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Greece Slides Back Into Recession As Deposits Hit 11-Year Low
On Wednesday, Greek PM Alexis Tsipras posted a statement on his official government website that contained the following passage:
I am optimistic that we will soon have positive results. We all, however, need to turn a deaf ear to those spreading doom, the alarmists. There is absolutely no danger to salaries and pensions or to the banks and people’s savings. And I believe that very soon we will be able to look ahead with greater optimism. However, we need composure and determination in this final stretch.
We would eventually learn that Tsipras had in fact been prompted by aides to say something — anything — to avert a bank run because according to some reports, €300 million in deposits were withdrawn on Tuesday alone after Yanis Varoufakis suggested the country may consider a levy on ATM visits in order to encourage Greeks to rely on their credit cards.
Today, we got the latest read on the Greek banking sector and, sure enough, deposits fell by another €5 billion and now stand at just €133.7 billion, the lowest level since September of 2004. Greek banks have now lost €32 billion in deposits since November and are losing another €167 million every day, on average. As a reminder, Greek banks are relying on ELA to stay solvent and a missed IMF payment risks a showdown with the ECB which could decide to effectively break the banks overnight if it raises haircuts on ELA collateral or continues to refuse to lift the ELA ceiling. Here's the situation visually:
Meanwhile, G-7 officials meeting in Dresden have given the market little reason to buy into Greece’s upbeat rhetoric.
Via Bloomberg:
The Greek administration saw its optimism about a deal rebuffed as European policy makers gathered in the German city of Dresden for a Group of Seven meeting. While Greece isn’t on the formal agenda, it has dominated public comments after the country’s officials claimed an accord can be reached by Sunday.
Bailout talks “are progressing faster but not yet fast enough to conclude,” French Finance Minister Michel Sapin said in an interview with Bloomberg at the G-7. “The red line is that there cannot be a deterioration of the overall budget situation, and in fact there needs to be an improvement.”
And, as expected, the IMF is sticking to its pension reform and debt writedown stance…
The IMF won’t support an accord unless Greece commits to a credible medium-term primary budget surplus and changes to its pension system, said a separate official involved in the G-7 talks. Greece and its international creditors remain far apart, said the official, who spoke to reporters on condition of anonymity because the discussions are confidential.
While Tsipras must make binding commitments, euro-area countries may also need to offer debt relief as part of any solution, the official said.
“I would not say that we have achieved results, that we are close to the end of the process,” IMF Managing Director Christine Lagarde said on Thursday in a television interview with ARD from Dresden. “There is still a lot of work to be done.”
...while German FinMin Wolfgang Schaeuble rather dryly notes that despite calls from European economic commissioner Pierre Moscovici to “work day and night” for a deal, no one spent too much time on the issue...
- SCHAEUBLE: GREECE TALKS AT G-7 ONLY TOOK `A FEW MINUTES
It’s easy to understand why the IMF is concerned about participating in a third program for Greece or indeed even disbursing its portion of the €7.2 billion in aid still ‘owed’ to Greece under a previous bailout. The economic situation simply isn’t improving, meaning creditors are throwing money into a black hole. This point was reinforced on Friday when the latest GDP print out of Athens showed that the country is now officially back in a recession.
Greece’s economy shrank 0.2% in 1Q from 4Q 2014, when it contracted 0.4%, according to e-mailed statement from Eurostat.
This makes the following soundbite from Varoufakis seem rather ironic:
- VAROUFAKIS SAYS GREECE WILL NOT ACCEPT RECESSIONARY MEASURES
Finally, here's a bit of color from BofAML which reinforces some of the issues we discussed on Thursday in "The Greek Endgame Is Hear: Probability Of IMF Default 70%":
Greece faces IMF payments of more than €1.5bn between 5 and 12 June, and our euro area team thinks a cash crunch will hit by mid-June. While a European agreement could emerge next week, cash disbursements will be conditional on the Greek parliament rubberstamping the deal. With Greece drawing “red lines” on primary surpluses and changes to pensions, passing a deal acceptable to creditors through the Greek parliament will be hard. A missed payment is looking increasingly likely.The focus is understandably shifting to the fallout from a potential default. A missed payment to the Fund would not place Greece in technical default immediately. Greece could have an implicit grace period of about a month. But it would signal deeply entrenched positions around the negotiating table. ECB support to the Greek banks could also come into question, accelerating capital outflows.
The case for Greek contagion has largely rested on what the crisis in this small country in the European Southeast says about the euro area architecture. The Greek crisis would be less relevant now that backstops have been strengthened and other peripheral countries regained some competitiveness. But austerity has left political scars, the implications of which are still sinking in. The highly uncertain fallout from a Greek exit could add momentum to centrifugal political forces.
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RUN
No I don't want to open an account. No bail-in for me please.
I'll just take cash, unless you can convert it to gold on spot.
Just take another confidence pill. Everything will be fine in the morning.
Thing is, if you look at the 5 year chart for Greek 10-year treasuries, the yield is basically back where it started 5 years ago; so I don't see what all the hysteria is about to be honest. Peripheral bonds have been one of the best plays over the last 2 years, and I think I deserve some credit for making that call 2 years ago.
OT but good news nevertheless :
http://nypost.com/2015/05/28/man-falls-to-death-outside-luxury-building/
Throw those pathetic Greeks out of Europe already.
Wolferl,
I make sure to always downvote your favorite comment, not because I necessarily believe Greece should stay in Europe, but because you seem to have a lot of sand in your german vag (perhaps from last year's greek vaca) and you add nothing to the conversation.
If you are tired of bailing out the "pathetic greeks" then why don't you stop doing it? It reminds me of when the 99% were angry at wall street (and greed lol) for the bailouts instead being angry at the enabling gvt which was using their money to bail them out while letting other businesses die. Pretty dumb... but what do I know, I'm half pathetic myself.
J
Graph says millions, not billions. As in a total of 133 million Euros of total deposits.
I think the problem has just been solved, guys. Whack 3 zeros off the end of every number and it's easy to meet obligations.
I'm pleased that you were able to profit from other's pain and suffering. Ambulance chaser by chance??
Don't be silly. I'm helping Greece by financing their government. Government spending is what kept the Greek economy going before, and government spending is what's going to get it kick started once again.
Yes, all of this economic hell on earth is all because of the generosity of investors like you who are doing gods work, and as a reward to profit a little is not so bad.
He failed to mention it was a 29yo banker that splattered.
Anyone consider
Greeks pull cash out of bank
EU Bans Cash ( Few days to deposite or lose it)
Hmmmmmmmmmmmmmm
The big question is how fast have they been running each day this week, and how many business days can they keep it up? ATMs and physical cash are only a small and slow moving part of the banking (and hence national) stability conundrum.
I'm impressed that they have been going through all of this shit and just now are entering a recession. Of course its all relative as to who is doing the accounting.
Must be the accountants turn to find their recession, who's next.
take your money out of banks right now
$133 Billion Stupid.
greece just now entered recession according to the maggots? what a crock.
I know right? People starving on the streets, homeless flooding into and taking over empty buildings living like cavemen, they just entered recession, ha! Move along, nothing to see here...
drudge headline right now "the future is a cardboard box"
" in order to encourage Greeks to rely on their credit cards. "
Let that sink in.
That is the chewy nougat center of most of what is wrong with the world.
+1
Well spotted!
+1 "after Yanis Varoufakis suggested the country may consider a levy on ATM visits in order to encourage Greeks to rely on their credit cards"
the War Against Cash is in full "progress"
the "leader" in the EU (but not eurozone) in this War Declared By The Left is Denmark. where a new law says shops will soon not to have to accept cash anymore
(hilarious, eh? The national currency called Danish Krone not valid for simple shopping)
the best retort to it is not privacy, btw, it's that cold, hard cash in your pockets helps to avoid... debt
that's related to the political war we are having on the european continent about debit cards versus credit cards
neo-liberal bankers telling "champagne socialist" social-liberals that cash is evil, the root of corruption, used by criminals and lovers of illicit drugs and prostitution...
... while actually is only about pushing debt
The reason for banning cash
Is 100% collection of taxes on earnings.................cause they are broke.
Compleate control over money ................they can take whatever they want, whenever they want.....................from YOUR bank account.
Business or personal
Why do you think the rich are putting their cash money into hard assets like paintings cars property etc
They know whats comming.........................
Varoufakis' reason, I agree. I was going to amend my hasty comment
nevertheless, my point is that the whole "Left" is getting, for various reasons, on the bandvagon of "forbid the evil cash"
from Scandinavian bigots that think they can forbid prostitution to bankers that want everybody to use credit cards and get into debt to weasel Finance Ministers that think they can keep Greeks from moving their cash out of the Greek banks
(see the endless polical discussion on restrictions on personal credit)
http://www.telegraph.co.uk/finance/personalfinance/comment/11602399/Ban-...
It's Taxes.......................they are after..............and when the next bailout due soon it will be bail IN...............from the bank accounts.
I can see it a mile out ....................comming down the track..........they are in a hurry ....................they know it will be needed soon................expect them to pull the trigger on cash quicker than anyone may think.
http://armstrongeconomics.com/archives/30862
The Secret Meeting in London to End CashThe credit that may increase................is just a Bonus
it's more then that. as often, it's a "confluence of interests"
note how positive The Telegraph article sounds. libertarian? The Telegraph? LOL
A kernel of truth and a barrel full of hysteria.
It's always funny when your real colors show through:
the whole "Left" is getting on the bandvagon
a) you still believe in any Left-Right difference and therefore "choice"
b) you assume the Left by (self-)definition covers the moral high ground
Given a "choice" of non-cash payments, people should switch to bitcoin.
Fuck CBs.
Clearly he is a Bankster stooge, no matter pretense to the contrary.
Getting Greeks to switch to Credit Cards isn't just about getting them used to Debt, but to a host of consequences:
1. Perpetual Debt --?Feudal serfdom to banks
2. Everyone gets taxed, not just the 'honest' Greeks
3. Real-time tracking of purchases and person's location
4. When Greeks (as a beta test case) get used to #3, Credit Cards will be replaced by cell phones, watches and IMPLANTS, to prevent "Loss, Theft and Fraud". YOU will become the Credit Card.
#4 becomes a Self-Fulfilling 'prophecy', whereby an ancient text (book of Revelation) is used as Inspiration -- the same way that TPTB use '1984' and 'Brave New World' as inspiration.
Globalist CB plan: "ONE COIN TO RULE THEM ALL"*
* This message is approved by the Fed, ECB, BOE, BOJ, Neocons, Zi'Borgs and the MIC.
They slid "back" into recession? Were they on a path to growth before?
The accountants were.
Other then people in a coma, who is it that still has money in a Greek bank? Really really need to find one and ask them about why.
You obviously have never run a company and needed cash in the bank to cut payroll checks, pay employee and employer FICA contributions quarterly, pay vendors, pay outsourcing partners, pay the fed and state quarterly taxes on profits.
Stacks of cash or pm doesn't work and therefore honorable employers MUST keep cash in banks
I find it hard to believe there is ANY money in Greek banks, let alone 133 billion. Every other number in the global mess is phoney, I'm betting Greek banks are worse than they are letting on.
They did not provide a breakdown of household vs corporate vs government deposits.
And furthemore, bank "deposits" include much more than demand deposits of currency.
EDIT: There are actually ony EUR 61.7 billion in combined OVERNIGHT currency deposits of both household and non-banking-business customers
see Aggregated balance sheet of credit institutions 2nd tab- Liabilities at
http://www.bankofgreece.gr/Pages/en/Statistics/monetary/nxi.aspx
He is wating for everybody to get their money out of the banks...
They're just now declaring 'recession'? Oh, so the Banksters must officially be in trouble now. Got it.
Being here and owning a business, I will help you understand the banking system for business her. Any bill over 500 has to paid through the bank. The next day the supplier withdraws the cash.
Not a Greek here has had any money in the bank for years here.
Doing the math, it works out to 12,000 euros per person... Seems crazy high.
Compare that to the US, where we have 12T on deposit for 350million or so. or $35000 a head........ Paging Sum Ting Wong to the white courtesy phone.
http://www.bankregdata.com/allDP.asp
@gatorengineer
It's just not person's that have money in banks
Businesses
Pension funds
Local councils (states)
Government
Armed forces
Businesses and peeps abroad with a need for a Greek account
etc
Every article citing Greek, or any other country's, economic data, needs to distinguish between the goods-n-services economy, and the giant-face-sucking-government-leech economy.
The propaganda machine wants you to think each part is equal and useful. Wails and cries the the leech is pulled off the economy of its victum.
If you needed further proof that nobody in Europe has any clue what they are doing, read this:
http://news.yahoo.com/exclusive-european-rescue-fund-struggling-low-retu...
The growth paradigm is a false paradigm.
IMO, people should forget about financialization and servicing elitist parasites and get on with their lives.
Yes, they lied, they are frauds and stole from us and probably deserve very severe punishment ... but that punishment is not for us to give.
Lets see..I am a Greek business owner...and I dont know if I am going to have a bank account next month...or what kind of cash I am going to have to use...so i think I will wait on expanding my business for awhile...
Beats me how anyone at all has money in the system. Personally I'd withdraw every last Euro/Drachma.
Which is why Greece is one of the first countries to start a "War on Cash"...
http://www.globaldeflationnews.com/more-proof-that-central-banks-have-de...
That article was debunked as malicious rumor.
Not to my knowledge.. link please Henry?
The Greeks really really need to allow their banks to go bust and not rescue them nor impose capital controls for which the government would be blamed.
It's called raw capitalism.
Athens .... Baltimore with an Acropolis .... and less solvency .... back sliding, my ass !
Cyprus .... off shore banking .... for wary Greeks !
"There's a sucker born every minute"
and I am optimistic that we will soon have positive results....
the positive results will be that we are still optimistic -
even though we, the Unicorn Government, are by now completely bankrupt.
(but Jack Lew said he will bail us out soon)
WR;)