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The Upside of the Greek Crisis
David Boaz
The Wall Street Journal reports:
Strikes, work slowdowns and protest marches have become so common in crisis-hit Greece that it can be hard to keep track of who is demonstrating when, where and against what….
The Greek finance ministry this year has had to extend the deadline for filing personal income-tax returns three times, in part because of strikes by tax collectors.
View full post on Cato @ Liberty
International News • Insight: Greek central banker’s big pay-off
Insight: Greek central banker’s big pay-off
http://www.reuters.com/article/2012/10/ … OD20121011
(Reuters) – The governor of the Bank of Greece was given a severance payment of 3.4 million euros when he left his former employer, a major bank that he now regulates, documents seen by Reuters show.
George Provopoulos was awarded the sum when he stepped down as vice-chairman of Piraeus Bank to become governor of Greece’s central bank and a member of the board of the European Central Bank in 2008. The scale of the pay-off, previously unknown to most Greeks, is likely to prove controversial, amounting to nearly 2.8 million euros ($3.6 million) after tax.
As governor of the central bank, Provopoulos, now 62, has played a key role in propping up Greece’s banking system, which has received billions of euros in liquidity from the ECB and is in line for up to 50 billion euros of new capital from the bailout provided by euro zone countries and the International Monetary Fund.
The Greek central bank has also faced criticism over the recent rescue of the country’s troubled state-run Agricultural Bank (ATE), which left-wing Greek MPs described as the "robbery of the century." In that deal the authorities decided to place ATE’s non-performing loans into a ‘bad bank’ and hand the rest of ATE to Piraeus.
The Bank of Greece said Provopoulos faced no conflict of interest from his severance deal and had fully informed the authorities of the payment. When Reuters sent questions to Provopoulos, the Bank of Greece legal department responded: "In compliance with the applicable Greek law, Governor Provopoulos declared the severance payment to all pertinent tax and judicial authorities."
In a letter to Reuters, Dr Vassilios Kotsovilis, the bank’s legal director, added: "The severance payment, having been agreed upon at an earlier time and under very different (pre-crisis) circumstances, was neither of an arbitrary nature nor of an extra-ordinary nature."
Kotsovilis said details of the payment were reported in "the press and blogs of the period." However, Reuters was unable to find mention of the payment despite extensive searches in both Greek and English.
Piraeus, which is suing Reuters over a previous report about the bank, said in a statement: "In view of legal proceedings… we consider it inappropriate to comment in any detail."
It added: "It goes without saying that Piraeus Bank has always fully complied with the rules and regulations governing the Greek banking sector."
BOARD APPROVAL
Provopoulos, a former chief executive at Emporiki Bank, Greece’s fifth largest bank, joined Piraeus, the fourth largest, on October 18, 2006. As a vice-chairman and managing director, he was entitled to a net salary of 580,000 euros, plus expenses and a bonus.
On May 22, 2008 he resigned from Piraeus after 19 months service. Documents seen by Reuters indicate that, on the day before he left the bank, its directors approved a severance payment of 2,775,000 euros, in addition to his pay of 325,704 euros for five months work that year.
The Bank of Greece confirmed the severance payment was 3.46 million euros before tax and was paid to Provopoulos that month. It amounted to more than two million euros per year of service.
Almost a year later the deal appeared in minutes of a Piraeus shareholder meeting held on April 30, 2009, which sought retrospective approval for the payment. Though such shareholder meetings are open to the press, the payment appears to have passed unnoticed.
Louka Katseli, a former Greek Economy Minister and now professor of Economics at the University of Athens, was one of those unaware of the payment, despite being a prominent opposition politician at the time. When told of the payment this week, she said: "I had no prior knowledge of Mr. Provopoulos’s severance."
George Gougoulis, the president of ESETP, a staff union within Piraeus Bank, was also unaware of the pay-off to Provopoulos. "We have repeatedly asked the Bank to disclose to us information about the way top executives and members of the Board are remunerated, for instance by stock options, and they have always refused that," he said.
The scale of Provopoulos’ payment is notable when set against what minutes of shareholder meetings record for payments to other directors who have departed Piraeus. Another vice-chairman, Theodoros Pantalakis, was on a similar level of remuneration at Piraeus to Provopoulos and left in December 2009 after working for the bank since 2004. He was given a pay-off of 470,000 euros, according to shareholder minutes, amounting to less than 100,000 euros per year of service.
By comparison, Provopoulos’ pay-off was three times his after-tax annual compensation, according to the Bank of Greece.
Pantalakis told Reuters that any payments to him were "as recorded in minutes of shareholder meetings." His severance payment may have been lower because of the worsening credit crunch at the time of his departure. He said of the payment to Provopoulos: "I don’t find it peculiar, I don’t have any recollection that something was out of line."
Michalis Colakides, another former vice chairman and deputy chief executive of Piraeus, left the bank in 2007 after seven years of service. Piraeus accounts record no severance pay for Colakides that year, though Colakides told Reuters that he received a payment equal to two years salary. He declined to comment further.
A spokesman for Piraeus said: "The remuneration of Piraeus Bank’s senior management has been established and duly approved by all the relevant corporate committees and bodies, in full compliance with all applicable internal and external regulations and duly recorded as such in the Bank’s financial statement."
In response to Reuters inquiries about Provopoulos’ financial arrangements with Piraeus, the Bank of Greece said that "detailed answers have been given to the Greek parliament", and other relevant authorities.
The issue arose in parliament in 2009 because rumors had been circulating in banking and political circles about a large investment loss suffered by Provopoulos a few months after he left Piraeus.
In September 2007 he and other senior executives of Piraeus had taken out loans from the bank to buy shares in a rights issue it was staging. According to one former Piraeus manager, all senior figures at the bank were asked to take part when the bank’s then executive chairman, Michael Sallas, announced he would raise 1.35 billion euros by issuing approximately 67m new shares.
"Everyone got a letter that said something like: ‘Here is your allocation of shares. Your loan is pre-approved. Sign here!’" said the former manager.
Bank of Greece rules allow banks to finance the participation of employees in rights issues. Piraeus declined to comment on the rights issue and the loans because of legal proceedings against Reuters.
In May, Piraeus announced it was suing Reuters over an earlier report about the bank renting properties owned by companies run by Sallas and his family. The bank is claiming 50 million euros in damages. Reuters stands by the accuracy of its report.
"AN IMPORTANT LOSS"
According to stock exchange records, on September 17, 2007 Provopoulos bought 212,911 shares in Piraeus, having purchased the rights to participate in the offer a week earlier. To cover the cost Provopoulos took a loan from Piraeus for 5,024,812 euros, according to his own later declarations.
He bought another 23,250 shares on December 28, 2007, under a share option scheme.
After leaving Piraeus, Provopoulos held onto his shares for three months while he was governor of the central bank overseeing the banking system. He had informed legal advisers and been told that "the ownership of the portfolio did not…influence in any way the legality of his duties", his office later told parliament.
Provopoulos sold the shares in October 2008 after the collapse of Lehmann Brothers sent bank shares plunging. He realized 2,449,256 euros – far less than his outstanding loan to Piraeus.
Speculation about Provopoulos’ debt to his former employer prompted Michael Karhimakis, then a Pasok MP, to ask questions in the Greek parliament. Provopoulos responded with a formal statement from the director of his office.
It said he had suffered an "important loss" on his Piraeus shares and repaid his loan to the bank with the proceeds of the share sale plus a personal cheque for 2.1 million euros. The statement to parliament made no reference to the fact that Provopoulos had been granted a severance payment of 3.4 million euros by Piraeus.
There was no legal obligation for Provopoulos to declare his severance payment in parliament and the Bank of Greece said it was not mentioned "due to the fact that the then-asking MP confined his questions to the sale of the shares of Piraeus."
But Karhimakis, the former Pasok MP, told Reuters that, in his opinion, Provopoulos had a moral duty to disclose the payment and make clear his assets and their source. "This is a period when transparency for public figures is needed more than ever," he said.
Provopoulos’ salary as governor of the central bank is not published. But the Bank of Greece told Reuters his salary is 50 per cent lower than it was when he took office, after he had accepted two pay cuts during the country’s austerity drive. Provopoulos now receives an after-tax ‘monthly’ salary of 7,615 euros paid, as for many Greek public officials, 14 times a year, said the central bank.
In August, Provopoulos defended Piraeus’s takeover of ATE in the Greek parliament. When lawmakers questioned him about Reuters reports involving Sallas, Provopoulos was dismissive. He said the reports referred "to isolated incidents, implications that are presented as facts and selected parts of statements by experts and non-experts to arrive at an arbitrary conclusion in my opinion – that the Greek banking system is suffering from bad corporate governance and inadequate regulation."
If this were true, Provopoulos said, "then today there would no banks left standing."
(This story removes euro sign in third paragraph from bottom)
(Reporting By Stephen Grey and Nikolas Leontopoulos; Editing by Richard Woods and Simon Robinson)
Greece
Statistics: Posted by DIGGER DAN — Mon Oct 15, 2012 12:43 pm
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International News • Re: Run on Spanish banks follows Greek pattern as 7% of GDP
Fears Rising, Spaniards Pull Out Their Cash and Get Out of Spain
http://www.cnbc.com/id/48889555
Statistics: Posted by yoda — Tue Sep 04, 2012 9:44 am
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International News • 350 Greek Tragedies in Athens in June Alone
350 Greek Tragedies in Athens in June Alone
WEDNESDAY, AUGUST 15, 2012
You know, we can write and read and research all we want, and till we’re deep dark blue in the face, about Angela Merkel and Tim Geithner and Mario Draghi or Monti and Greek heroes Samaras and Venizelos, about what they say and do from day to day, driven by political pressure and mundane issues such as bond yields. And we will continue to write, read and research these things; that’s not going to stop.
But as soon as any of us take a step back and try to see things from another perspective than that of the proverbial and iconic child with her nose pressed against the display window of the candy store, there’s none of us with a grain of self-respect left who can maintain that what we see unfold is about Angela, Timothy and the Mario’s. And that is what we will increasingly, and I mean all of us, need to add to our writing and reading: We will have failed miserably if we haven’t paid attention to the people most affected by what rabbits the various leaderships decide to conjure up out of their high hats.
And not just because if misery in the streets reaches a critical mass, that will be where the direction of politics will be decided. It’s not a macro picture. We ourselves are not a macro picture; we all of us live human micro lives. We therefore need to pay attention to the plight of the victims of the crisis, because they are people like us, because they can function as a mirror to who we are, and strive to be, and as a mirror for our futures. It is no use to be well-off yourself if you don’t have a functioning society to be well-off in. And don’t worry, I don’t expect the majority of you to understand. I fully expect most people to hit the wall running.
Money has no value in and of itself; it derives that value from the world it rolls in. Take away that world, and you take away the value.
Yes, financial markets are doing relatively well, and if they don’t, central banks will throw more of your cash at the banks. The problem is that they don’t throw that cash at the people. Many of whom could really do with some. According to the present paradigm, banks are more important than people, and people, if I understand it well, can only be saved if banks are saved first (with the people’s money). This paradigm is the sort of insanity only economists and bankers can come up with. The life of a person, whether rich or poor, is infinitely more important than the life of a bank. No contest. You would think.
What got me started on all of this is a great – great in its sadness – little tale from today’s Spiegel, by Barbara Hardinghaus and Julia Amalia Heyer, on what happens with real people. Either we deal with issues such as this, or we don’t. And if we don’t, the issues will deal with us. Down the line, whatever happens to others happens to us too. We are after all social animals, that’s not something we can alter at will. But we still try hard, don’t we?
Wave of Suicides Shocks Greece
Greece has always had one of the lowest suicide rates in Europe, but its economic crisis has triggered a disturbing increase in the number of people killing themselves. Are the deaths the result of personal desperation or are people making a political statement with the only thing they have left to sacrifice?
On July 16, a businessman and father of three hanged himself in his shop on the island of Crete. A 49-year-old man from Patras was found by his son. He had also hanged himself. On July 25, a 79-year-old man on the southern Peloponnese peninsula hanged himself with a cable tied to an olive tree. On August 3, a 31-year-old man shot himself to death at his home near Olympia. On August 5, a 15-year-old boy hanged himself in Pieria. And, on August 6, a 60-year-old former footballer self-immolated in Chalcis.
These are also reports from Greece, reports that, at first glance, seem to have nothing to do with the economy. They come together to form a grim statistic, raising questions of what is triggering the suicides and whether the high incidence is merely a coincidence.
Or do people see suicide as a way out of the crisis that has taken hold of their country and their lives? Are they bowing out before things get even worse? Germany and the International Monetary Fund (IMF) are opposed to a new bailout package for Athens. The country faces a shortfall of at least €40 billion ($49 billion). Greece could very well be officially bankrupt by the fall.
Greece, a country whose Orthodox Church does not condone suicide, has always had one of the lowest suicide rates in Europe. But now, there were 350 suicide attempts and 50 deaths in Athens in June alone. Most of the suicides were among members of the middle class and, in many cases, the act itself was carried out in public, almost as if it were a theatrical performance.
Desperate for Dignity
On April 4, shortly after 9 a.m., a 77-year-old pharmacist shot himself to death on Syntagma Square in downtown Athens. Dimitris Christoulas, a short man, stood against one of the large trees on the square, held a pistol to his temple and pulled the trigger.
"My father was a political person, a fighter," says his daughter, Emmy Christoulas. Weeks after her father’s death, she is sitting in her living room in Chalandri, a northern suburb of Athens. She is a slim 42-year-old wearing oversized jeans, her short black hair streaked with gray.
Her father was politically active, a member of the "We Won’t Pay" movement. He repeatedly called for an international review of Greece’s national debt because he was convinced that it wasn’t the fault of the people. He had come to beleaguered downtown Athens every day last summer to take part in rallies and to lend a hand, usually in the Red Cross tent.
When he went to Syntagma Square for the last time, on April 4, he sent his daughter a text message consisting of one short sentence: "This is the end." Then he switched off his cell phone. "It was at exactly 8:31 a.m.," says Emmy, pulling a cigarillo from a crumpled pack. When she was unable to reach her father by phone after receiving the text message, she and two friends drove to his apartment.
She heard a news report on the radio that someone had shot and killed himself under a tree on Syntagma Square. "First the text message, and then that report," she says. "I was sure it was him."
Since her father’s death, Emmy Christoulas has taken the subway to the square, nine stops from her apartment, many times. She visits the memorial to her father two or three times a week, usually in the evening. When she does, she stands a short distance away from the tree.
It’s become quiet in the square, where a band is playing and the sound of guitar music is wafting through the warm air. Christoulas crosses her arms over her chest and looks at the people who stop at the memorial. It consists of wreaths and a few stuffed animals leaning against the tree, as well as notes pinned to the trunk. "Don’t walk like a robot! Open your spirit!" one note written in red letters on a piece of cardboard reads. The lines that Dimitris Christoulas wrote in a suicide note are engraved into a marble plaque.
The government has annihilated all traces for my survival, which was based on a very dignified pension that I alone paid into for 35 years with no help from the state. I see no other solution than this dignified end to my life so that I don’t find myself fishing through garbage cans for my sustenance.
The words "Dimitris’ gesture cannot be repeated" are written on a piece of paper above the plaque. But his gesture is repeating itself on an almost daily basis. The newspaper Ta Nea describes the mood among Greeks as a "society on the verge of a nervous breakdown." [..]
On the morning of April 4, Dimitris Christoulas put on his light-colored trench coat, stuck his pistol in one pocket and the farewell letter in the other, and set out for the square, as he had done so many times before, and wrote the last text message to his daughter.
On the day after the memorial service for her father, Emmy Christoulas drove her father’s body 13 hours to Bulgaria to have him cremated. The Greek Orthodox Church denies church burials to people who have committed suicide. Her father had left her the money for the trip. [..]
Nikiforos Angelopoulos, an Athens psychiatrist, has kept track of suicides and, with each new death, he has become more afraid. He tries to see each act as the failure of an individual, confused person. The 60-year-old did his doctoral dissertation on the subject of "hostility." Suicide is a disorder, he says, a form of hostility — a person’s hostility against him- or herself. [..]
The 90-year-old woman who fell to her death from a rooftop terrace on Vathi Square jumped together with her son. But the truth is that she didn’t jump at all. Her son pushed her. Then he waited three minutes and followed his mother. It was a 15-meter (49-foot) drop to the pavement below. His name was Anthony Perris, a musician and writer, a quiet, 60-year-old man.
The spot where he hit the ground is three kilometers from Syntagma Square, next to the building where he lived with his mother. Perris had cared for his mother, who had Alzheimer’s and cancer, for 20 years. He took her for a short walk in the small park outside every day. On the evening before the suicide, he closed the blinds in the apartment. The next morning, he took his mother into the elevator and up to the roof terrace above the sixth floor.
Perris also left a suicide note, placing it on the kitchen table. "My life has become a constant tragedy," he wrote. He tried to sell his house, but no one had the money to buy it. He owned a house, a boat and a moped.
"What’s the use of owning things when you don’t have any money to buy food?" Perris asked in his suicide note.
Everything that the papers are saying about the rash of suicides is "misleading and dangerous," says Angelopoulos, the psychiatrist. People who commit suicide, he notes, are not political fighters, even if the public turns them into heroes.
The pharmacist who shot himself to death on Syntagma Square was a desperate individual, just like all the others, says Angelopoulos, who sounds a little desperate himself. He is fighting a lonely battle. All the same, the Greek Ministry for Health set up a suicide hotline a few weeks ago. Despite all the budget cuts and austerity measures, it feels the expense is justified. [..]
On the morning after our visit with Christoulas, the Athens police received another emergency call. A 61-year-old man has hanged himself from a tree on a hill in Aghios Philippos Park, not far from his house. He was a sailor who had recently lost his job. He had a wife, a son, a daughter and a dog. His body was removed by the afternoon, a few hours after his death.
The red-and-white strip of crime scene tape is still hanging between two trees, fluttering in the wind above the big city.
http://theautomaticearth.com/Finance/35 … alone.html
Statistics: Posted by yoda — Thu Aug 16, 2012 8:00 am
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Other • Greek Theater Double-Feature: A Farce and a Tragi-comedy
Greek Theater Double-Feature: A Farce and a Tragi-comedy
June 19, 2012
The "narrative" of Greece is simple: no entity, be it a household or nation, can live beyond its means indefinitely.
Imagine a ship with 100 passengers and crew drifting down a river that eventually cascades over a 1,000 foot waterfall. It’s easy to plot the ship’s course and the waterfall ahead. You might think 100% of those onboard would agree that something drastic must be done to either reverse course or abandon ship, but before we jump to any conclusion we must first identify what each of the 100 people perceive as serving their self-interest.
If life onboard is good for 55 of the 100, they may well rationalize away the waterfall dead ahead. Indeed, they might vote to maintain the current course, thus dooming the 45 others who can hear the thundering cascade ahead but who are powerless to change course in a democracy.
This is the "tyranny of the majority" feared by some of the American Founding Fathers. I cannot locate reliable statistics on what percentage of the Greek population is dependent on the State for a paycheck, entitlement, retirement, disability, unemployment, etc., but I suspect the number exceeds the full-time private payroll of that nation. It seems likely that the number of voters in Greece who draw a check or benefit from the State exceeds the number of privately employed voters whose perception of self-interest is radically at odds with continuing State borrowing to fund the Status Quo.
If 55% of the voting public is dependent on government spending, then they will vote to continue that spending regardless of its unsustainability.
This is a variation of The Tragedy of the Commons, where the self-interest of each individual is served by stripmining the public commons for their individual gain. When everyone sees the commons as "free for the taking," then the commons is soon destroyed for all.
To the degree that Central State revenue is a form of public commons, then the siphoning of that resource to serve individual gain leads to the loss of the commons, as well as the loss of any notion of the "common good."
With 55 of the 100 voting to continue the present course of State borrowing and spending to support their piece of the largesse, the ship is doomed to end up in pieces at the bottom of the waterfall, despite the utter obviousness of the catastrophe just ahead.
Self-interest is often distorted or short-sighted, something I analyze in depth in Resistance, Revolution, Liberation: A Model for Positive Change, for without an understanding of distorted self-interest, we cannot understand why people will continue supporting a visibly imploding Status Quo: they will do so as long as they are getting a "free" piece of that Status Quo.
This chart is a bit dated, but the trends haven’t changed. According to Wikipedia’s entry on Greece’s economy, public debt is now $355 billion and its GDP is $215 billion, though those numbers have probably drifted higher/lower along these trendlines:
Here is Greece’s Central State budget, which sports an annual deficit of roughly 10% of GDP. This is about the same as the U.S., but the U.S. has the privilege of printing/ borrowing its own currency into existence. Greece does not have the luxury of printing euros. It seems likely these tax revenue figures are wildly optimistic, and so the actual current deficit is probably much higher.
Most of those collecting a piece of the 96 billion euros in annual State spending appear to have voted to keep the ship firmly heading for the waterfall, because they fear the consequences of changing course or abandoning ship. A "tyranny of the majority" voted by all the recipients of Status Quo deficit-spending is a form of farce, while the chosen course–off the waterfall–is a tragi-comedy.
There is only one productive path forward for Greece:
1. Renounce the unpayable debt and cease paying interest on all sovereign debt.
2. Live within the means generated by the nation’s enterprises and workers.
3. Stop consuming/living off borrowing money.
A government can only spend the surplus generated by the nation’s private sector. Ultimately, all government expenditures are paid from the surplus generated by the private sector. If that surplus is modest, then government expenditures must be modest as well.
This means that all those individuals who have been paid with borrowed funds will experience a decline in their State-provided income when the borrowing ceases. The "standard of living" will decline until the cost-basis of the economy declines as demand contracts.
When street upon street of commercial spaces are vacant, eventually the owners of those empty spaces will go bankrupt or lower the rents to what the economy can sustain. This reduction in price from a decline in demand plays out in a number of domestically supplied cost structures.
The "narrative" of Greece is simple: no entity, be it a household or nation, can live beyond its means indefinitely. If consumption is paid by borrowing, eventually the interest payments on that ever-rising debt feed a financial death-spiral of ever-higher interest, taxes, austerity and ever-declining investment in productive assets.
Greece is not alone in living beyond its means. This chart is a bit dated, but it usefully poses this question: if these massive bond maturations continue month after month as far as the eye can see, exactly what miracle source will roll over all this debt *and* fund the vast new debt that is sold every year to fund massive deficit spending by these nations?
The Chinese have an apt saying: when you’re thirsty, it’s too late to dig a well. We’re not yet thirsty in America, so we have no interest in digging a well. That’s a bother; it’s so much easier to borrow 10% of our GDP every year to fund our deficit spending. We too face a "tyranny of the majority:" there are only 115 million full-time private-sector jobs in the U.S., and a far greater number of recipients of government funding who will vote to continue their share of the borrowed money, regardless of the waterfall just ahead.
The double-feature farce and tragi-comedy is currently playing at the Greek Theater, but it will soon be opening in every debt-dependent nation on the planet.
http://www.oftwominds.com/blog.html
Statistics: Posted by yoda — Tue Jun 19, 2012 9:57 am
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International News • Greek, Spanish savings flee eurozone crisis
ATHENS, Greece (AP) — In Europe’s most economically stricken countries, people are taking their money out of their banks as a way to protect their savings from the growing financial storm.
Worried that their savings could be devalued, or that banks are on the verge of collapse and that governments cannot make good on deposit insurance, people in Greece, Spain and beyond are withdrawing euros by the billions — behavior that is magnifying their countries’ financial stresses.
The money is being hoarded at home or deposited in banks in more stable economies.
It’s a steady bank "jog" at the moment, not a full-bore run. But it threatens to undermine the finances of those countries’ already-stressed lenders. And if it does turn into a full bank run after Greece’s crucial election on Sunday, it could hasten financial disaster in Europe and help spread turmoil around the world.
Since the Greek debt crisis broke in late 2009, deposits have fallen by 30 percent cent, as savers have slowly pulled some €72 billion ($90.24 billion) from local lenders, with total household and corporate deposits standing at €165.9 billion ($207.94 billion) in April, according to the latest data from the Bank of Greece.
Spanish deposits have fallen about six percent over the past year. They dipped suddenly in April by about €3.1 billion, or 1.8 percent, to €1.624 trillion as problems with the country’s troubled banks stated to grow to alarming proportions.
This is despite the fact that deposits are guaranteed by the government up to €100,000 across the eurozone.
Spain’s financial turmoil quickly worsened in late May, when the country’s second-largest lender announced it needed capital of €19 billion to stay afloat. Bankia denied reports of a rush by its customers to withdraw, but the bailout scared Spaniards who assumed their money was safe.
Bankia client Rosa Monsivais panicked and decided she had to move her savings from Bankia to one she thought would be safer. She chose a foreign bank with Spanish operations, the Dutch owned ING bank.
It took longer than she thought, leading to anxious days until she knew her money was in her new account.
"It scared me a little. I took all my money out and put it in ING," said Monsivais, a 41-year-old graphic artist who would not say how much money she moved. "But it took a full week to do this kind of transaction. I was reading the newspaper each day and it worried me."
The money across Europe is headed different places.
Some has simply been withdrawn and spent out of urgent need as people lose their jobs due to recessions. Some is winding up in bank accounts or invested in countries that are more stable such as Germany. The rest is being invested in property or bonds being issued by other eurozone countries.
In the U.K., the eurozone crisis was seen as one factor pushing up central London house prices, according to Knight Frank, a real estate agency dealing in high-end property.
"While it looks very much that the surge in Greek buyers has fallen off sharply since the beginning of the year — those who had the funds to buy have done so — we are now seeing a noticeable uptick in interest from France, Italy, Spain and even German-based purchasers looking at the prime London market," the company said in its Prime Central London Index report.
Meanwhile, some money appears to be simply hoarded at home, despite the risk of theft. Last month, police in Athens arrested a gang that specialized in breaking into basement storage spaces under apartment blocks, netting a rich haul in stashed cash and valuables.
"What the average Greek has in mind is to secure the euros they currently hold," said Theodore Krintas, managing director at Attica Wealth Management. "That has been going on for a long time, and will continue as long as the uncertainty increases concerning Greece’s position in the near future in the eurozone and the European Union."
Sunday’s vote could determine whether Greece stays in the euro or leaves in chaos. Since 2010, Greece has been dependent on two bailouts totaling €240 billion in loans to pay its bills. In return, the government had to promise to make deep spending cuts to lower its deficit. That has helped put the country in a deep recession. Leading political figures have called for renegotiating or rejecting the bailout deal, which could lead to a payment cutoff from mistrustful eurozone governments and the IMF.
A bailout cutoff could lead to a complete collapse of government finances and a euro exit meaning the country would have to print its own money to pay bills or recapitalize banks.
A large-scale bank run in Greece could further wreck government finances and push the country closer to leaving the euro. T
So far it’s been a trickle rather than a flood in Greece, underlining its slow-motion nature. Many have kept their deposits because they don’t believe Greece will leave the euro.
Wealthy Germans also are concerned that inflation will surge if Europe’s central bank has to step in and spend huge amounts of money propping up the single currency. So they are putting more money into their own country’s high-end real-estate in hope it will keep its value.
Well-heeled Spaniards have been moving money to Switzerland and the U.S. for months amid mounting worries about Spain and the safety of the eurozone, said Bruce Goslin, managing director for Europe, the Middle East and Africa for K2 Intelligence consulting group.
"As we are circulating and talking to people, some things are becoming clear. Everyone says ‘There is nothing going on in Spain, the economy is contracting so fast we’re going to have to go out of Spain.’" said Goslin.
Spain’s banking problems come from the collapse of a real estate boom. Banks that made reckless loans are not being paid back and are seeing the value of the properties they invested in tumbling. This is making the country’s banking system increasingly financially insecure — heightening savers’ fears that their money is not safe.
Fernando Encinar, head of research at real estate website Idealista.com, said some wealthy people who didn’t have money to buy during the boom are now taking advantage of prices that have fallen 26 percent in four years.
Many Spaniards can’t move money abroad because times are so tough, said Vincent Forest at the Economist Intelligence Unit. With unemployment now at nearly 25 percent, Spaniards with jobs and savings are increasingly helping out less fortunate relatives.
"Most Spaniards have huge savings, but they have someone in the family who needs money and isn’t earning anything," Forest said.
Many Italians — some of Europe’s most devoted savers — are also moving money. They are worried their government will be the next victim of the crisis through its heavy debt load, even though Italy’s banks, government finances and economy are in better shape than Spain’s.
Some 60,000 to 70,000 small investors have bought property abroad, mostly in Germany but also on the Spanish islands, in the last three months, for a total investment of €400 million on an annual basis, said Paolo Righi, president of the Italian Federation of Real Estate Professionals.
Ruth Stirati, who runs a business helping Italians buy property in Berlin, said she gets about 10 emails a day asking about properties.
"Over the last two or three weeks, there has been a new panic," she said. "They have a thousand fears: That the banks won’t have money, that the euro will fail. It is without substance, their doubts. But they worry there will be one strong euro in Germany, and one that is weak.’
Wealthy Germans aren’t worried about seeing their money disappear due to collapsing banks, but they are concerned that their savings will be eaten away through inflation. As a result, they are putting money into real estate — at home.
Even though inflation currently is moderate at 2.2 percent in May, there is concern about the risk of rising prices in Germany’s media. There is speculation that inflation could jump if the European Central Bank has to take drastic measures to keep the eurozone from breaking up — such as printing large amounts of money to buy government bonds and cover bankrupt governments’ financing needs.
The current EU treaty bars that. But that hasn’t stopped German newspaper headlines warning about possible inflation to come.
According to the Europace real estate financing platform, German home prices rose 5.46 percent in the first quarter over a year ago.
Read more: http://www.seattlepi.com/news/article/G … z1xz2Tmalq
Statistics: Posted by yoda — Sat Jun 16, 2012 12:48 pm
View full post on opinions.caduceusx.com
International News • Markets Have Lost 2 Trillion Since Greek Stalemate Began
http://www.theglobeandmail.com/report-o … le2439742/
Statistics: Posted by yoda — Fri May 25, 2012 8:56 pm
View full post on opinions.caduceusx.com
International News • All Hail the Greek Exit
All Hail the Greek Exit
WEDNESDAY, MAY 23, 2012
The dialogue between academics, officials, analysts and pundits in Europe has very obviously turned towards ways of spinning a Greek exit as a "good thing" for the system, or, at least, not such a "bad thing". Last week, we saw analysts at Bank of America and HSBC telling us that a Greek exit would actually cause a large market rally for a bunch of dubious reasons (i.e. the CBs will print to infinity and cause everything to soar, while also making a stark example out of Greece). That’s a common argument, and there is at least some historical precedent in support. Like I said before, though, we can no longer use recent history alone as a reliable guide to the near future.
Deterrence is Dead
When the Greek people finally exit the EZ, and if/when they are made to SUFFER at the Cross for their "sins", the Spaniards, Italians, Portuguese and Irish (and eventually, the French, British, Germans, Americans) will look on and realize that the Cross is not such a bad fate when compared to the tons of flesh that will be demanded by the globalist elites in perpetuity.
In the short-term, it is quite possible that the bankster propaganda-and-punishment cycle succeeds in quelling further internal dissent within the Eurozone, but any such success will amount to nothing more than castles made of sand on the shores of a ravaging sea. As the tides of popular resistance continue to turn and grow with force, these castles will eventually crumble.
But now we have entered the stage of the crisis in which people are rushing to claim that the deeply-rooted structural issues facing countries in the EMU can be fundamentally resolved, despite or because of a Greek exit! These claims come from both sides of the divide, too. First, we have an article on BBC by Ann Pettifor, who falls into the "liberal progressive" camp – one that bears a certain fondness for Keynes. To be fair, people like Pettifor have been making the case for a Greek default/exit for quite some time now.
Nevertheless, I’m sure she is fully aware of the fact that, if there was ever a time to make the case for an exit, it is now.
Greece: The upside of default
It now seems inevitable that Greece will default on its debts, with all sorts of disastrous scenarios being discussed, particularly if it has to leave the euro.
But I know from my experience of working with Jubilee 2000 to "drop the debt" of poor countries in Africa and Latin America that there is life and economic recovery after sovereign debt crises.
Countries that defaulted in the 1990s suffered recessions that lasted briefly. Then came the rebound, as Arvind Subramanian of the Petersen Institute shows. Argentina grew by 8% after its default, Russia by more than 7%, and Indonesia by 5% after its crisis.
Of course Greece would initially suffer a severe shock and economic contraction. Its elites would intensify the export of their wealth to, for example, the City of London, causing inflation.
Greece would have to issue an alternative, parallel currency – at a large discount to the euro – to finance domestic economic activity.
But Greek exporters would benefit from a mega-devaluation of this new currency, and increased competitiveness vis-a-vis European partners, especially Germany.
There are other upsides for Greece too. To understand why, we need to recognise that the eurozone monetary framework is like a "golden corset". By defaulting on its debts, Greece can escape the "corset" that resembles the "barbaric relic" that Keynes deemed the Gold Standard of the 1930s.
I think you get the picture – it is pretty clear where Pettifor’s analysis is headed from there (if not, follow the link). There is a good deal of truth to what she says, but it is also contains an obvious spin of optimism about what Greece can accomplish on its own. Next, we have an article in Bloomberg explaining the position of the Bundesbank (Germany’s CB), which falls into the conservative, "fiscally disciplined" camp that has a fondness for Austrian economics. That is obviously the diametric opposite of what Pettifor believes, but they are both attempting to spin the Greek exit as a "manageable" affair.
Bundesbank Suggests Greek Exit From Euro Would Be Manageable
Germany’s Bundesbank said the consequences of Greece reneging on the terms of its bailout program would be manageable for the euro area.
"The current situation in Greece is extremely worrying," the Frankfurt-based central bank said in its monthly report today. "Greece is threatening not to implement the reform and consolidation measures it agreed to in return for sizeable rescue programs."
Speculation about a Greek exit from the euro region has increased before new elections next month that could give power to parties opposed to austerity measures.
Greece is "jeopardizing the continuation of aid payments," the Bundesbank said. "Greece would have to bear the consequences of such a decision. The challenges for the euro area and Germany would be significant but manageable with the help of cautious crisis management."
The ECB, in an effort to protect its balance sheet, last week excluded some Greek banks from regular refinancing operations, moving them to an emergency-liquidity program run by the Greek central bank until they are sufficiently recapitalized.
"In supplying extensive liquidity to Greece, the Eurosystem believed in the implementation of the programs, and has thus taken on considerable risks," the Bundesbank said. "In light of the current situation, it shouldn’t increase these significantly any more."
Please understand that I would be the last person to suggest that Greece defaulting on its external debts and implementing its own national currency will mark the "end of the world", because it most certainly won’t, and those are really their best options now (they would have been much better options a few years ago – or better yet, before Greece entered the euro). However, a Greek exit is not going to be anything close to a walk in the park, and will be a lot more painful than the analysts above would have you believe. It will be very painful for both the Greek people, and the Eurozone in general.
What Pettifor and the Bundesbank fail to mention is that investors are like herd animals, and these animals have no time for Keynesian or Austrian ideology. The possibility of a Greek exit is weighing heavily on the markets as I write this today, as well as for the past few weeks, but have we really seen the full extent of panic that can result when it actually happens? That sort of panic is not something the Eurozone authorities can manage, no matter how badly they want us to believe that they can. Similarly, it will not be a path to favorable inflation, exporting glory and sustainable economic growth for Greece, as Pettifor argues.
So the liberal idelogues want to spin the crisis and prove to us why they were always so right, and the conservative policymakers want to spin the crisis and explain to us why it doesn’t really hurt to be so wrong. They all want to pretend that the world is governed by a much simpler equation than it really is. What should be abundantly clear by now is that we are sailing in uncharted territory here, and the seas are getting angry. Everyone has an agenda or an ideology to push, and fanciful ideas about what the world will look like a few years from now, but no one really has a clue what will happen tomorrow or the day after.
http://theautomaticearth.org/Finance/al … -exit.html
Statistics: Posted by yoda — Wed May 23, 2012 1:19 pm
View full post on opinions.caduceusx.com
International News • We Are Watching The Greek Banking System Die Right In Front
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.
http://theeconomiccollapseblog.com/arch … f-our-eyes
Statistics: Posted by yoda — Wed May 16, 2012 9:01 pm
View full post on opinions.caduceusx.com
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.
View full post on The Economic Collapse