The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Greece Closes Banks in Crisis

Posted on | June 29, 2015 | 70 Comments

It was first announced that Prime Minister Alexis Tsipras debt-ridden left-wing government would close banks Monday, but now they’ve decided the banks will remain closed all week:

Greek banks are to remain closed and capital controls will be imposed, Prime Minister Alexis Tsipras says.
Speaking after the European Central Bank (ECB) said it was not increasing emergency funding to Greek banks, Mr Tsipras said Greek deposits were safe.
Greece is due to make a €1.6bn (£1.1bn) payment to the International Monetary Fund (IMF) on Tuesday – the same day that its current bailout expires.
Greece risks default and moving closer to a possible exit from the eurozone.
Greeks have been queuing to withdraw money from cash machines over the weekend, and the Bank of Greece said it was making “huge efforts” to keep the machines stocked.
Greek banks are expected to stay shut until 7 July, two days after Greece’s planned referendum on the terms it had been offered by international creditors for receiving fresh bailout money. . . .
Eurozone finance ministers blamed Greece for breaking off the talks, and the European Commission took the unusual step on Sunday of publishing proposals by European creditors that it said were on the table at the time.
But Greece described creditors’ terms as “not viable”, and asked for an extension of its current deal until after the vote was completed.
“[Rejection] of the Greek government’s request for a short extension of the programme was an unprecedented act by European standards, questioning the right of a sovereign people to decide,” Mr Tsipras on Sunday said in a televised address.
“This decision led the ECB today to limit the liquidity available to Greek banks and forced the Greek central bank to suggest a bank holiday and restrictions on bank withdrawals.” . . .
The temporary closure of banks in Greece, and the introduction of capital controls, is very bad news for Greece. Greek people will have less money to spend and business less to invest; so an already weak economy will probably return to deep recession.

(More at Memeorandum.) Notice how Tsipras suggests that the creditors are being undemocratic, rather than admitting that Greece has been irresponsible? Tsipras obviously believes Greeks have a right to other people’s money, and that it is wrong for European creditors to expect them to pay back what they borrowed.  Meanwhile the financial experts are getting worried:

The world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises, the Bank of International Settlements has warned.
The so-called central bank of central banks launched a scatching critique of global monetary policy in its annual report. The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies.
These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates.
Claudio Borio, head of the organisation’s monetary and economic department, said: “Persistent exceptionally low rates reflect the central banks’ and market participants’ response to the unusually weak post-crisis recovery as they fumble in the dark in search of new certainties.”

Oh, by the way: Puerto Rico can’t pay its debts, either.

 

Category: Economics, Greece

Comments

70 Responses to “Greece Closes Banks in Crisis”

  1. Quartermaster
    June 30th, 2015 @ 11:51 am

    Thank you for confirming my point about you.

  2. Quartermaster
    June 30th, 2015 @ 11:53 am

    You aren’t much on history. What happened is the monetary base was contracted in the face of incoming gold increasing our gold stock. The New York Fed normally would have acted in such cases, but was prevented from doing so.

  3. M. Thompson
    June 30th, 2015 @ 11:54 am

    Not likely. But Eastern Europe? A situation like this give Tsar Putin another opprotunity for making him look like a leader.

  4. Art Deco
    June 30th, 2015 @ 12:45 pm

    What happened is the monetary base was contracted in the face of incoming gold increasing our gold stock.

    1. No, that’s not what happened.

    2. The monetary base does not contract in response to increases in gold reserves from abroad.

  5. Art Deco
    June 30th, 2015 @ 12:47 pm

    You’re point is what, that counter arguments irritate you when you’re in the middle of one of your whinges?

  6. Art Deco
    June 30th, 2015 @ 12:55 pm

    Per Stuart Koehl, the Ukraine has a better military pound-for-pound than Russia and conquering and subduing a country which is 30% your size and has 15% of your domestic product would (it’s reasonable for a layman to wager) require a general mobilization. No one has attempted anything on that scale since the 2d World War. Russia right now satisfies itself with the Crimea and stirring the pot in Donetsk and Lukhansk. That’s regrettable, but Donetsk is a long way from Warsaw.

  7. Quartermaster
    June 30th, 2015 @ 1:15 pm

    Whinge doesn’t mean what you think it means.

  8. Quartermaster
    June 30th, 2015 @ 1:17 pm

    #1 shows you haven’t a clue what happened. Read :Free To Choose” sometime.
    #2 shows you haven’t a clue what was done either.

  9. Quartermaster
    June 30th, 2015 @ 2:27 pm

    I agree with your parenthetical.

  10. Adobe_Walls
    June 30th, 2015 @ 7:36 pm

    And top men are working on it as we speak. Top. Men.

  11. Adobe_Walls
    June 30th, 2015 @ 7:37 pm

    08 should not have been a surprise either.

  12. Adobe_Walls
    June 30th, 2015 @ 8:02 pm

    We borrowed 8 trillion in 2013, most of that was to pay off maturing bonds. As the IOUs in the SS fund come due or are cashed out to meets expenses that ”money” comes out of the current budget or in other words current receipts or borrowing.

  13. Adobe_Walls
    June 30th, 2015 @ 8:07 pm

    Just because you don’t know we’ve gone over a cliff doesn’t mean we haven’t, though to be fair most people don’t know. But when we do slam into the bottom the crews with the mops and the buckets, they’ll know

  14. Adobe_Walls
    June 30th, 2015 @ 8:09 pm

    Medium of exchange yes, store of value(!!?) are you serious?!

  15. Adjoran
    July 1st, 2015 @ 2:17 am

    The Fed doesn’t print anything except their reports. Currency is printed by the Mint under direction of the Treasury.

  16. HouseofSuffering
    July 1st, 2015 @ 4:54 am

    Is that Tommy Duncan there on your profile?

    And yeah, Zerohedge is a constant source of entertainment, especially if you can get an argument started about whether or not it’s really a Russkie disinformation operation.

  17. trangbang68
    July 1st, 2015 @ 9:02 am

    OK, again I’m no financial whiz, but doesn’t the Fed determine the amount of currency in circulation?

  18. texlovera
    July 1st, 2015 @ 9:05 am

    Actually, that’s Bob Wills, leader of The Texas Playboys. One of my all-time favorite Western swing bands…

  19. HouseofSuffering
    July 1st, 2015 @ 12:06 pm

    You sir, have excellent taste. Bob Wills is still the king.

  20. texlovera
    July 2nd, 2015 @ 12:52 pm

    Why thank you, and back atya, sir…