Berlin 1933 Athens 2012?
It is being reported by the Wall Street Journal, CNBC etc, that the money held by individuals and small businesses in Greece is starting to haemorrhage from Greek Banks. This is both hardly a surprise, indeed it is a very rational act by sensible people, and far from being an act of the panicked moment.
It’s been happening slowly for a while. Greek bank holdings of your average person’s money have fallen by a third since 2010, to 165 billion Euros, which is 70 billion Euros down since the crash. On Monday 700 million Euros (about $898 million) was withdrawn. The withdrawals continue.
Why? If the election on 17th June means Greece is to come out of the Euro and default, any new Government will impose an instant “Bank Holiday” freezing all accounts. The savings of your average Demetrius in the street would be instantly trapped in the bank so he could not get his hands on it before being his hard earned cash is immediately converted from useful Euros, to New Drachmas by the Government. Then the ordinary man’s life savings will promptly be devalued by, oh say, 40% to make the country competitive. People will be beggared.
So, wise Greeks are prudently shifting significant chunks of their savings to banks elsewhere, like say Germany or Switzerland. At first it was your upper middle class doing this, the Doctors and professionals who it is claimed didn’t pay their taxes anyway, as well as the more financially astute. Now it’s the turn of pensioners and the ordinary guy in the Taverna to shunt money out of Greek Banks. Greeks are voting with their feet and sticking the valuable Euros under the bed where the government and the Germans cannot get them. Just like Granny did.
Clever, more savvy Greeks may choose to max out every credit card they hold for cash and hold on, to see what happens.
So far it’s rather civilised, more a gentle stroll out of the Bank than a run. Will that continue?
All of which takes money out of the banking system, meaning the Banks in turn cannot make money available to businesses or each other and indeed this could unbalance some weaker banks terminally, precipitating the very collapse everyone hopes will never come.
Copyright David Macadam 2012
Just as, I believe, you said quite a few months ago, though not on the blog.
I’m just surprised it’s taken people so long to get a roll on this one.
Maybe they hoped and hoped and hoped things would stop looking so black and now are realising that it’s not going to turn around.
Did you see this: http://www.dailymail.co.uk/travel/article-2144713/Greece-crisis-Get-rid-Greek-euros-holiday-company-issues-dramatic-warning-travellers.html
i also have concerns for the Spanish situation, especially since one Spanish bank has taken over large areas of the UK High street, but nobody has said whether they will be affected if Spain goes the way of Greece. In fact, I feel a popecroak coming on….Mr Macadam, over to you
Yes I did see it. The Dreadful Mail is scaremongering about Europe as usual, so pay them no heed. This is possibly one of the best summers in years to go to Europe for the holidays. Indeed I intend taking the wife there myself come the hols! The pound has risen well against the Euro in recent days, so for once, will go that much further. There is no chance whatsoever that they will not take your Euros, or dollars or Pounds Sterling or your credit cards. Frankly they would take Matebele bungo beads if they thought they’d scratch glass.
Thirty nine years ago, in the summer of 1973, I remember sitting in a tavern in the Plaka at Athens, drinking wine and watching my first foreign election – being the referendum on keeping on the Greek (German) royal family – in absolute utter fascination. A sense of sitting on the hinge of history. Greece is a lovely country and the people are a delight and very welcoming. Whatever happens they will treat foreigners as guests and you will have a great time. Outside the major cities I doubt you would even be aware of a problem.
Santander – the Bank you mention? Yes Spanish owned but UK regulated so fine if your deposits are below the statutory bail-out limit which is £85,000 per person, and remember joint accounts count as twice so £170,000. Other european banks such as ING Direct, Anglo-Irish or Triodos are not covered by UK protection but rely on their home country.
http://www.guardian.co.uk/world/2012/may/17/spain-denies-bankia-customers-rushing-to-withdraw?newsfeed=true
What was that Tom Lehrer song….”And we’ll all go together when we go…”
yes yes keep smiling through
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