Best of the Week
Most Popular
1. Crude Oil and Water: How Climate Change is Threatening our Two Most Precious Commodities - Richard_Mills
2.The Potential $54 Trillion Cost Of The Fed's Planned Interest Rate Increases - Dan_Amerman
3.Best Cash ISA Savings for Rising UK Interest Rates and High Inflation - March 2018 - Nadeem_Walayat
4.Fed Interest Hikes, US Dollar, and Gold - Zeal_LLC
5.What Happens Next after February’s Stock Market Selloff - Troy_Bombardia
6.The 'Beast from the East' UK Extreme Snow Weather - Sheffield Day 2 - N_Walayat
7.Currencies Will Be ‘Flushed Down the Toilet’ Triggering a ‘Mad Rush into Gold’ - MoneyMetals
8.Significant Decline In Stocks On The Cards! -Enda_Glynn
9.Land Rover Discovery Sport Extreme Driving "Beast from the East" Snow Weather Test - N_Walayat
10.SILVER Large Specualtors Net Short Position 15 Year Anniversary - Clive_Maund
Last 7 days
Global Trade War Fears See Precious Metals Gain And Stocks Fall - 23rd Mar 18
Stocks Recovering from a "deep dive" Overnight - 23rd Mar 18
Blaming the Fed for Weaker Greenback US Dollar - 23rd Mar 18
Watch This Group Signal Stock Market Trend Changes - 22nd Mar 18
Stocks are Gapping Beneath the Trendline Support - 22nd Mar 18
Fed Action Casts Shadow on Bullish Case for Stocks - 22nd Mar 18
A Strong Economy and Weak Stock Market is Bullish for Stocks - 22nd Mar 18
Fed Raises US Interest Rates 25bp – Where Are We In The Stock Market Cycle? - 22nd Mar 18
Why Spotify Will Likely Surge During Its IPO - 22nd Mar 18
SY Police Arrest Woman for Blowing Trumpet at Sheffield Tree Felling Protest - 22nd Mar 18
Facebook: The Anti-Social Network Covert Data Gathering - 21st Mar 18
Additional Signs for Gold and Silver Amid Increasing FOMC Tension - 21st Mar 18
Credit Concerns In U.S. Growing As LIBOR OIS Surges to 2009 High - 21st Mar 18
Stock Markets Are Flat-to-lower Before the FOMC - 21st Mar 18
Will Powell’s Actions Pop Stock Market Perfection - 21st Mar 18
Economic Moral Hazards of the International Criminal Court - and Philippines Withdrawal - 21st Mar 18
Larry Kudlow vs. Vladimir Putin on Gold - 21st Mar 18
Trump Builds Economy and War Machine - 21st Mar 18
This Stock Market "Illusion" Can Destroy Once-Vibrant Portfolios - 21st Mar 18
Gold Short-term Pull Back in Progress - 20th Mar 18
Stocks Appear to be Under Pressure - 20th Mar 18
Time To Eliminate Your Wall Street Tax? - 20th Mar 18
The Beast from the East Snow, UK Roads Driving Car Accidents - 20th Mar 18
Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - 19th Mar 18
2018 Reversal Dates for Gold, Silver and Gold Stocks - 19th Mar 18
This Tech Breakthrough Could Save The Electric Car Market - 19th Mar 18
Stocks Set to Open Lower, Should You Buy? - 19th Mar 18
The Wealth Machine That Rising Interest Rates Create Conflict With The National Debt - 19th Mar 18
Affiliate Marketing Tips and Network Recommendations - 19th Mar 18
Do Stocks Bull Market Tops Need Breadth Divergences? - 19th Mar 18
Doritos Instant £500 Win! Why Super Market Shelves are Empty - 19th Mar 18
Bonds, Inflation & the Market Amigos - 19th Mar 18
US Housing Real Estate Market and Banking Pressures Are Building - 19th Mar 18
Stock Market Bulls Last Stand? - 18th Mar 18
Putin Flip-Flops Like A Drunken Whore On Bitcoin Cryptocurrency Legalization - 18th Mar 18
How to Legally Manipulate Interest Rates - 18th Mar 18
Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - 18th Mar 18
Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - 17th Mar 18
Strong Earnings Growth is Bullish for Stocks - 17th Mar 18
The War on the Post Office - 17th Mar 18
GDX Gold Mining Stocks Fundamentals - 16th Mar 18
Nationalism, Not the Russians, got Trump Elected - 16th Mar 18
Has Bitcoin Bought It? - 16th Mar 18
Crude Oil Price – Who Wants the Triangle? - 16th Mar 18
PayPal Cease Trading Crypto Currency Bitcoin Warning Email Sophisticated Fake Scam? - 16th Mar 18
EUR/USD – Something Old, Something New and… Something Blue - 16th Mar 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

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


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:

By Nadeem Walayat

Copyright © 2005-2015 (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.

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

© 2005-2018 - 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

6 Critical Money Making Rules