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Business/Finance See other Business/Finance Articles Title: We Are Watching The Greek Banking System Die Right In Front Of Our Eyes Money is being pulled out of Greek banks at an alarming rate, and if something dramatic is not done quickly Greek banks are going to start dropping like flies. As I detailed yesterday, people do not want to be stuck with euros in Greek banks when Greece leaves the euro and converts back to the drachma. The fear is that all existing euros in Greek banks would be converted over to drachmas which would then rapidly lose value after the transition. So right now euros are being pulled out of Greek banks at a staggering pace. According to MSNBC, Greeks withdrew $894 million from Greek banks on Monday alone and a similar amount was withdrawn on Tuesday. But this is just an acceleration of a trend that has been going on for a couple of years. It has been reported that approximately a third of all Greek bank deposits were withdrawn between January 2010 and March 2012. So where has all of the cash for these withdrawals been coming from? Well, the European Central Bank has been providing liquidity for Greek banks, but on Tuesday it was reported that the ECB is going to stop providing liquidity to some Greek banks. It was not announced which Greek banks are being cut off. For now, the Greek Central Bank will continue to provide euros to those banks, but the Greek Central Bank will not be able to funnel euros into insolvent banks indefinitely. This is a major move by the European Central Bank, and it is going to shake confidence in the Greek banking system even more. There are already rumors that the Greek government is considering placing limits on bank withdrawals, and many Greeks will be tempted to go grab their money while they still can. Once strict currency controls are put in place, the population is likely to respond very angrily. If people can't get their money there is no telling what they might do. We are reaching a critical moment. Many fear that a full-blown "bank panic" could happen at any time. The following is from a recent Forbes article.... The pressing problem isn't a splintered legislature that may balk at delivering the reforms that the IMF and European Community are demanding in exchange for the next tranche of bailout money. It's a disastrous, old-fashioned run-on-the bank. "For a year, Greeks have been sending their savings from Greek banks to foreign banks," says Robert Aliber, retired professor of international economics from the University of Chicago. "Now, the flood has reached a crescendo." Indeed on Monday alone, outflows from the Greek banks reached almost $900 million. These banks would have collapsed already if not for the support of the European Central Bank and the Greek Central Bank. This was described in a recent blog post by Paul Krugman of the New York Times.... But where are the euros coming from? Basically, banks are borrowing them from the Greek central bank, which in turn must borrow them from the European Central Bank. The question then becomes how far the ECB is willing to go here; is it willing, in effect, to lend enough money to buy up the entire balance sheet of the Greek banking sector, given the likelihood that this sector will be left insolvent by Greek default? Yet if the ECB says no more, Greek banks stop operating — and it’s hard to see how they can be restored to operation except by ditching the euro and using something else. That is why the announcement on Tuesday was so dramatic. The ECB is starting to pull back and that is a very bad sign for the Greek banking system. For the moment, the Greek Central Bank is continuing to support the Greek banks that the European Central Bank is no longer providing liquidity for. A Reuters article explained how this works.... The ECB only conducts its refinancing operations with solvent banks. Banks which fail to meet strict ECB rules but are deemed solvent by the national central bank (NCB) concerned can nonetheless go to their NCB for emergency liquidity assistance (ELA). But this emergency liquidity assistance is not intended to be a long-term solution as a recent Wall Street Journal article noted.... The ECB's emergency-lending facility isn't intended as a long-term fix. National central banks must get approval each month that they want to let their banks access the facility from the ECB's governing council, which can veto use of the program. If Greece installs an antibailout government that reneges on its austerity promises, it would almost certainly be cut off from ECB funding. The truth is that we are heading for a financial tragedy in Greece. If the flow of money out of Greek banks intensifies, the Greek banking system might not even be able to make it to the next election in June. This point was underscored in an article that was published on Tuesday that was authored by renowned financial journalist Ambrose Evans-Pritchard.... Steen Jakobsen from Danske Bank said outflows are becoming unstoppable, not helped by open talk in EU circles of `technical’ plans for Greek withdrawal. "This has a self-fulfilling prophecy built into it and I don’t think we can get to June. The fuse is burning and the only two options now are a controlled explosion where Germany steps in to ensure an orderly exit, or an uncontrolled explosion," he said. So what should we expect to see next? Well, James Carney of CNBC says that he believes that it is inevitable that Greece is going to have to implement currency controls in order to slow the bleeding.... It looks increasingly likely that Greece will have to implement controls to prevent capital flight and a banking collapse. To my mind, the only real question is when this will occur. The widespread talk about Greece possibly leaving the euro zone is likely to trigger withdrawal of bank deposits and other financial assets, by those who fear they might be redenominated into a drachma that would be worth far less than the euro. The Greek government may soon announce a limit on the amount of money that can be withdrawn on a single day. The Greek government may also soon announce a limit on the amount of money that can be moved out of the country. Those would be dramatic steps to take, but if nothing is done we are likely to watch the Greek banking system die right in front of our eyes. A Greek exit from the euro seems more likely with each passing day. Such an exit would have a devastating impact on the Greek economy, but it would also dramatically affect the rest of the globe as well. The following is from a recent article by Louise Armitstead.... The Institute of International Finance has estimated that the global cost of a Greek exit could hit €1trillion. When Argentina defaulted in 2001, foreign debtors lost around 70pc of their investments. That is a big hit for such a little country. So what would it cost the globe if Spain or Italy left the eurozone? That is something to think about. Meanwhile, the United States continues to steamroll down the same road that Greece has gone. According to the Republican Senate Budget Committee, the U.S. government is currently spending more money per person than Greece, Portugal, Italy or Spain does. We are spending ourselves into oblivion, and we are heading for a national financial disaster. Unfortunately, most Americans are totally oblivious to all of this. Instead of getting educated about the horrific financial crisis heading our way, most Americans would rather read about why Jennifer Lopez is leaving American Idol. But those that are listening to the warnings will be prepared when the storm hits. Things in Europe look really, really bad. You better get prepared while you still can. Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: Tatarewicz, all, 4UM (#0)
The paper money terror attacks are becoming routine. What about it is reality ? The Powers that Be are using fiction to create our reality by claiming insurmountable debts based upon fictional monetary policies belong to the people at large because the banks are too big to fail. These artificial debts are owed by WALL STREET, HEDGE FUNDS, GOVT ENTITIES and INTERNATIONAL BANKS, not the average man or woman. International riots are simply the result of people knowing that they have done nothing wrong, their so- called leaders (like those in D.C.) have tried to rob them of their savings, retirements and security because of the greed that fuels the bribe paying "upper crust." The Ferrari driving, death dealing, merchants of misery that fund the media through their advertising budgets have conscripted the media to lie for them in an attempt to make you and me believe we are responsible somehow for their GAMBLING DEBTS. The root cause behind the catastrophic banking failures revolves around the massive mismanagement of National, State, and Local Govt budgets. The derivatives "MESSIAH" was sold for a decade as a "get rich quick" scheme that would supply the funds that had been wasted, lost or stolen by the managers of "the people's money." Management types all around the world were told whatever lie was consistent with selling derivatives that sellers like Goldman- Sachs KNEW WOULD FAIL AT THE SAME TIME THEY WERE CLAIMING THESE MAKE-BELIEVE FINANCIAL PRODUCTS WERE AAA ! All of the misery that results from this fairy-tale being spun by the media and the governments culminates in "DEATH." It is time to return to truth and reality by refusing to cooperate with the debt demons and their fictional system because we actually have no choice. The fact that scum like Bush, Clinton, Schumer, Feinstein, Soros, Gore, Kissinger, Jamie Dimon and many others are able to walk around in public is an abomination and they should be driven back under the rocks they have crawled out from under or else they intend to kill us. Are you hearing me yet ? They intend to kill us and our children either in fake wars or by poisoning our food and water. Resistance is victory. "The few who understand the [FEDERAL RESERVE] system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests." The Rothschild brothers of London writing to associates in New York, 1863.
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The relationship between morality and liberty is a directly proportional one. "If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your counsel nor your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen.” —Samuel Adams America: Israel's Handmaiden
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