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Moody's Warns Of "Severe Greek Bank Cash Shortage" Due To Accelerating Deposit Flight

Tyler Durden's picture




 

We have long been warning that by fat the biggest risk to the Greek banking system is not whether or not its retains its access to the ECB funding window (it will, probably even in the case of a Greek bankruptcy through covert pathways), but domestic confidence in the financial institutions as expressed by deposits, or rather, the lack thereof. Today, as part of its Weekly Credit Outlook, Moody's issued for the first time a very stark warning that should the rate of attrition in domestic deposits (and to see where these are going merely look at the daily EURCHF chart) persist, or accelerate, the results would be disastrous. To wit: "a sustained decline of deposits by more than 35% (roughly equal to
the consolidated banking system’s liquid assets and ECB funding
availability) within a short period of time, would cause a severe
shortage of cash among banks." 
Bottom line, it is unclear if even the existing deterioration in the deposit base can ever be undone due to the banks unprecedented reliance on the ECB for day to day funding, now that the bulk of domestic Greek capital is stashed away, safely, somewhere in the Swiss Alps: "With the decline in customer deposits, we expect Greek banks to find it increasingly challenging to reduce their ECB funding dependence, which is their primary objective based on their funding plans committed to the Central Bank of Greece."

From Moody's:

Our discussions with rated Greek banks last week and public information lead us to estimate that private-sector customer deposit outflows in the banking system amount to around 8% since the beginning of 2011, which is a key credit negative for Greek banks. The potential for further deposit outflows constitutes a major liquidity risk for banks as depositor sentiment is affected by negative political developments and Greece’s capability for timely repayment of its debt obligations. We expect Greek banks to find it increasingly challenging to lower their dependence on ECB repo funding as deposit balances continue to decline.

Private-sector deposits have been declining since late 2009, while outflows in May and June accelerated, as shown in the exhibit below. Greece’s heated political tensions (government reshuffling and resistance to the new austerity package) and the uncertainties regarding the Troika’s (European Union, European Central Bank, and International Monetary Fund) commitment to continue funding support to Greece are driving deposits elsewhere.

However, the roughly 8% deposit decline so far in 2011 also reflects the “cash-burn” effect of the country’s recession, with the economy expected to decline by 3.8% this year. We estimate that more than half of the year-to-date deposits decline is due to a steady draw-down of deposits to compensate for lower income by individuals and companies.

Based on recent media reports, confidence-sensitive depositors concerned about local banks’ financial health have also been transferring funds abroad and converting their deposits into gold coins, while others have been placing their cash into bank safety-boxes. The increasing liquidity risk for the banks is compounded by the volatile nature of government deposits, which are not incorporated in the exhibit above, and account for 6.7% of total deposits in April 2011 and are utilised to repay maturing government securities.

An acceleration of deposit outflows is one of the key risks for Greek banks and something that is beyond the control of either local or European authorities. A sustained decline of deposits by more than 35% (roughly equal to the consolidated banking system’s liquid assets and ECB funding availability) within a short period of time, would cause a severe shortage of cash among banks. This estimate takes into account the imminent availability of an additional €30 billion of government guarantees that can also be used for ECB funding, providing an extra buffer to any future deposit outflows, although these funds are yet to be dispersed. The availability of ECB funding through repo transactions would mitigate liquidity pressures, provided this method of funding remains available in the event of a sovereign default.

ECB funding has increased significantly since January 2010, as capital markets and the inter-bank market are still closed to Greek banks. The latest available data show that at the end of April 2011, overall ECB funding stood at €87 billion, comprising more than 21% of the banks’ total liabilities, compared to 59.4% for deposits. With the decline in customer deposits, we expect Greek banks to find it increasingly challenging to reduce their ECB funding dependence, which is their primary objective based on their funding plans committed to the Central Bank of Greece.

 

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Mon, 06/27/2011 - 09:14 | 1405088 slow_roast
slow_roast's picture

Great, this means that in the monetary circle jerk China will get new orders for printing presses; globalization.

Mon, 06/27/2011 - 09:20 | 1405121 FOREX loop.
FOREX loop.'s picture

China has the chance to really become a scary world power... There are some serious national moves affoot.

Silver not looking good right now.

http://collegemessiah.blogspot.com/2011/06/missing-silver.html

I'm not as optimistic that it will bounce back. I think Gold will slay the chinese dragon.

Mon, 06/27/2011 - 09:26 | 1405131 MFL8240
MFL8240's picture

Yup, but the US is busy with gay rights, confiscation of guns, overlaoding the sytem with illegal immagrants, handouts to the non producers and phony meetings on debt celings because of gross mismanagement to partake in the European mess.  China, for all its faults and stupid moves will come out smelling like a rose no matter what happens in Greece.

Mon, 06/27/2011 - 10:00 | 1405179 French Frog
French Frog's picture

There must be a trading desk somewhere watching ZH that will push the Euro up 50/70 pips everytime euro-bearish news are published in here

;-)

Mon, 06/27/2011 - 10:19 | 1405259 snowball777
snowball777's picture

Yes, that's why their interbank rates are soo low...all that trust just oozing out all over the place.

 

Mon, 06/27/2011 - 09:32 | 1405134 doesmybuttlookf...
doesmybuttlookfatinthis's picture

Less then 30 million ounces at the comex and you think silver is going take a hit? 

Mon, 06/27/2011 - 09:46 | 1405168 MFL8240
MFL8240's picture

Never stopped the criminals at JP Morgan from naked shorting, so, why not??

Mon, 06/27/2011 - 10:18 | 1405239 SheepDog-One
SheepDog-One's picture

That road isnt an autobahn its a cul de sac.

Mon, 06/27/2011 - 09:37 | 1405157 scatterbrains
scatterbrains's picture

I don't understand..  can't they just print Euros like Ireland did/does ?

 

Mon, 06/27/2011 - 09:56 | 1405173 ISEEIT
ISEEIT's picture

I was wondering why the EUR just took a 60 pip moonshot. Now I understand!

Mon, 06/27/2011 - 09:12 | 1405095 jkruffin
jkruffin's picture

Gold is going to take about a $100-$200 haircut in a matter of days

Mon, 06/27/2011 - 09:16 | 1405099 GetZeeGold
GetZeeGold's picture

 

How is gold going to take a haircut if everyone is buying it? Except you of course.

This thing just went total retard.

SARKOZY: French banks will roll over Greek debt for 30 years...

 

 

Mon, 06/27/2011 - 09:49 | 1405165 glenlloyd
glenlloyd's picture

yesterday's news

Mon, 06/27/2011 - 10:03 | 1405186 GetZeeGold
GetZeeGold's picture

 

I can already tell you what tomorrows news will be.....default.

The 50 year old retired Greek sitting on the beach needs to get a job. The French and Germans are done paying his bills.

 

 

Mon, 06/27/2011 - 10:14 | 1405233 BobPaulson
BobPaulson's picture

Every society has always had parasites who do nothing. It used to be the church. Don't know how you get rid of them if people don't mind giving money to them.

Mon, 06/27/2011 - 09:18 | 1405100 Jambo Mambo Bill
Jambo Mambo Bill's picture

Silver then is going to what... 18?

Mon, 06/27/2011 - 09:17 | 1405107 Bindar Dundat
Bindar Dundat's picture

Why? I mean that comment does not fit the model....

Mon, 06/27/2011 - 09:21 | 1405123 dbach
dbach's picture

I agree with jkruffin, if there is a liquidity crisis and money is destroyed then cash will be king. I think it's pretty obvious when, as ZH has pointed out, there are treasuries trading at 0%. People want to "not lose money", what better way than to have cash?

Mon, 06/27/2011 - 09:23 | 1405127 SheepDog-One
SheepDog-One's picture

What better way? A vault full of universally accepted gold and silver coins. If people think 'cash' is a stor of value, youre in for some real tough times quick.

Mon, 06/27/2011 - 09:37 | 1405146 dbach
dbach's picture

I understand your concerns about a debt backed money, however if there is less money around then there is less of it to purchase any good, including gold. If money supply increases (thanks Bernanke) then nominal asset prices go up, money supply decreases through withdrawn deposits or default then nominal prices decrease. The only caveat is that gold is a good alternative to paper money, so it would be a lower beta deflation play.

Mon, 06/27/2011 - 09:45 | 1405164 Quintus
Quintus's picture

Think it all the way through.  If there is less money around then all the world's banks will be in the same position that Moody's is warning Greece about.  There may be less of it around, and people may well prize it above all else, but they won't be able to get any because all the banks will have shut down due to there being too little money available for them to keep the doors open.  Where then do people turn?

There is a tipping point where 'Less money available' stops being a plus for those with large bank accounts and becomes a disaster because the 30x leveraged financial institution that is holding their deposits will not survive the liquidity crunch.  Bye bye electronic 1's and 0's.

Mon, 06/27/2011 - 10:12 | 1405214 dbach
dbach's picture

I think if you, rather than buy an oz of gold right now, put the equivilent amount of cash under your mattress, you would be better off in 3-6 months. In 10-20 years is a different question and that will be answered by how we deal with our debt problems.

Mon, 06/27/2011 - 10:16 | 1405246 SheepDog-One
SheepDog-One's picture

Doesnt matter how much money there is when the banks are simply hoarding it in their vaults.

Mon, 06/27/2011 - 11:53 | 1405581 Quintus
Quintus's picture

Not sure about that.  Who's to say the government won't try to save the system by re-denominating the currency into 'New Dollars' or whatever at a 100:1 rate, rendering the pile of old-style FRN's under the mattress totally worthless.

Mon, 06/27/2011 - 09:46 | 1405167 Central Wanker
Central Wanker's picture

The existence of the banking system is nowadays 100% dependent of the existence of inflation. The TPTB will not allow failure of the banking system. To keep the banks "alive", they will allow the failure of the fiat currencies.

Mon, 06/27/2011 - 09:56 | 1405178 pan-the-ist
pan-the-ist's picture

This is THE question.  If TPTB have enough cash, they might let contaction happen to squeeze real wealth (property, gold, etc) out of our hands.  We have to eat.  How evil are your masters?  What do they gain if they allow hyperinflation to happen?

Mon, 06/27/2011 - 10:05 | 1405208 dbach
dbach's picture

Good point. The banks used to get ahead in the 1800's by allowing (creating) waves of deflation to reposses and resell to further indebted people.

Mon, 06/27/2011 - 10:35 | 1405312 i-dog
i-dog's picture

This time IS different! There will be no further crests after this 'wave'.

TPTB are not planning on an economic recovery for the general population of America this time. Have you seen any sign of government recently enacting policies to bring jobs back? Or reduce spending by a meaningful amount? Or develop alternatives to imported oil?

If they succeed in crashing the American economy next year (I think they are trying to prolong the agony until then), then the security infrastructure that is growing daily will immediately be rolled out in full force: DHS, TSA, FEMA, National Guard, state troopers, county sheriff departments, military, mercenaries, and Canadian and Mexican support (under NAFTA/NAU arrangements, already agreed). The 850,000-strong (as of 12 months ago!) surveillance team will also be assisting to nominate candidates for the FEMA camps.

"850,000 Americans Now Have Jobs In Top Security Organaizations and No-one Has Any Idea What They Do (Washington Post, July 2010)"

During a paradigm shift, the rearview mirror is not the best planning tool!

End the Feds!!
End the European 'Experiment'!!
De-fund the IMF!!

Mon, 06/27/2011 - 14:39 | 1406115 Jonas Parker
Jonas Parker's picture

Oh goody!!! We get to go to Camp Fema next summer!!!  [/SARC]

Mon, 06/27/2011 - 12:36 | 1405690 Central Wanker
Central Wanker's picture

In the 1800's they did not have derivatives. Now those modern time marvels would blow the entire banking system up if we entered deflation. Hence, no deflation.

Mon, 06/27/2011 - 10:12 | 1405215 nodhannum
nodhannum's picture

With a fertile farm near the coast of NC (sandy loam), a John Deere and a supply of fresh water some 4 to 5 feet below, the Bernak will have one hell of a time starving me or my heavily armed neighbors out.  I can go 0,25 miles down to our dock on the sound and put some fish nets out..yum, yum.

Mon, 06/27/2011 - 12:46 | 1405714 Almost Solvent
Almost Solvent's picture

The only long term flaw I can see would be the John Deere when it runs out of fuel/oil/hydraulic fluid and there is no more available.

 

 

Mon, 06/27/2011 - 10:10 | 1405222 shortus cynicus
shortus cynicus's picture

Money put in circulation stays there, but unfortunately on foreign accounts - China, Switzerland have it all and is not willing to spend it until they are threatened with the only working argument: debt free money counterfeiting printing.

Then they came to their signs and start buying whatever possible in EU and USA allowing us to pay debt back.

Nobody expects Spanish Inquisition inflation.

Mon, 06/27/2011 - 09:31 | 1405133 MFL8240
MFL8240's picture

On what?  People want more fiat junk paper?

Mon, 06/27/2011 - 09:33 | 1405138 Central Wanker
Central Wanker's picture

Gold is going to take about a $100-$200 haircut in a matter of days

 

That, if anything, would be "transitory". Act accordingly.

Mon, 06/27/2011 - 10:45 | 1405357 Vinny
Vinny's picture

Possible. Platinum took level of fall last week.  Whoever has been manipulating platinum, must have a reason for the desire to lower PM's value. Likely whoever this is, wants to buy it at a lower price. Who?

Mon, 06/27/2011 - 09:19 | 1405102 GeneMarchbanks
GeneMarchbanks's picture

Bank Run! Bitchez

 

 

* seriously though, good to see Moodys on top of things. They're an amazing institution unlike the EU and IMF.

Mon, 06/27/2011 - 09:22 | 1405116 SheepDog-One
SheepDog-One's picture

Yes Moodys is Johnny on the spot with Greek and Spanish banks....too bad they COMPLETELY missed the 2008 bank meltdown though.

Mon, 06/27/2011 - 10:13 | 1405218 nodhannum
nodhannum's picture

I think that they went to a revival meeting and caught religion.  That being said, the state will now find something amiss to crush them if they don't play ball.

Mon, 06/27/2011 - 09:19 | 1405103 oogs66
oogs66's picture

Feels like the politicians and bankers are getting desperate to come up with new ways to stick the losses to the taxpayers, but its not working so well anymore.

Mon, 06/27/2011 - 09:15 | 1405106 Gandalf6900
Gandalf6900's picture

 

excuse me, why are the greek people afraid they will never ever see their precious money again? Isn't the bank supposed to hold your money for you for a small fee and pay you some interest in exchange for the availability to lend that same money...I don't understand what went wrong with this simple formula, is somebody bending the rules and risking other peoples money on foolish ideas, nah I refuse to entertain such a though...greek people your money is safe where it is.....

Mon, 06/27/2011 - 09:17 | 1405111 Gandalf6900
Gandalf6900's picture

 

run for your life bitchiz, RUNNNNNNNN

Mon, 06/27/2011 - 09:39 | 1405160 Commander Cody
Commander Cody's picture

Sarcasm, or don't you understand fractional reserve banking?

Mon, 06/27/2011 - 09:46 | 1405166 GeneMarchbanks
GeneMarchbanks's picture

i keed i keed

Mon, 06/27/2011 - 09:42 | 1405161 Urban Redneck
Urban Redneck's picture

When you deposit money at a bank, THE MONEY BECOMES THE PROPERTY OF THE BANK and YOU BECOME A CREDITOR OF THE BANK.  The fractional reserve fiat ponzi upon which Greek banks are built is Greek sovereign debt.  Greek people should be very afraid, if they understand basic banking.

Mon, 06/27/2011 - 12:52 | 1405735 Almost Solvent
Almost Solvent's picture

That is why you see that little FDIC sign at every US bank and people *might* understand that means they get back up to the limit, but they don't understand *why* that FDIC insurance is necessary in the first place.

Banks & credit unions can easily go into your account and *offset* anything you owe to that institution if you have stopped *voluntarily* paying that institution.

Mon, 06/27/2011 - 12:59 | 1405758 Urban Redneck
Urban Redneck's picture

But the Deposit Insurance situation in Greece is very different-

Even if Greek individuals move their money out of Greece, Greek employers still use Greek banks for next week's paycheck, and Greek companies use Greek banks to pay for food and energy imports.  Also, an ATM card from another Eurozone country is useless if the local ATMs don't dispense cash or the ATM owners' bank is persona non grata at the BIS.  To backstop against a Greek bank run there is only the HSGF (Greek FDIC, and just as under capitalized), when it runs out of money it can't go to G-Pap and ask him to print some more Euros.  Whoever is PM of Greece will have to crawl like a bitch and beg the ECB for a bailout.  Since the rather pathetic collateral that the Greek banks are currently using for ECB repos will no longer be eligible at the ECB, the terms demanded to put Euros in the hands of the masses after a Greek default would be far more onerous than anything even discussed now.

Default is sounds nice, but Greece is nothing like Iceland or Argentina.  Greece is a member of the Eurozone, and is incapable of devaluing its adopted currency.  Default coupled with an exit from the Eurozone/EU would allow/force Greece to devalue its currency but the resulting hyperinflation will make imported food and energy unreachable to broad segment of the population.  The biggest obstacle is that all the preparations would have to made and completed in secret BEFORE defaulting, and the government in question apparently has difficulty even importing a cleaning crew to spruce up its escape tunnels without spilling the beans.

Mon, 06/27/2011 - 09:20 | 1405108 SheepDog-One
SheepDog-One's picture

But Greece was confirmed totaly FIXED only a few days ago! WTF!! :D

Mon, 06/27/2011 - 09:16 | 1405109 White.Star.Line
White.Star.Line's picture

This is the new age of electronic money.

Just add a few 1s and 0s and fix the fricking problem!

Mon, 06/27/2011 - 09:19 | 1405119 SheepDog-One
SheepDog-One's picture

Yes as prices rise a corresponding amount. Works great, just ask the Bernankster.

Mon, 06/27/2011 - 09:21 | 1405112 tpberg7
tpberg7's picture

I was wondering if the first sentence in this missive is referring to that fat fascist Pangolos?

Mon, 06/27/2011 - 09:17 | 1405113 gwar5
gwar5's picture

On the bright side, if it wasn't for bank runs, some people would get no excercise at all.

Mon, 06/27/2011 - 09:38 | 1405147 Founders Keeper
Founders Keeper's picture

**Please consult your financial planner before beginning a rigorous exercise routine. ;)

Mon, 06/27/2011 - 10:15 | 1405228 nodhannum
nodhannum's picture

Are you in for the 5k, 10k, or 24k as in Gold?

Mon, 06/27/2011 - 09:22 | 1405114 kroegman
kroegman's picture

Greeks I spoke to all claim most of their money is already safe. Apparently Cypriotic banks are in favour... and gold

Mon, 06/27/2011 - 09:21 | 1405124 SheepDog-One
SheepDog-One's picture

Did you ask them if its safe with a dentist drill?

Mon, 06/27/2011 - 09:18 | 1405115 Yen Cross
Yen Cross's picture

 Like that 1.42 level that has been hammered since Sunday

 

   eur/usd we can go eur/chf as well!?

Mon, 06/27/2011 - 09:21 | 1405117 etrader
etrader's picture

Cue RBS's Harvinder Singh to issue a denial note in t-minus 3, 2.....

Mon, 06/27/2011 - 09:25 | 1405125 Yen Cross
Yen Cross's picture

 Moodys is a chair saten 'PROXY'

Mon, 06/27/2011 - 09:40 | 1405155 Yen Cross
Yen Cross's picture

 Hey whimpy junksters! Libtards?  Check out the (XLF) if you can spell it  (dot)

Mon, 06/27/2011 - 09:25 | 1405128 SheepDog-One
SheepDog-One's picture

'Cash shortage'...Oh NOES! Time to print some more 'cash' out of thin air I guess, since its so valuable and all.

Mon, 06/27/2011 - 09:30 | 1405129 GFORCE
GFORCE's picture

Moodys are desperate to finish off the euro.

Mon, 06/27/2011 - 09:31 | 1405132 Founders Keeper
Founders Keeper's picture

They said bank runs are a thing of the past. Hmmm. ;)

 

 

Mon, 06/27/2011 - 09:34 | 1405149 Yen Cross
Yen Cross's picture

 Think again!

Mon, 06/27/2011 - 09:30 | 1405140 Jambo Mambo Bill
Jambo Mambo Bill's picture

WHat is the next thing then...Euro shortage?

Mon, 06/27/2011 - 09:33 | 1405145 Yen Cross
Yen Cross's picture

 Spillage! but yes you are on the right page!

Mon, 06/27/2011 - 09:31 | 1405143 Greeny
Greeny's picture

Banks required to boost more "safety net" reserves.

They have to sell what's in profit, and that's more likely

Gold/Silver. Silver $2 to go to 200 MA on daily.

Chart looks terrible on short term Time Frame.

Mon, 06/27/2011 - 09:39 | 1405159 Yen Cross
Yen Cross's picture

 R u refering to Capital reserve requirements?

Mon, 06/27/2011 - 09:46 | 1405162 Greeny
Greeny's picture

Yeah.. There is absolutely ZERO logic in resent GOLD price

drop. Greek Collapsing, USA defaulting, currencies are screwed

and yet GOLD going down as well? It should be pushing

$2000 instead. EURCHF at ridiculous 1.18, SWISS should be

broke by now under those Exchange rates, who the f*k going to

pay twice for Swiss Made.. And Tourists getting robbed as well.

10$ for cop of coffee? F* that.

Mon, 06/27/2011 - 10:03 | 1405202 GetZeeGold
GetZeeGold's picture

 

If they want to subsidize my gold purchase.....fine with me.

 

 

Mon, 06/27/2011 - 16:25 | 1406454 Fiat2Zero
Fiat2Zero's picture

Well don't forget the "Summer Doldrums" for the metals.  Also, old habits die hard.  I doubt most of the developed world is hip to Gold as an alternative currency (even if China and India are and are buying hand over fist).

I'm not against another good buying opportunity.

Mon, 06/27/2011 - 10:00 | 1405188 6 String
6 String's picture

Silver will probably test support at around 29. Remember the resistence 30 held for awhile. This summer will be eventful. States lose funding from Fiscal around...right now. QE2 ends, so bad news might be treated as, well, bad news. One thing that is obvious, TPTB are fighting tooth and nail not to have the ALGO's and HFT's turn and send the stock market down 20% in June alone. QE2 has been a disaster and has accomplished nothing so their only claim of success can be of asset price stability.

If the market tanked too hard in June, well, then Bernanke and Co. wouldn't even have those bragging rights....take today's ridiculous trading...the R2K was down .60%, within seconds, literally it went flat and the DOW and S + P ramped, why? It's TPTB fighting to ramp on these no volume everyone dissented markets. What was POMO today? 5 billion? Right?

Of course, the debt ceiling debate has....what, five weeks to go? All point to a relapse of last summers 16% decline in the cherished and untouchable R2K at some point, or more. Any bank contagion out of Greece, with no announcements of QE3, we'll be looking at the start of 08/09 all over again until Benny and Jets come in. Which, of course, could send silver into a major opporunitistic entry point. 

At any rate, short almost everything is the way to go as QE2 winds down. Remember, post QE2, Benny won't have the incentive to prop markets nor the "tools." The farther it falls the more he can point to the success of QE'ing to infinity. 

Good luck trading when "sand castles made of sand, slip into the sea...eventually."

 

Mon, 06/27/2011 - 09:38 | 1405151 Madcow
Madcow's picture

The ‘product’ central banks sell is their own paper.

 

Just imagine – if the products your business sold INCREASED in value in accordance with your own recklessness and stupidity.  There would be infinite incentive to become reckless and stupid.

 

Following that lead for my own business.  Maybe I should light the building on fire, harass the neighbors, stiff my creditors, poison my customers, and bash in the windows of every car in the employee lot. Just imagine how successful we’d be then ! 

Mon, 06/27/2011 - 09:57 | 1405180 White.Star.Line
White.Star.Line's picture

Brilliant post Sir.

You deserve a seat on our lifeboats!

Mon, 06/27/2011 - 09:41 | 1405156 Sean7k
Sean7k's picture

This carnival gets better all the time. Banksters work in a world of fantasy. The Greek people and all others are more aware than the media would have us believe. Europe is running to the only stable currency they can find and in doing so, will collapse the Titanic (Sw Fr). 

No one wants the dollar and no one wants the euro and no one wants the yen. What does that add up to? Gold and silver. You can trash the paper, but the real stuff will always leave you warm and sunny. 

Of course, if they are going to keep putting it on sale, woohoo! Go JPM and HSBC! 

Mon, 06/27/2011 - 09:48 | 1405163 buzzsaw99
buzzsaw99's picture

They should just lie the way usa banks do. BONUS TIME!

Mon, 06/27/2011 - 09:56 | 1405176 Sherman McCoy
Sherman McCoy's picture

Greece is a sidewhow. The gang rampages in Chicago are more important than what's going on in the large open air museum that is Europe. Seen th eput/call ratio on the S&P lately? It's higher than in March '08. Spend a little time looking at the forest, intead of obsessing about one dead tree...

Mon, 06/27/2011 - 10:15 | 1405241 nodhannum
nodhannum's picture

But will it play in PEORIA?

Mon, 06/27/2011 - 10:18 | 1405255 SheepDog-One
SheepDog-One's picture

Yep, good point. Media is obsessiong over tiny tempests in tea pots, ignoring the Cat 5 hurricane bearing down on us from the rear.

Mon, 06/27/2011 - 10:21 | 1405256 Cone of Uncertainty
Cone of Uncertainty's picture

The social unease that is quietly unfolidng in the US is a major trend to watch closely.

When the collapse is apparent and known to all, the flash mob style sidewalk robberies and store looting will become uncontrollable.

This will be the most effective means for people to survive in the acute chaos period leading up to military intervention and the declaration of martial law.

These attacks come by suprise and I fully expect that when we are in the thick of it, it won't be stores and pedestrians that are targeted, but unprotected homes and small scale apartment buildings.

If you and your family are inside when these bandits strike and you have no protection--large capacity gun--then you will likely be beating while your wife and kids are abused.

Many survival writers have warned of violent roving gangs during a SHTF situation, but here we are, watching these events unfold daily in every major city across the country, while commentators and shills proclaim we are just entering a slow period for the economy, which will bounce back strong in the second half.

Meh.

Mon, 06/27/2011 - 11:19 | 1405484 The Deacon
The Deacon's picture

Relax Sherman, Rahm is on it!

 

Ever read the second city police blog - enlightening stuff.

Mon, 06/27/2011 - 10:01 | 1405182 Zymurguy
Zymurguy's picture

Can ZH find any information about how much liquid assets the wealthy of Greece have been removed already?  They get the early tips just as those folks did before our market crash during the Great Depression.  Keep a close eye on the big rats... when they jump ship you better be ready to move fast and follow them off the ship.

Mon, 06/27/2011 - 10:26 | 1405271 edotabin
edotabin's picture

They jumped so long ago you couldn't see them with a telescope.

Mon, 06/27/2011 - 10:07 | 1405205 nodhannum
nodhannum's picture

The Bernak can print more fiat but unless he is one hell of an alchemist with access to a bunch more neutrons than I have access to, he won't be printing more Au.

Mon, 06/27/2011 - 10:25 | 1405282 agNau
agNau's picture

You have to think about this a little differently. I have bee thinking that confidence would be an issue soon in the Eurozone. Playing out now is contagion. Acceleration of flight throughout Eurozone will erupt. Euro sustainability is now questionable. Was this the Anglo-bankers plan. The Euro threatened their existence from the beginning. Why not export toxic assets with the ultimate goal of imploding their banking system. Easily done with the many basket case members. I would now say that that phase of the plan is moving nicely. Next up would be the China problem. China is even more dependent on foreign energy than the US(albeit arguably). Today, in the name of freedom, liberty, and all things good, the US military is surrounding the ME and the Lion share of Oil. With the Eurozone quite busy the US remain unchallenged and even supported. China has been on a massive build, and is WAY ahead of itself. With the rest of the world contracting at increasing speed, China will become increasingly dependent on internal consumption as the driver for growth. It is not enough to sustain. The Printers will maintain their system at any cost. the energy is key to maintaining global control. That would mean ME. And if you look far enough down the road, Russia/China. Today the Printers have Iran(the Axis of Evil) surrounded. Iran is behaving badly. Chaos & crisis is growing. The printers will step up the chaos and bring more to dependence on their system if not outright exit from the system. An organized exit is what I believe they are trying to avoid (covertly), and for the eyes, an overt organized change. Beware, as "change" comes.

Mon, 06/27/2011 - 10:31 | 1405306 dxj
dxj's picture

Ha ha, "Accelerating Deposit Flight" - a.k.a. old fashioned run on the bank.

 

Mon, 06/27/2011 - 10:31 | 1405308 PulauHantu29
PulauHantu29's picture

I bet those Greeks are keeping the Swiss and London banker boys busy moving as much money out as fast as posisble....lol.

Mon, 06/27/2011 - 11:00 | 1405426 P-K4
P-K4's picture

Rumor has it Greece is looking into California's (paper) IOU system as a way to shore up the banks.

Mon, 06/27/2011 - 12:31 | 1405680 Bartanist
Bartanist's picture

They could call the paper IOU the "Drachma". How about that?

Mon, 06/27/2011 - 11:15 | 1405472 The Deacon
The Deacon's picture

Seriously, between all the threats, warnings and actual downgrades, Moody's can effectively enact a death by a literal THOUSAND cuts.  It is almost as if they want to keep Greece in the news by releasing a new downgrade or potential one everyday. It has kept them so  busy they haven't been able to give us their latest take on the US.  Let's cut them some slack though, slamming the eurozone daily takes a lot of time and energy.

 

Does this hurt the Euro and strengthen the USD at all?

 

My first '0' captcha...is that a sign or something?

Mon, 06/27/2011 - 11:48 | 1405552 Use of Weapons
Use of Weapons's picture

The first rule of the hierarchy of captchas is never to talk about the hierarchy of captchas. And don't divide by zero.

Anyhow - of course Moody's is hyping Greece. Do a quick grep on who is who in the ratings world, and who used to work for whom [i.e. JP Morg exes going to work for Moodys and being assigned to Austria Nat. Bank whilst rating the Iberian peninsula, for example; then check what they're telling Austria's N.B. to do (!!) -- that was a while back, but there was a sterling silver bit of spinning there, in time for the next big 'shock n awe' that was Greece. Or are our memories that short?].

 

Hint: It is all a con. A nice & easy circle jerk to make vast profits if you're part of the 'in crowd'. Someone once posted here: "There's a club, and I realised I wasn't in it". The genius part is that tracking the lower parts of the 'in crowd' isn't even that difficult because they all use technology without really understanding it. (cough.. HFT algos cough). Tangent - when LulzSec were dox'd as using social media sites "as themselves", you knew that they weren't real players; same principle applies to LinkedIn profiles.

 

[edit - I missed the faux schoolgirl naviety of your post, apologies - I won't redact, but I'll admit I missed it... I blame the afro distraction]

Mon, 06/27/2011 - 12:30 | 1405679 Bartanist
Bartanist's picture

So Greece should just print a massively larger number of paper OYE-rows and let people extract their money with suitcases.

What is the problem with that? Who cares if the books balance, it is all worthless fiat crap paper anyway.

Mon, 06/27/2011 - 13:30 | 1405889 Jambo Mambo Bill
Jambo Mambo Bill's picture

WHERE IS MY freaking money amigo ????!!!!

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