 billion in December, the Treasury Department said today in Washington. Six economists surveyed by Bloomberg News had forecast net buying of $38.5 billion of long-term assets, according to the median estimate.

“The surge in foreign demand for U.S. financial assets underscores the healthy appetite that continues to prevail globally for U.S. securities,” Millan Mulraine, a senior U.S. strategist at TD Securities in New York, said. “Treasuries demand was especially strong, reflecting the appeal of this ‘safe haven’ asset to global investors even at a time when risk appetite was improving.”

http://b2b.desay.com/news/content--1331886597620.html

[Xolodno]

29. So many believe that the US is still a safe haven....

...for now. Find that rather interesting. Considering, the antics of Boehnor, Republicans, etc. playing with fire. Just think of the "perfect storm" if some fruit loops in Congress put politics ahead of rationality. Its kind of scary....

[hack89]

30. The rest of the world is on much shakier ground then we are.

the US economy is much more resilient.

[Xolodno]

31. I don't have that kind of faith...

...maybe its the russian in me. But many scoffed at the idea that the 300+ year Romanoff dynasty would fall in Imperial Russia. Hence I don't put much stock in such notions...never underestimate the power of stupid people in large numbers. Under the right circumstances, anything can happen. Although I do agree the US economy is resilient...and probabilites are the right thing will always be done, I always remind myself that it isn't gauranteed.

[jakeXT]

35. Michael Hudson: Banks Weren’t Meant to Be Like This

Michael Hudson: Banks Weren’t Meant to Be Like This

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City and a research associate at the Levy Economics Institute of Bard College

A shorter version of this article in German will run in the Frankfurter Algemeine Zeitung on January 28. 2012

The inherently symbiotic relationship between banks and governments recently has been reversed. In medieval times, wealthy bankers lent to kings and princes as their major customers. But now it is the banks that are needy, relying on governments for funding – capped by the post-2008 bailouts to save them from going bankrupt from their bad private-sector loans and gambles.

Yet the banks now browbeat governments – not by having ready cash but by threatening to go bust and drag the economy down with them if they are not given control of public tax policy, spending and planning. The process has gone furthest in the United States. Joseph Stiglitz characterizes the Obama administration’s vast transfer of money and pubic debt to the banks as a “privatizing of gains and the socializing of losses. It is a ‘partnership’ in which one partner robs the other.” Prof. Bill Black describes banks as becoming criminogenic and innovating “control fraud.” High finance has corrupted regulatory agencies, falsified account-keeping by “mark to model” trickery, and financed the campaigns of its supporters to disable public oversight. The effect is to leave banks in control of how the economy’s allocates its credit and resources.

If there is any silver lining to today’s debt crisis, it is that the present situation and trends cannot continue. So this is not only an opportunity to restructure banking; we have little choice. The urgent issue is who will control the economy: governments, or the financial sector and monopolies with which it has made an alliance.

Fortunately, it is not necessary to re-invent the wheel. Already a century ago the outlines of a productive industrial banking system were well understood. But recent bank lobbying has been remarkably successful in distracting attention away from classical analyses of how to shape the financial and tax system to best promote economic growth – by public checks on bank privileges.

...
http://www.nakedcapitalism.com/2012/01/michael-hudson-banks-weren%E2%80%99t-meant-to-be-like-this.html

[jakeXT]

23. ECB Cuts Off Operations With Some Greek Banks

FRANKFURT, May 16 (Reuters) - The European Central Bank has stopped monetary policy operations with some Greek banks as they have not been successfully recapitalised, euro zone central bank sources said on Wednesday.
The ECB declined to comment.
The ECB only conducts its refinancing operations with solvent banks. With no access to ECB funds, the banks concerned must go to the Bank of Greece for emergency liquidity assistance (ELA).
It was unclear exactly how many banks were affected.

http://www.huffingtonpost.com/2012/05/16/ecb-greek-banks_n_1521255.html

However, if creditors (note holders of gold originally deposited) lost faith in the ability of a bank to redeem (pay) their notes, many would try to redeem their notes at the same time. If in response a bank could not raise enough funds by calling in loans or selling bills, it either went into insolvency or defaulted on its notes. Such a situation is called a bank run and caused the demise of many early banks.[3]

Repeated bank failures and financial crises led to the creation of central banks – public institutions that have the authority to regulate commercial banks, impose reserve requirements, and act as lender-of-last-resort if a bank runs low on liquidity. The emergence of central banks mitigated the dangers associated with fractional reserve banking.[2][4]
http://en.wikipedia.org/wiki/Fractional_reserve_banking

We'll find out who is broke .....

[Nihil]

52. Umm ... oops?

> The European Central Bank has stopped monetary policy operations
> with some Greek banks as they have not been successfully recapitalised

Hadn't seen that posted before but it doesn't look good.

[AngryAmish]

37. Anyone should get your money out of the Greek banks ASAP

This is how it works: Greece owes it's debtors in Euros currently (mostly). As soon as a government gets in place they are going to pass a law saying that all sovereign debts are going to be denominated in Drachmas. (Is this legal - I dunno. But I bet the Greeks are going to tell their creditors to go pound sand). Then a shitload of drachmas are going to be printed. If you have 1000 Euros in the bank now then you are going to have the equivalent of 500 when the currency changes over. The balance will be taken by the government to pay old bills - not exactly "taken" but individual savers will have their money devalued so the government can pay their bills.

The smart money left Greece months and years ago. What is left in Greek banks are pensioners and unsophisticated people. The 99% will get shafted - but this always happens when these things occur.

If you can't leave Greece buy hard goods - I would go with wine since it can be small and valuable. Or open a bank account in Switzerland. But no matter what, get the fuck out of the Greek banks.

[Thrill]

44. There are some serious idiots

running things over there

[hack89]

45. I don't think anybody is running anything. nt

[Katashi_itto]

53. Short term it will be painful, but 18 months after leaving they will be just like Iceland

Greece will have a recovering economy and the rest of the EU countries will see that it wasn't the end of the world. That austerity wasnt the way to go. Germany, who set this all up will be left holding the bag, when the other EU countries wake up and begin to begin to leave.

[hack89]

54. It took Iceland 3 years and billions of international financial assistance

they imposed austerity measures as part of an IMF led bailout. They have also applied to join the EU.

There is no comparison. Iceland was a domestic banking crisis - Iceland's government was in good fiscal shape with manageable debt and adequate reserves. Greece is a sovereign debt crisis - the Greek government is in horrible fiscal shape with unmanageable debt and no reserves.

Greece does not have the same options that Iceland had. They are much sicker. They cannot survive without borrowing more money. That was not the case with Iceland.