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The Greek Modest Proposal To Savers: Please Bring Your Cash Home
Earlier today we reported that after a €2.5 billion outflow in March, Greek deposits have hit their lowest level since 2005 and have fallen by some €27 billion (or 16%) since December. A few other rather disconcerting data points: although the Greek banking system only comprises a little over 1% of eurozone assets, it accounts for nearly a fifth of ECB facility usage while nearly a third of Greek banking assets are now funded by the central bank.
In the midst of this decidedly untenable situation, and as Tsipras does his best to shakedown municipalities and pension funds for excess cash (“Where’s the money Lebowski?!), FinMin Varoufakis has a new proposal for all Greeks who have taken the very rational step of moving their cash elsewhere to avoid being Cyprus’d: bring your money back and we won’t tax it at 50%. Here’s more from Reuters:
Greece is to allow money held abroad by its taxpayers to be declared without penalty and taxed at a discount rate, a move to help overcome a cash crunch threatening the country with bankruptcy.
"The government will table a bill to allow citizens to voluntarily declare their deposits abroad," Finance Minister Yanis Varoufakis told reporters after meeting Swiss officials in Athens.
Greeks have sent billions of euros abroad since the debt crisis exploded in 2010, fearing that the country may crash out of the euro zone. The deposit flight has strained its banks which have become dependent on central bank funding for liquidity.
A portion of the money has fled to Swiss banks.
Under the planned law, the deposits may be taxed at a rate of 15 to 20 percent, a senior finance ministry official said, an incentive for those who have sent money abroad but have not reported it as income to Greek tax authorities.
Depositors who have evaded reporting incomes would otherwise face a 46 percent tax rate and 46 percent in penalties if caught.
Varoufakis said that once the bill is passed by parliament, a political agreement will be signed between Greece and Swiss authorities to exchange information on Greek deposits held in Swiss banks.
This may sound like a good idea in principle, but we’re not entirely sure why this represents a compelling value proposition for those who are storing their euros in the safe confines of Swiss bank accounts. That is, why would anyone want to bring cash back to Greece and pay a 20% tax only to face the very real chance that those deposits will be converted to drachma or some equally worthless scrip in the not-so-distant future?
Here's what UBS had to say on the subject of redenomination risk earlier this month (we think it applies here):
Even if a depositor thinks that there is only a 1% chance their country will exit the Euro, why take a 1% chance that your life savings are forcibly converted into a perceived worthless currency if by acting quickly (and withdrawing deposits) one can have 100% certainty that your life savings remain in Euros?
As a reminder, here is the deposit situation in Greece:
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Yes, please bring it home so we can confiscate it and give it to foreign bankers.
Thanks,
the Mgmt.
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Well some might bring them back for a 20% bonus. But pay for the privilege of getting their money back to Greece? WTF? This must be GATCA related.
Tee Hee.
How many rich people are that stoopid?
Don't do it!!!!!! Admiral Akbar says its a trap! Declare and confiscate!
Next: Swiss agree to confiscate "illegal" Greek accounts on behalf of ECB
For a modest "processing fee" of half the loot.
At Hillary's command so she gets first cut!
Like a date rapist saying "Come on, let me just put the head in a little bit"
Poor Bastards, they are really screwed.
Yup. As they say in Greece:
https://upload.wikimedia.org/wikipedia/commons/d/db/Griechen31.png
if your cash is abroad you are a terrorist
Greece: "Please bring your cash home... so we can steal it.... for the troika."
Hahahahahaha. Shoulda grabbed a banker or three on day one.
HAHAHAHA
Yeah, bring it home so we can tax it or seize it.
And we will keep you under even greater scrutiny in the future.
Bwahahahaha!!! Where's Allen Funt??
In America we call this "Panhandling"
Logical error: This being Greece, if it's held abroad the holders are not tax payers.
Dear Yanis,
If you think even the offer of sexual favours for life from Danae Stratou would convince us to give you a thin dime of our clients' money, you're living in Aristophanes' Cloudcuckooland.
We're still sitting on billions worth of Jewish gold the Nazis gave us for safekeeping. If the Israelis can't have that money, much less tax it, who do you think you are giving us orders? Our Greek clients are still alive and you don't have nukes.
Our clients don't pay taxes---taxes are for fools and slaves---and they're not going to start. They got their assets out of Greece for a reason. If Danae has the sense she was born with she'll get her own assets out of Greece too, and soon. She won't like what our clients have in store for you, and throwing her sweet self in front of her Yanis won't change the mind of our agents in the field.
If it comes to that, neither we nor our clients will shed a tear.
We understand you're a game theorist. So we find it odd how hard it is for you to admit you've been beaten.
Sincerely,
The Swiss banking community
Tyler are you completely stupid? Read the entire article....
Depositors who have evaded reporting incomes would otherwise face a 46 percent tax rate and 46 percent in penalties if caught.
Varoufakis said that once the bill is passed by parliament, a political agreement will be signed between Greece and Swiss authorities to exchange information on Greek deposits held in Swiss banks.
And in exchange the Swiss will get the names of all the Swiss who have money in Greek banks?
The Greek already have a list of Greek tax evaders that hold money on Swiss bank accounts but have not acted on that. The previous government 'lost' that list. They got it back though.
They have the Lagarde list and a much larger list of tax evaders (they claim).
The problem is they can't legally act on it w/o information from the Swiss side. Just because Lagarde gave you a list doesn't mean shit--you still have to investigate and come up with some evidence. Apparently the Swiss will give them what they need.
So pay the 20% and not have to explain how someone claiming 900 euros/month salary for example ended up with 1 million euros in a Swiss bank, or have your ass reamed. The choice is easy.
They don't have to bring the money back into Greek banks, that's not part of the agreement (from what I can read). Just declare it and pay the tax.
Any Greek who is not 100% in physical gold in their possession right now is either mentally retarded or just downright stupid.
to late. the greeks that have gotten their money out aren't going to bring it back in, not until greece fades away until the tidal. then they will rebuild. but not now.
( contributor Kenneth Rapoza, Forbes.com 4/29/2015 )
The Obama administration is playing defense. The latest strategy: get Greece to back out of its natural gas delivery deal with Russia’s Gazprom.
Earlier this month, Russian energy giant Gazprom signed a deal with the Greek government to turn it into a transit station for natural gas into Europe. The deal is part of the Russian-Turkey pipeline project which would include Greece as a major transit hub for Gazprom in the E.U.
Gazprom has been trying to come up with alternative route into the E.U., its most important market, following the constant upheavals in Ukraine. There, Gazprom partners with Naftogaz to deliver gas to the E.U. But those two are currently going through a bad divorce. Gazprom wanted to build a pipeline into Europe, called South Stream, with west European partners. Then sanctions came in 2014 because of Russia’s involvement in fomenting political unrest in Ukraine. That deal fell through. Turkey hopped on the bandwagon. Greece bought a ticket on the Gazprom train in April.
If Ukraine drove a wedge between Russia and Europe, then the U.S. came in with a gigantic sledge hammer and drove that wedge deeper. Washington was the first to sanction Gazprom and other Russian energy companies as punishment for Moscow’s involvement in eastern Ukraine’s separatist movement.
Once that wedge was in place, Washington moved at light speed to convince at least two former Soviet satellite states, Lithuania and Poland, to develop liquefied natural gas terminals to receive U.S. shale gas someday in the future. In Russia, where everything the western world does is looked at through a spy lens, those two new LNG terminals on Russia’s border were evidence of a Washington-inspired energy war with Russia. Let Europe fund the dirty work of reconstructing Ukraine’s economy. What Washington really wants is European energy markets.
This became even more evident this week when Secretary of State John Kerry wooed cash strapped Greece with a “counter-offer”. Although the market does not know what that offer is, chances are it comes with the stipulation of nixing the Gazprom deal. Washington suddenly discovered Greece as a natural gas play just days before Gazprom is set to ink the deal in Athens. In Russia, this can only be viewed as politically motivated.
Greek foreign minister Nikos Kotzias, who concluded a five-day trip to Washington this week, told the Associated Press on Tuesday that he met with Kerry and Kerry told him he would send State Department’s energy envoy Amos Hochstein to Athens “within days” to counteroffer the Russian deal. Kotzias said that the proposal had to do with the Turkish Stream connect.
As it now stands, the Russian deal would connect the Turkish Stream pipeline to existing Greek pipelines. That makes Greece an important transit hub and with that comes Vladimir Putin’s guarantee of a haircut on natural gas prices. This is similar to the deals Russia has done with Ukraine.
Kotzias noted that Greece’s recent talks with Gazprom were based on economic concerns, not political. He described Gazprom’s interest to develop pipeline infrastructure through Greece as part of a wider Russian effort to counter U.S. plans to cut Gazprom’s market share in eastern Europe.
Isn’t there room for everyone here?
European natural gas demand isn’t in decline. It is on the rise. Can’t the U.S. offer Greece financing to build an LNG terminal under the stipulation that the natural gas delivered to it comes strictly from the U.S.? Of course it can. So why go after the Turkish Stream, as Kotzias suggests?
“It seems the Obama administration is becoming more mercantilist,” says Vladimir Signorelli, president of Bretton Woods Research, a macro-themed investment research firm based in New Jersey. “The Greek deal with Russia is about (Greek Prime Minister) Alexis Tsipras trying to get billions of dollars in his government’s coffers, and now he sees the U.S. willing to chip in. But from Washington’s point of view, this is all about deterring Russian influence in Athens. It’s a zero-sum mercantile view. My opponents gain means my disadvantage. If the most efficient use of capital is for Russia to ink a pipeline deal with Greece, then the U.S. should simply allow capitalism to work. Why didn’t this materialize before the Russian offer? It doesn’t make sense. This is simply to lock out a natural gas competitor.”
Washington has been on a tear lately in this regard.
When China announced its new Asian Infrastructure Investment Bank, the Asia pivoting Obama administration lobbied European allies not to join. His team’s warnings fell on deaf ears. Nearly every major European economy is on board the AIIB.
Then China came up with its new Silk Road Initiative, which seeks to invest billions in woefully undeveloped ‘Stan nations to its west.
Not surprisingly, Washington quickly turned to AIIB-rejecting Tokyo to create a Trans-Pacific Partnership. The TPP came out of thin air. And not surprisingly it excludes America’s most important Asia-Pacific trading partner — China.
Meanwhile in Russia, Gazprom CEO Alexei Miller announced his plans late last year to build the new South Stream pipeline through Turkey. Greece was never part of the original deal anyway.
The Turkish Stream pipeline will have an annual capacity of 63 billion cubic meters (2,224 billion cubic feet) of gas. Around 14 billion will be supplied to Turkey. With Greece in the mix, the rest would be pumped to a receiving hub on the Turkish-Greece border for customers in Europe.
That is, unless Washington opts to play the role of agitator and poke Miller and Putin in the eyes.
http://www.forbes.com/sites/kenrapoza/2015/04/29/washington-muscles-in-o...
Safe? Bank?
Thats a good one. It's kind of like one of those jokes that starts, three guys enter a bar.....
Never eat your seed corn.
Wealthy response to socialist parasite thieves running Greece, a failed state:
YOU CAN FUCK YOURSELVES, NOT US
Now, who approached you? Tattaglia or Barzini?
It was barzini.
Good.
There's a car waiting for you outside to take you to the airport. I'll call your wife, tell her what flight you're on.
Go on, get outta my sight.
wow who do they think they're fooling? once home, a little tax here, a little capital control there...next thing you know it's all gone.
I find it amazing though that 10 million Greek (or probably a small portion of them) have billions on the bank.
heh looking for the last fools
It IS a compelling proposition. if people accept, they can keep the money in England, and substantially the Greel government has renounced any recourse on that. If I were a greek tycoon, i'd probably find the means to have the Royal Court of Justice examine the decree before accepting. But apart from that, there's no legal way to write or enforce a duty to bring back the money under the EU charter.