Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Mainstream Media Feeding Frenzy in the Echo Chamber - 28th Jun 17
The Fed Has Undermined the US Economy’s Ability to Grow - 28th Jun 17
“Secular Stagnation” Is Nonsense… Here’s the Real Reason Behind the US Downturn - 28th Jun 17
Sheffield Broomhall Hanover Flats Tower Block Cladding Could Take Months to Remove! - 28th Jun 17
Shrinkflation In UK – Real Inflation Much Higher Than Reported - 28th Jun 17
Are the UK Elections a Forgone Conclusion? - 28th Jun 17
Is the Tech Stock Market Bloodbath is Finally Here? - 28th Jun 17
Crude Oil Sinks 20%: Why "Oversupply" Isn't the Half of It - 28th Jun 17
Important Money Management Tips For Teenagers - 28th Jun 17
The Coming Battery Bonanza - 28th Jun 17
Overlooked Stock Investments To Keep An Eye On in 2017 - 27th Jun 17
The Federal Reserve And Drug Addiction – A Prediction - 27th Jun 17
Charts Show Why Emerging Markets Will Be an Essential Part of Your Portfolio Going Forward - 27th Jun 17
Former Lehman Brothers Trader: I Bet My Reputation That Stocks Bubble Will Pop In A Year - 27th Jun 17
US Bonds and Related Market Indicators - 27th Jun 17
Stocks At Record Highs: Market Sentiment Still Bullish - 27th Jun 17
Stock Market Running Out of Steam - 27th Jun 17
Gold Back With A Vengeance As Bitcoin Bubble Bursts - 26th Jun 17
Crude Oil Trade & Nasdaq QQQ Update - 26th Jun 17
Gold and Silver Ongoing Consolidation May End Soon - 25th Jun 17
Dollar May Become “Local Currency of the U.S.” Only - 25th Jun 17
Sheffield Great Flood of 2007, 10 Years On - Unique Timeline of What Happened - 24th Jun 17
US Stock Market Correction Could be Underway - 24th Jun 17
Proof That This Economic Recovery Narrative is False - 24th Jun 17
Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - 24th Jun 17
Gold Summer Doldrums - 23rd Jun 17
Hedgers Net Short the Euro, US Market Rotates; 2 Horsemen Set to Ride? - 23rd Jun 17
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit

Stock-Markets / Eurozone Debt Crisis Jun 28, 2015 - 03:38 PM GMT

By: Nadeem_Walayat

Stock-Markets

It looks like the 'game theory' playing Tsipras and Varoufakis are succeeding in having Greece thrown out of the Euro-zone as the ECB after financing every single euro withdrawn from the Greek banks for the past 5 years, Euro-zone tax payer funds amounting to E130billion, has finally today announced that it has effectively pulled the plug on the Greek banking system by stating that the ECB would not extend its emergency lending support programme for the Greek banking system that is haemorrhaging billions of euros on a daily basis.


28 June 2015 - ELA to Greek banks maintained at its current level

  • ECB takes note of decision on Greek referendum and the non-prolongation of the EU adjustment programme
  • ECB will work closely with Bank of Greece to maintain financial stability
  • Emergency liquidity assistance maintained at Friday’s (26 June 2015) level
  • Governing Council stands ready to review decision
  • Governing Council closely monitoring situation and potential implications for monetary policy stance

The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union.

Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability.

Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015).

The Governing Council stands ready to reconsider its decision.

Mario Draghi, ECB President, said: “We continue to work closely with the Bank of Greece and we strongly endorse the commitment of Member States in pledging to take action to address the fragilities of euro area economies.”

Yannis Stournaras, Governor of the Bank of Greece, said: “The Bank of Greece, as a member of the Eurosystem, will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.”

The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area. The Governing Council is determined to use all the instruments available within its mandate.

This follows Tsipras' announcement on Saturday (27th June) of a 5th of July referendum on the deal being offered by the Troika which was deliberately engineered by the Syriza government to circumvent the 30th June deadline for reaching an agreement for it is impossible to arrange a referendum in just 1 weeks time and therefore the referendum would become a neverandum that would be delayed and delayed in perpetuity whilst the ECB would have been expected to finance the Greek bank run to the tune of Euro 2-3 billion per day. A trick that the ECB has clearly not fallen for as Euro-zone finance ministers yesterday rejected the Greeks request to extend beyond the 30th June deadline.

GrExit Beckons

The mainstream press has once more been caught off guard as regurgitated euro-zone propaganda had resulted in the consensus view that a last minute deal would be done that would prevent Greece from leaving the euro-zone, which was the primary strategy of the Syriza government to black mail the euro-zone with the threat of a GrExit in exchange for a permanent subsidy from Euro-zone tax payers coupled with 50% debt write offs every few years.

However, it is finally starting to dawn on the 'herd journalists' that a GrExit in the wake of the ECB announcement is actually the most probable outcome and so have finally begun writing streams and streams of mostly nonsense on the ramifications of a GrExit.

My consistent view for sometime has been that a GrExit was a near certainty (see excerpts below) for the fundamental fact that Greece within the Euro-zone CANNOT PRINT MONEY AND DEBT AND INFLATE TO PAY FOR its bloated public sector and voter bribes. Greece for the duration of the 'crisis' has had NO CHOICE but to leave the Euro-zone and all that the ECB, and the IMF have done is to throw good money after bad that totals some Euro 320 billion of Euro-zone tax payers money flushed down the Greek toilet. It should be noted that this follows a decade long spending binge on the back of GERMAN LOW INTEREST RATES, when the Greek government wracked up debts that it HID from the markets, which it could do because the debts were denominated in EUROS. The lied, they stole and then they wanted a perpetual euro-zone subsidy just like Scotland enjoys in the UK.

What's going to happen Monday?

Well, without ECB financing of every single euro withdrawn then the Greek banks do not have the euros in their vaults to pay out to withdrawing customers that were already in a building panic of withdrawing 2-3 billion euros per day. This means that many if not most Greek banks will not open Monday, as it is probable that the Greek government will before Monday's open announce a Bank Holiday that could run from days to weeks to months, that will likely be coupled with the announcement for capital controls as the Greek government effectively attempts to steal the remaining Euro 100 billion or so of Greek customer bank deposits just as Cyprus did last year.

Unfortunately for Greek depositors ITS ALREADY TOO LATE, their money is now gone! As temporary capital controls translate into permanently frozen bank deposits only to be released once their purchasing power has been eroded away to nothing i.e. by means of Greece printing its own currency as I have often written of over the years as what would eventually take place in Greece.

26 Jan 2015 - Greece Votes for Syriza Hyperinflation - Threatening Euro-zone Collapse or Perpetual Free Lunch

Grexit - Greece Euro-zone Exit

A Syriza majority government will embolden the radical left to embark on a suicide mission to demand freshly printed ECB Euros to finance an ever expanding socialist spending binge where the price expected to be paid will be by the rest of the euro-zone in terms of printing money to finance unproductive activities such as the public sector and the life styles of corrupt politicians. This puts Greece ultimately on the track towards being ejected out of the Eurozone with the consequences of there being high inflation (at least 30%) if not an hyperinflationary panic event for Greece and its new currency.

New Greek Currency

The Greek central bank will likely have already made contingency plans to launch a new currency in the wake of an GrExit details of which now could be made public within a matter of days in an attempt to reduce the instability that Greece now faces.

The bottom line is that this is mostly Tsipras and Varoufakis doing, the so called 'Game Theory' experts who attempted to black mail Europe just got their bluff called. So do not buy into the propaganda that will spew from their mouths over the coming hours, days and weeks attempting to lay the blame elsewhere when the truth is that Greece has stolen Euro 320 billion from the euro-zone.

More on the Greece crisis in my recent articles -

25 Jun 2015 - European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT

The bottom line is that Greeks whole heartedly believe in their fantasy economy, one that promises affluence without work, retirement without work, public services without paying for them, life after death, no wait that is a different fantasy. However, Greece is a MIRROR for ALL euro-zone members, for the Greeks are human, and therefore ALL of the other euro-zone members are also delusional INCLUDING GERMANY because the Euro-zone is built on a delusional construct of a single currency. Well all currencies are pure fantasy where someone believes in the currency because they have been repeatedly told that it has value which I will cover in detail in my next in-depth analysis so ensure you are subscribed to my always free newsletters.

My long standing view is that the best thing for the Greek people to do would be to leave the euro-zone. As of writing Greece apparently is counting down to yet another deadline today (Thursday) which will pass just as surely had Wednesdays 11am deadline passed without event and so will probably Fridays deadline as Greece remains firmly on the path towards a GREXIT. Some times I have to wonder is the Greece debt crisis real or is it a never ending soap opera that ends each days episode with a cliff hanger. JUST GET ON WITH IT AND EJECT GREECE, then Spain, Portugal and Italy out of the Eurozone!

And as GREXIT appears probable then expect much huffing and puffing from Alexis Tsipras laying the blame at the feet of the Euro-zone rather than looking in the mirror at the power hungry mad marxist staring back, who delusionally sees it as the right of Greece that like a vampire sucks the blood of the euro-zone forever.

19 Jun 2015 - Big Fat Greek Bank Run - Greece Banking System Could Collapse Monday 22nd June

Greece Bank Run Going Exponential

The Greek banking system has been bleeding deposits all year, having seen at least Euro 40 billion withdrawn this year, leaving behind approx Euro 120 billion. However, as the end game approaches (Varoufakis is apparently an expert on Game Theory) the rate of withdrawal has accelerated to over Euro 1 billion per day, up from approx Euro 200 million a day of a week ago, and could keep doubling every other day, which is despite ECB support on a DAILY basis without which Greece's banking system would have collapsed 5 years ago! Which means Greek banks are paying withdrawing depositors with funds from the ECB that to date totals approx Euro 120 billion because the Greek banks have been bankrupt for some time!

Even Greece's central bank panicked by opening warning the Syriza government that Greece was heading for a catastrophic crash out of the euro-zone.

18 Jun 2015 - GREXIT - Greece Wants to Become Scotland, Seeks Permanent Subsidy from Euro Tax Payers

The Big Problem is PorExit, SpaExit and ItaExit.

Greece in economic terms is a flea on the back of the Euro-zone elephant that could easily survive a GREXIT. But the real problem is who would be next, for soon the pressure would mount on the other PIIGS, with Portugal, Spain and Italy vying for who would be next to EXIT the euro-zone, something which the Euro-zone would not survive. Therefore that remains Greece's 'Ace in the hole', which is why they are still in the eurozone, so probably suggests that some sort of fudge will be arrived at that would only DELAY GREXIT for the fundamental reason Greece is BANKRUPT!

A GrExit would also make a BrExit more probable, whilst Putin would be dancing in the Kremlin.

Source and Comments: http://www.marketoracle.co.uk/Article51244.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife