Bold bits by me.
EU, Greece Pursue Quiet Diplomacy to Stave Off Default
by Karl Stagno NavarraIan WishartRebecca Christie
June 19, 2015 — 1:32 AM PDT Updated on June 19, 2015 — 1:35 PM PDT
Last night in Luxembourg, Finance Minister Yanis Varoufakis launched a broadside against the Bank of Greece, accusing it of encouraging liquidity fears in an “astonishing” fashion. Earlier this week, the parliamentary speaker refused to accept the central bank’s annual monetary policy report, which urged a deal with creditors, instead releasing a document arguing that “odious” debts shouldn’t be repaid.
The clash between the ruling Syriza party and the Bank of Greece shows the extent to which the Mediterranean country’s debt crisis risks undermining the basic functioning of its governing institutions. It’s also left Prime Minister Alexis Tsipras fighting on yet another front to fulfill pledges to keep his country in the euro region without further rounds of austerity.
“This highlights the desperation of what’s happening,” said Dario Perkins, the chief European economist at Lombard Street Research in London.
Central Bank Duty
In Luxembourg yesterday, Varoufakis said the lender was “the only central bank I know personally that, even before there were any serious problems, issued a statement that there was a prospect of a liquidity shortage.” Instead, he said, “central banks have a duty to do precisely the opposite — douse any concerns about liquidity, then provide liquidity when it is lacking.”
Tsipras’s government on Thursday said there was an effort under way to spur capital flight, undermine the financial system and strengthen the creditors’ position. No conspirator was identified.
The line about the duty of a central bank to suppress liquidity fears is “exactly right”. Though in the present mess I doubt anyone would be fooled into thinking there isn’t a liquidity crisis looming. Cyprus proved that.
The Central Bank is trying to get the government to go along with the bailout terms, while the government is not going to do it. The bankers are basically sticking with the ECB bankers while the government is unwilling to go against the expressed will of the people who elected them. Said people pulling out € by the Billions.
We can count on the already burned Russians to keep tabs on how much money is being hauled out of Greek banks now that Cyprus showed how the game is to be played. I’ve bolded a couple of bits.
Greek bank run: Deposit withdrawals hit €3 billion in four days – media
Published time: June 19, 2015 15:56
Edited time: June 19, 2015 19:07 Get short URL
Panicking savers in Greece have withdrawn over €3 billion in deposits from the country’s banks between June 15 and June 18, with a record €1 billion having left Greek banks on Thursday, banking sources told Reuters.
As the fears of Greece defaulting on its €316 billion debt and leaving the eurozone are escalating, people in Greece are rushing to take their savings out of banks. An estimated €200-€300 million a day was leaving the country prior to this week. Between October and April €30 billion left Greek banks, according to data from the Bank of Greece.
The panic accelerated Thursday ahead of the Eurogroup meeting in Luxembourg where European Finance Ministers and Greek officials were to discuss the ways Athens could deal with its international creditors. The meeting however did not show any feasible results.
On Monday, June 22, Greek banks might have to stay closed, when the EU summit takes place in Brussels, according to the European Central Bank (ECB). The summit will focus on Greece’s problem at the highest political level and is aimed to discuss ways of preventing the crisis from spreading within the EU.
Greek Finance Minister Yanis Varoufakis said on Friday that a comprehensive Greek proposal for a cash-for-reforms deal to the euro zone group of finance ministers was not discussed, and that Europe’s leaders had a duty to come up with a deal.
“Greek authorities presented a wide-ranging, comprehensive and credible proposal that can be the foundation of an agreement that not only concludes the current program but also addresses Greece’s future funding needs. Regrettably, no discussion of our proposal took place within the Eurogroup,” Varoufakis said in a statement.
Anyone leaving money in a bank in Greece is a fool. And given how the US Government is behaving, the USA will be right behind them… I can’t keep track of how fast the $Trillion meter is clicking over any more… and that path leads to where Greece is now. So watch how the game is played, and remember when the time comes to “withdraw early and withdraw often”.
Note that since Greece has about 10 million population, that € 1 Billion in one day is roughly €100 for every soul in the nation. So figure mom or dad hit the ATM for a few hundred for the family. The € 30 Billion from October to April is roughly € 3000 for every person. Given that, I suspect only major institutions have left their money in the bank. Individual citizens and any Russian Mafia money ought to be well gone by now and with only the ‘end of month’ or ‘end of week’ check deposits being left to pull out before the weekend.
It will be an interesting Monday…