Troika Exploits Greek Bank Run As Varoufakis Slams "Pernicious" Banking Sector "Leaks"

Tyler Durden's picture

As expected, no progress was made between Greek FinMin Yanis Varoufakis and EU finance ministers at Thursday’s Eurogroup meeting in Luxembourg. Varoufakis warned his counterparts that Europe was very close to “accepting” a Greek “accident”, something the FinMin said EU officials have a “moral duty” to avoid before “uncontrollable events” occur. Varoufakis also implicitly accused the troika of attempting to incite a bank run. 

While it wasn’t entirely clear what Varoufakis meant by “uncontrollable events,” it seems likely he’s referencing the fact that while politicians may be able to push back their own self-imposed deadlines as many times as they wish even to the point of rendering the entire effort “ridiculous”, — to use German Vice Chancellor and Economy Minister Sigmar Gabriel’s words — the reality on the ground in Greece is that the economy is collapsing on itself and deposit flight is now running above at €750 million euros each day. Put simply: an acute crisis of confidence among the Greek populace now risks plunging the country into a state of emergency. 

In an attempt to address the quickly deteriorating situation, Brussels looks set to impose capital controls as early as this weekend and has scheduled an emergency summit on Monday. EU finance ministers will reportedly hold another meeting ahead of the summit. WSJ has more:

Eurozone leaders will try to clinch a deal on Greece’s flailing bailout at a hastily called crisis summit Monday, after finance ministers failed again to bridge the gap between Athens and its lenders.

 

The summit—eight days before Greece’s eurozone rescue runs out—will be one of the last chances to avert the specter of further economic meltdown for Greece and a messy exit from the eurozone.

 

After five months of fraught negotiations, “it is time to urgently discuss the situation of Greece at the highest political level,” said Donald Tusk, who presides over meetings of European leaders.

 

Christine Lagarde, managing director of the International Monetary Fund, said the extra meeting was necessary “to restore a dialogue with adults in the room.”

 

French Finance Minister Michel Sapin said Friday that eurozone finance ministers would meet again ahead of Monday’s summit.

 

“A summit like this is prepared by finance ministers so there will be a Eurogroup meeting to prepare,” he said.

 

Greek budget data released Thursday showed the toll the economic uncertainty is taking on state revenues. Budget income in May fell 24% short of the monthly target mainly due to a drop in taxes paid by companies, the finance ministry said.

 

Amid the standoff, many countries are now openly preparing for a Greek default and departure from the currency union.

For his part, Austrian finance minister Hans Schelling isn't optimistic and only hopes Austrians visiting Greece won't find that the ATMs have gone dark on Monday.

Via Bloomberg:

“Taking this to the political level the way Greece did is a very double-edged sword because all decisions in the end are taken in the Eurogroup”

 

“Calling a summit which possibly can’t be prepared because there are no decisions over the weekend may not be very fruitful”

 

Schelling says he assumes Austrian tourists will be able to withdraw money from Greek cash machines on Monday. “We will have to discuss with our leaders what positions have to be taken.”

 

“The finance ministers are acting on the basis of the memorandum of understanding. The finance ministers are acting on the basis of the decision taken in February”

 

“Certain flexibility was built in there. This flexibility isn’t accepted by Greece. We can’t take any more steps, the ball is entirely in Greece’s court.”

Indeed, waiting until Monday will be too late for the Greek banking sector. Depositors pulled more than €1 billion from banks on Thursday alone, prompting Greek banking officials to request an additional €3 billion in ELA allowances on the heels of Wednesday’s €1.1 billion cap increase.

The ECB’s governing council met Friday to consider the request. Regardless of the outcome, Greek banks may not be able to open on Monday according to governing council member Benoît Coeuré, whose opinion on the matter was ‘leaked’ by people close to the discussions. Yanis Varoufakis believes — and we have suggested this on a number of occasions over the past several months — that the troika is effectively colluding to incite a bank run in an effort to force Syriza into the types of concessions which will strip the party of its mandate and transform Tsipras into a pandering technocrat reminiscent of his predecessors. "Regrettably, no discussion of our proposal took place within the Eurogroup. Even more regrettably, instead of that essential discussion, we observed pernicious ‘leaks’ to the press regarding Greece’s banking system," the FinMin told Bloomberg. 

Supporting the assessment that the institutions are exploiting the situation in the Greek banking system is Credit Agricole who says the ECB could decide to tie future ELA increases to a reform deal, a move which would represent the first concerted effort on the part of the central bank to assist the EU and the IMF in applying political pressure on Alexis Tsipras and Syriza, proving that the ECB, like the BIS from which it was born, is far from an apolitical institution. Credit Agricole also notes that Thursday’s pro-euro protests in Athens prove that Europe’s strategy of politicizing the detb negotiations is starting to bear fruit:

A potential statement today by ECB that makes any future ELA contingent on a reform deal could add to pressure on Greek govt, Valentin Marinov, head of G10 FX strategy at Credit Agricole, writes in client note.

 

Creditors’ strategy may be paying off as yday there was the first mass anti-govt protests in Athens.

 

Mkts in Europe could start panicking if deadlock persist into next week and June 30 deadline draws near.

 

EUR expected to come under sustained downside pressure if no resolution by Monday and fears of Greek default and capital controls escalate next week.

So, as we wait to see if the ECB will drop all pretenses of being an apolitical body that concerns itself only with matters of promoting financial stability and as we look anxiously to see if Friday's deposit flight will once again top €1 billion virtually assuring that Greek banks will not be able to open the doors come Monday morning, we leave you with a summary of where it all stands courtesy of Deutsche Bank's Jim Reid:
The rhetoric was unsurprisingly negative following yesterday’s Eurogroup. With the IMF confirming that no grace period applies to the June 30th bundled repayments and subsequently resulting in default should it be missed, Eurogroup President Dijsselbloem summed up yesterday’s progress by saying that ‘regrettably, too little progress has been made’ and that ‘no agreement is in sight’. EC Council President Tusk urged that ‘it is now time to urgently discuss the situation of Greece at the highest political level’, while Dijsselbloem, when questioned if he could imagine Greece being forced out of the Euro, said that ‘the way it goes now we’re going in that direction’. Meanwhile, Greek finance minister Varoufakis warned that an ‘accident’ was drawing ‘dangerously close’. It’s now looking likely that the EU summit proposed for Monday will conclude with a take it or leave it offer as well as a formal deadline. In the mean time, with deposit flight from Greek banks under huge pressure, the ECB’s Coeure said that he was unsure if Greek banks would be open on Monday although this was seemingly downplayed by an EU official in headlines later on Bloomberg. Capital controls appear to be drawing ever closer with each passing day however. So recapping the calendar now, an emergency ECB Governing Council meeting will be held today (scheduled for 11am GMT) to discuss the ELA cap. This will be followed by an EU Emergency Leaders Summit due 6pm GMT on Monday, while it’s possible that over the weekend we get another Eurogroup meeting to prepare the agenda. A Heads of State and Government Summit is then scheduled for 25th-26th June before IMF bundled payments due June 30th. Of course this timeline will be subject to what happens on Monday. It’s set up to be another jittery one for markets again next week however.

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VinceFostersGhost's picture

 

 

They call it a bank run....because you don't want to walk.

 

In and out.....be gone before the crowd shows up.

SheepRevolution's picture

Still it's completely unbelievable that there's still money left in the greek banking sector, and that some wait until this point.

Latina Lover's picture

Yes, if you still have deposits in the Greek Banking System, then you are a sucker. If Greece gets Cyprus'ed, and the rest of the EU figures out that holding deposits in EU banks sets them up for similar treatment, I think Gold will be bid stronger.

Wolferl's picture

Throw those pathetic Greek deadbeats out of Europe already.

Haus-Targaryen's picture

Another *last chance* meeting!?

For something that is "fully contained" they sure are killing themselves to make sure it doesn't happen.  

Cognitive Dissonance's picture

Don't 'bluff' unless you are prepared to carry out your bluff all the way to the end. Otherwise all you are is the patsy at the table to be feasted upon by the other players.

The Troika is playing hardball and so are the Greeks. Lets see if the Greek people have the stomach for the suspension of the game due to fiat darkness.

Motasaurus's picture

The EU is exploiting Greece? Who would have thought it.

Groundhog Day's picture

Throw those war mongering germans out of the euro and lets see how the economy does

VinceFostersGhost's picture

 

 

unbelievable that there's still money left in the greek banking sector

 

I remember the day before Jan 1, 2000.

 

I walked into a grocery store and there was a group of people filling carts with canned goods. One of cashers stated that she would be glad when they were gone.

 

I didn't expect anything to happen the next day, but they clearly did.

 

Bottom line....lots of people will wait until the last second.

Vigilante's picture

The ECB replenishs the coffers through ELA  every week.....

Cognitive Dissonance's picture

I would suspect it is daily now. I wonder what the total has risen to over the last few weeks. Anyone have that number?

Cognitive Dissonance's picture

Must have run out of fingers and toes.

Bearwagon's picture

Number as of wednesday morning: 84.1 billion Euros (risen by 1.1).

p00k1e's picture

"Bottom line....lots of people will wait until the last second."

 

Just like the pull-out method?  

XAU XAG's picture

Oh p00k1e

 

Just like the pull-out method?  

 

 

now I know why your user name is thus!

XAU XAG's picture

 

Eurozone leaders will try to clinch a deal on Greece’s flailing bailout at a hastily called crisis summit Monday, after finance ministers failed again to bridge the gap between Athens and its lenders.

 

 

One day the forward meeting will be a smoke screen......and poof it's gone

 

https://www.youtube.com/watch?v=-DT7bX-B1Mg

new game's picture

every good crisses needs a bankster ready willing and able. one way or another 1 percent will get wealthier...slim pickens are easy pickens, let the vultures descend, ha...

kaiserhoff's picture

Greece is so third century BC.

 

Sandmann's picture

Draghi knows that Italy is the Big One as No3 Borrower on the planet able to destroy the global banking system with its $2.6 Trillion Debt Market. Greece was a firewall. With 215,000 jobs at risk from loss of business with Russia and waves of Africans being landed by EU allies in Italy it is ready to blow up

NoDebt's picture

Some guest on CNBC said "I can't believe they had a billion left to give out yesterday".  I guess they read ZH.

The more I read about this Greek saga the more I believe it's a big, fat nothing sandwich.

skistroni's picture

Retail businesses still deposit their collections daily (most of them at least). There is a lot of paper cash circulating therefore it's not only outflows every day. Nobody knows if the published "bank run" numbers refer to gross outflows or net outflows. I asked around and nobody had an answer. 

p00k1e's picture

Wait a minute.  Wasn’t the Grexit plan ‘accidentally’ e-mailed out a few weeks back?

Was that leak a lie too?         

NoDebt's picture

How to know which lie to believe:  whichever one is most recent.

wmbz's picture

Best get your last bits of paper out of the banks today Greeks (if you are dumb enough to have any in them) for Monday just may be a "holiday" !

Gunga's picture

 No matter whatever payments are made or missed by the Greeks,  the Troika will not classify anything as a default for fear of triggering a derivatives crisis. The bankers will lie their way through this crisis to minimize their costs and maximize the Greek peoples pain.

Bearwagon's picture

If the greek people man up and hang them at the nearest lamppost - I'll foot their bill! Promised! ;)

NotApplicable's picture

Lagarde is doing that bit of the work. Wonder what her true target is?

mojojojo's picture

Central banks won't let the market crash! Inflation low, they can't raise rates!

Take advantage of record low rates and pile on the debt!

Spend tomorrows income today, and don't forget to buy back your stocks!

Chase yield in the stock market, you don't wanna miss out!

All on red please! Woops! All on black this time! Woops!

Borrow credit and spend on consumer goods, maintain escape velocity!

Spend all your credit today, before the banks go on holiday!

Negative real interest rates! Fuck savers, we don't need capital to have capitalism!

We don't need workers to produce capital, we don't need savings with ZIRP!

Expand central bank balance sheet! The music must never stop!

The economy has recovered see, see the flat line of the interest rate!

Initiate cataclysm! Raise rates!

So many choices on the broken economy smorgasboard!

Which company do you wanna buy, Peter! I wanna buy the White House! Is that OK Paul!

XAU XAG's picture

+100 for the CB speak!        maintain escape velocity!

Bearwagon's picture

Fuck all this. Ludicrous speed. Go!

Element's picture

Let's hope it works Dark Helmet, for if it doesn't, Greece could <gulp> end up in a depression, instead of the current easy-street bailout recovery paradise.

Giving in to the pootie darkside is probably not going to help them much though, remember Alderaan bitchez.

 

 

buzzsaw99's picture

there ain't no money in german banks either

back to basics's picture

I wish I could up vote you more than once,

BRILLIANT !!!!

carlnpa's picture

I expect we will see all Russias assets seized to "save the children".

Much easier to steal than to earn.

Russian assets are ripe for the picking, under color of law.

The best argument ever against TPP.

dogfish's picture

This is what everybody has to consider a corupt media.

http://rt.com/news/268303-greek-journalists-imf-bias/

Able Ape's picture

Get this damn thing resolved one way or another or I'll go completely Apeshit...

Phillyguy's picture

Greece is not the only country with financial problems. There are plenty more Greece’s in and outside the EU, including Italy, Spain, Belgium, Protugal, Germany, France, Netherlands, Hungary, Slovania and Japan. Greece is only the beginning. (See: 20 Worst Economies in the World (link: www.businessinsider.com//worlds-slowest-economies-2012-10#20-dominica-1)

 

Shhh dont wake the VIX's picture

 So... a Grexit is now Bullish and an extension of the Bailouts is also Bullish if I am reading the markets correctly and I think I am.

SpanishGoop's picture

"Brussels looks set to impose capital controls as early as this weekend....".

I hope they try and Greece is smart enough to call this "an act of agression" and declare war with The EU (?).

If you want to have fun you must do it right.

 

Brazen Heist's picture

I heard €1 billion was withdrawn in a day this week in Greece. That is pretty much the start of a bank run.

litemine's picture

The Bankers have no trouble controling the USA'S president.....why so much with the Greek's leadership?

The Ukraine again?  Where is the CIA?

The whole system is bullshit.

gatorengineer's picture

Dont be surprised if the Greek Military steps in over the weekend......  Thats the Wests next and last card.

fredquimby's picture

And.......BOOM

Greece gets the end of the Turkish stream natty gas pipeline from Russia (with love) to Europe.

http://rt.com/business/268279-russia-greece-turkish-stream

GoGoGadgetGreece

gatorengineer's picture

Have we not reached peak Bizzaro world?  Not sure how much more I can stand

mojojojo's picture

Dear hegemonic privilege of the US dollar,

The data indicates an inverse correlation between central bank rates and marginal productivity of debt. I gleefully point out that the diminishing marginal utility of debt vortex is growing and becoming increasingly volatile! Debt monetization will exacerbate the situation, and ultimately cause the vortex to expand to the point of oblivion*.

* With conventional printing systems, it is impossible for printers to indefinitely keep up with inflation in paper currencies. The same applies for digital currencies, as nonlinear inflation would overwhelm Moore's law and the thermodynamics of computational infrastructure. So forget about software managing perpetual debt monetization!

A tyrannical regime can confiscate your land, gold, weapons, water, food, medicine. Complacency, decadence, despondency, apathy, are they the symptoms or the cause? Without morality, tell me what future does that society ultimately have?

mojojojo's picture

The answer. Fatalism.

Cognitive dissonance and normalcy bias allows society to sleep walk into a slow moving technocratic totalitarian dystopia.

The willfully ignorant and fearful masses have passively ensured that forced medication, incarceration, and an ever widening net of poverty are what humanity has to look forward to. Do we handover our humanity to technology, do we place our faith in the state? Is that how we reap the rewards of the final revolution? Will robots take care of our old, raise our children, police our streets, fight our wars, farm our crops, pour our drinks, suck our cocks, and become the “new” slaves that hypothetically never revolt? Laughably while billions of humans live lives of frivolity? No. We are not part of the final equation. We are not needed. Not even in the form of a slave. All we have yet to do is set the final stage of our obsolescence.

miki's picture

economic genocide by the imf and ecb the greek people will be on the street soon in full riot gear. lagarde is a bloody lawyer not a economist the rest of southern europe is fully awake eyes wide open.

CHC's picture
CHC (not verified) Jun 19, 2015 9:17 AM

OMG - ever see those huge "Going Out of Business" signs that stay up forEVER?!?