Bank run in Greece! Scramble To Pull Out Savings From Local Banks!

Asheron

We previously wrote about the possibility of a bank run in Greece following unsubstantiated reports that Greek citizens don't trust the Greek financial system all that much anymore, courtesy of the whole bailout and GDP reporting fraud thing.

The rumor was not only just confirmed and also quantified: Dow Jones reports that in the past three months Greeks have moved about €8 billion out of local banks "fearing a possible new tax on bank accounts, increased government scrutiny on assets and a run on the banks if Athens is forced to turn to the International Monetary Fund." This represents over a quarter of the money held by private banks in the country. This also represents about €400 billion in total money leaving the system courtesy of fractional reserve banking and the money multiplier. Yet the worst news for Greeks: money controls are coming.

"There is a lot of uncertainty out there," said a senior private banker at a Greek bank. "We've had a number of customers asking to move funds out of Greece, mostly to Cyprus, Luxembourg and Switzerland."

Clients of private banks also fear that Greece may be unable able to raise the EUR54 billion it needs this year to pay back maturing bonds and will therefore have to turn to the IMF for help.

"Some of our clients are concerned about a run on the banks if the IMF gets involved," said another private banker, this one from a foreign bank. "They believe the situation in Greece will get worse before it gets better. There is also very little clarity from the government about its intentions on new tax measures."

"We estimate that €8 billion has moved out of Greece to accounts abroad since December. It's money from bank accounts, stock sales, property sales and other sources. This is pretty substantial considering that there is only €30 billion under management in private banks here," he added.

All is fine and well if this was all: just your plain vanilla run on the bank. But it's not - the Greek response to this capital outflow: upcoming money controls.

Wealthy individuals may have good reasons to be concerned, however. Finance Minister George Papaconstantinou earlier this month urged Greeks with accounts abroad to repatriate their money and said the capital will be taxed at a 5% rate. He said those who choose to keep their money abroad should declare their deposits and pay a tax of 8% for the first six months.

Thereafter he threatened that Greece will use all laws at its disposal, such as double-taxation agreements, to ask foreign banks for information on Greek account holders.

"For us this is the first step towards taxing all accounts in Greece," said the chief financial officer of a major Greek shipping company. "The line is minimum deposits here and moving all assets abroad,"

And now back to your regularly scheduled program of curling and no mention of the imminent collapse of Greece in the mainstream media whatsoever.


Submitted by Tyler Durden on 02/23/2010

Asheron

I bet they wish they had Gold and Silver

Mr.Brown_4

I'm not sure I like this report. Is it real or rumour? Not nice for the Greek people to have to fight rumour as well as their own well publicised problems.

Butterfly_Brain

Might just start pulling my savings out too cos we're next!

HAMISH_MCTAVISH

Butterfly_Brain wrote: »

Might just start pulling my savings out too cos we're next!

Alrighty then.......

Butterfly_Brain

Oh Hamish you actually going to pay for my highlights...... by the way I have no facial hair and my boobs are a LOT bigger

HAMISH_MCTAVISH

Butterfly_Brain wrote: »

Oh Hamish you actually going to pay for my highlights...... by the way I have no facial hair and my boobs are a LOT bigger

:rotfl:

Actually, that was supposed to be a "my big fat greek tin foil hatter", in line with the OP.

Forgot to delete your quote.:D

But here's one for you.....

Generali

Mr.Brown wrote: »

I'm not sure I like this report. Is it real or rumour? Not nice for the Greek people to have to fight rumour as well as their own well publicised problems.

It's alright, the article is an over sensationalised crock which undermines what should be its central message.

Look at the numbers. 8,000,000,000 fall in bank deposits cutting the money supply by 400,000,000,000?

Banks are operating on minimum reserves of 8% right now and more likely 10%. If we take 8% as the Greek bank reserve ratio, bank reserves falling by 8,000,000,000 would mean a fall in possible lending by 96,000,000,000. But that's not the full story.

In the UK, M4 is barely changing despite huge amounts of money being pumped into the banking system. That effectively means that the mutliplier effect of the FRB system in the UK has fallen to about 0: put money into the banks and pretty much none of it is lent out.

Greece has enough problems without the innumerate getting involved.

The_White_Horse

Butterfly_Brain wrote: »

Oh Hamish you actually going to pay for my highlights...... by the way I have no facial hair and my boobs are a LOT bigger

can we see them? just to be sure its not a conspiracy

Butterfly_Brain

HAMISH_MCTAVISH wrote: »

:rotfl:

Actually, that was supposed to be a "my big fat greek tin foil hatter", in line with the OP.

Forgot to delete your quote.:D

But here's one for you.....

Sorry mate boobs wayyyyyyyyy bigger :rotfl:

Butterfly_Brain

The_White_Horse wrote: »

can we see them? just to be sure its not a conspiracy

No perving now boys lets just say katies are false and mine are REAL x