Without a government for the last eleven days, and amid mainstream discussion of a Euro Zone exit, the Greek people are realizing that the economic and political system as they know it is rapidly descending into chaos.
With massive jobless rates that have forced many into bartering to survive, and facing credit destruction across the entirety of the country that has led to shortages of critical supplies like life saving medicines, those with any money left at national banks are taking the desperate step of withdrawing as much of their savings as they can from a banking system on its last leg.
This is what it looks like when a populace plagued with uncertainty finally loses trust in the credibility of their country’s leadership and financial system.
Anxious Greeks have withdrawn as much as 700 million euros ($893 million) from the nation’s banks since the inconclusive May 6 election, President Karolos Papoulias told party leaders yesterday, according to a transcript of the meeting posted on the presidency’s website today. Papoulias said he got the information from the head of the Bank of Greece, the central bank, George Provopoulos, according to the transcript.
Via Zero Hedge
As has been said before, Greece is the canary in the coal mine.
The debt has piled up across Europe and the United States. Like the Greeks, Americans will soon hit a breaking point from which there will be no return. When it does finally happen you can be assured that your local ATM’s and banks will be inundated with panicked depositors attempting to take possession of as much of their money as possible.
But once the lines start forming it will be too late. Banks will have no choice but to limit withdrawals and close their doors (even to safe deposit box owners), because they will not have enough cash on hand to meet demand.
The choice is simple: Either prepare now and have physical assets in your possession, or join the crowds and hope the government will come up with a solution to the massive outflows that will ensue when the bank run begins.
Greece: For the record. A blog of the Financial Times published details of the Greek government’s efforts to increase tax collection in compliance with EU and IMF directives. The government tied unpaid property taxes to current electricity bills for households and businesses. So many Greeks stopped paying both but received electricity because of a ruling that a cutoff would be illegal. The power company and the government folded.
The number of non-payments was sufficiently large that the main power company nearly collapsed, requiring a government bailout to keep it “afloat.” One commentator opined that the new drachma will be IOUs, as the currency of the street so that Greece can retain the euro as the currency of the bankers. That suggests that the grey economy might get its own currency.
Comment: The government hoped to raise nearly Euros 2 billion in back taxes. The program backfired.
Phi Beta Iota: The five economies are:
A. Financial terrorist banks with government complicity and corruption
B. Normal businesses being legal while still using all methods to avoid taxation, externalizing at least 50% of the “true cost” (water, child labor, fuel, toxins, tax avoidance, obesity health costs, etc.) to the public
C. The new gray economy of IOUs, barter, and survival at the individual level
D. System D, mostly an immigrant entrepreneurial economy that is off the books in every possible way
E. Traditional crime, petty and organized, that now looks more like System D than real crime–in the face of massive government idiocy and corruption, everything else looks much more rational and “legal” than it did before.