Has The Greek Bank Run Started?

Tyler Durden's picture

While the long-term decline in bank deposits over the past 3 years has been well documented both on Zero Hedge and elsewhere, it is the most recent, acute post-election phase that has not gotten much coverage. Minutes ago Bloomberg sent out a notice that things in Greece may be on the verge of the final collapse. From Bloomberg: "Anxious Greeks have withdrawn as much as 700 million euros ($893 million) from the nation’s banks since the inconclusive May 6 election, President Karolos Papoulias told party leaders yesterday, according to a transcript of the meeting posted on the presidency’s website today. Papoulias said he got the information from the head of the Bank of Greece, the central bank, George Provopoulos, according to the transcript." While this was likely a negotiation talking point to facilitate the formation of the government, the reality as we now know is that there has been NO government formed, which now means that the bank run will only get worse. Needless to say, a Greek banking system which is now virtually shut out of any extrenal funding except for the ELA, where it has a few billions euros in access left, will be unable to deal with hundreds of millions in deposit outflows.

This may be the beginning of the end for Greece, just as Buiter and later JPM warned over the weekend.

And courtesy of Russian_market, here is a picture of the first Greek ATM lines:

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Fips_OnTheSpot's picture

Bullshit.. already 300bn gone abroad.


that's not "Started" at all

slaughterer's picture

Lagarde jawboning a few areas where the Troika is open to negotiation already.  Sorry guys, I am covering all shorts.  These Eurodummies want to keep the game going somehow.  

EUR/USD 1.2650 target got "Lagarded" today.


PS. to the people downarrowing me, wait until the 3:30pm Eurorumor(TM) today to see my point.  

MillionDollarBonus_'s picture

This is EXACTLY why a failure to bail out Greece would be CATASTRPOHIC for the global banking system. Because people do not have their deposits guaranteed by the ECB, they are panicking and withdrawing precious liquidity from the banks. These financial institutions are simply TOO BIG TO FAIL, and no amount of whining from doomer libertarians or Greek “protesters” will change that. The ECB, Federal Reserve and IMF NEED to step in and put a stop to this nonsense once and for all. Insolent Greek populism and ignorance has been tolerated for far too long. “Not accepting” the bailout, is simply not an option, I’m afraid. Greek whiners, and doomer goons need to suck it in and GET this.

Pladizow's picture

You gotta switch it up buddy, you've become quite predictable!

sessinpo's picture

I think he's related to Max Fisher. Maybe they are one in the same.

Al Huxley's picture

He's funnier than Max Fischer.

Zero Govt's picture

MillionDollarBankrupt is hilarious

i like he wont "tolerate" bad attitude or people taking their money out of bankrupt banks ...what a world MDB would build for us, is his family all zombies already?

Hard1's picture

Where are the pics of the greek bank lines?  there is a longer line here in the ATM outside my office

NumNutt's picture

Funny, I was thinking the same thing...

emersonreturn's picture

you're right, Max is really Timmy's fun side.

fuu's picture

Stretching the meaning of "fun".

Matt's picture

Is that true? Europe doesn't have an FDIC equivelent? If so, that would seem really bizarre and irresponsible.

sessinpo's picture

Actually from a free market stand point, our FDIC is a joke and irresponsible. First off, banks are supposed to pay into the FDIC fund. Yet FDIC is horribly underfunded, with absolutely no chance of being able to cover a massive bank run in the US, 1T. The proper avenue has always been is through bankruptcy where other institutions buy the assets of a bankrupt corporation. That buyer would also be buying the liabilities, such as the deposits FDIC has simply turned into another social program for banks because if FDIC gets in real trouble, they have option of going to congress to beg for money, which means taxpayer bail out of guess who - the banks. Just another version of the same old story. Rinse, repeat.

trembo slice's picture

FDIC is certainly a joke, but wouldn't it be the depositors that are bailed out?  FDIC didn't come about until after the Gold Removal Act of 1933.  Which, if you think about it, makes sense; if money is sound how can you guarantee the money deposited would be redeemable on demand?  It is impossible to print more gold/silver so FDIC can only exist under a fiat-monetary system.

If there is no deposit insurance in Greek banks -- a bank run makes sense even with paper money.  However, in the US bank runs make no sense.  If you are guaranteed to be able to redeem your deposits (whether they print it or not) why would you need to rush the bank to withdraw your funds?  You're fucked either way if you haven't put your savings into something tangible.

Bank runs make logical sense if there is a gold standard.  If the bank has made more loans than they have the capacity to make and customers catch wind of this fact -- they need to hurry and withdraw their gold because when it is gone it is gone.

malikai's picture

Greece is fixin to be broke with no government. I don't think deposit insurance by the state would help them much.

Tortfeasor's picture

The idea of "no government" is where it all comes to a head. How can Greece institute a bank holiday without a government? This will be a slow motion revolution -- they've tipped their hand already.

Nozza's picture

...perhaps people might not want to join the queue to get hold of their guaranteed money... they might fancy buying something to eat in the next few months

moneymutt's picture

bank runs only make sense when you people are worried about a shrinking money supply. Fractional reserve always gets carried away, and at some point money suply (debt created by banks) becomes suspect, and if there is no govt backing of deposits, bank run insues. Banks inherently run themselves to insolvency if not regulated, and even when regulated, still many collapse under their risky lending.

There was a run on money market funds in 2008 in US til govt put their full faith behind it up to $250k for each account. This was not paid for FDIC, it ultimately cost govt little, but saved whole population of losing retirement savings etc, scrambling to exhange money markets to bank accounts and thus crashing system, and the run stopped.

The FDIC is actually one of the better run, least corrupt agencies the US has, read some articles about it. It leads to great trust in system and is a pittance of the cost, even whe FDIC is underfunded by bank tax, compared to what we spend on much more wasteful, less useful things. It is a tiny sliver of the DoD budget. But average person not having to be a bank examiner before they depsot funds, average person not having to worr about bank runs, is a very valuable security.

For the best overview on how banks and private debt are THE money supply (swamps public debt) and how they always get carried away and crash and how this could possibly be controlled see Steve Keen, on good overview video is this http://www.debtdeflation.com/blogs/?p=7258

If private debt in Greece is collapsing via bank runs, this is taking way way more money supply out of their economy than EU can ever give in public bailout. Greece now will only get better when all the private debt defaults and they start over. This was avoidable, but given rich investers/bondholders in German and French banks never losing a dime on stupid loans they made to customers who clearly could have never paid them back, given these few 1000 richies were more important than entire population of Gree, this unfolding brutal jubilee is now their regular folks in Greece's best option, much better being debt slaves to the IMF in a moribond economy for 30 years.

Now greek CDS will kick in, the sellings of the CDS will not be able to pay and will have AIG all over again...


QQQBall's picture

FDIC... best run... blah blah blah... the FDIC front-loaded three years of premiums to banks; its a strawman - could never make good in the case of a  real bank run.


Remain calm, all is well...

BooMushroom's picture

Like politics, most Americans are ignorant of high finance. They see the big FDIC placard (or NCUA) placard, and say "oh that's good to know." Perception is reality. At least until it isn't.

Sokhmate's picture

I'd argue reality is perception.. until it isn't.

Matt's picture

So everyone who had money at WaMu lost all their deposits?

Marco's picture

Private debt doesn't collapse in a bank run, it collapses in the accompanying depression. The EU could easily give all the Greeks their savings and let the banks hold on to their reserves, it would only amount to a fraction of the current bailout ...

In fact if the stability fund did just that (up to some per person limit) for savings and pensions I think it would be a lot easier to get people to rally behind it ... saving the peons is cheap, the rich however are a bottomless pit.

sessinpo's picture

trembo slice                 2427716

"FDIC is certainly a joke, but wouldn't it be the depositors that are bailed out?"



That would be true except for several things. The repeal of Glass Steagall which allows for investment banking and traditional commercial lending banks to be one in the same. TD has already exposed where Bank of America is using its $1T in deposits as collateral against investments it is making. That wouldn't have been allowed before. So in essence, the depositors, which are also generally tax payers would be bailed out but it would be the overall bank that is being bailed out instead of facing its bad decisions.

Referring to the gold standard, PM's were actually still used for foriegn exchange after 1933. It was just national use and where gold was confiscated whereas gold was nationalized (taken by the gov) and banks part of the FR system had to turn over gold holdings to the treasury. You should note that the US gov was still legislating laws regarding PMs. Most notably in the 1963 where the treasury was authorized to issue silver certificates. That was eventually discontinued.

FDIC could exist under a  non fiat system. It is supposed to be simply an insurance program. How it is designed is the problem. It is underfunded because the funds it collects from banks aren't enough to cover a catastrophic loss. It would be like a property insurer. Say someone loses their house because of a tornado. Well the insurance company pays and everything is fine. No bankruptcy or run on bank so to speak. But let's say a hurricane like Katrina hits and thousands of houses are destroyed. Well the claims overwhelm the insurance company. The company goes bankrupt or races to find addional funding (bond issues, stock issuance, etc.) The problem is that the way FDIC is designed (as with many government departments), FDIC's last resort is always the tax payer. This simple factor is what makes government inefficient, flawed and quite often corrupt. When things go bad, they always look toward raising taxes to pay for their mismanagement.

An additional thing that would end this problem banking system is fractional reserve. Just because you have a fiat system does not mean you have to have a fractional reserve system. Banks are way overleveraged and thus exacerbate a bank run.

Sauk Leader's picture

It is not a joke, your money is insured. I asked my banker and he told me it could take over 70 years to get my money.... Oh wait nevermind.

sessinpo's picture

MillionDollarBonus_                 2427412

"These financial institutions are simply TOO BIG TO FAIL"



Nothing is too big to fail. However, things become to big to bail out.

You weren't the captain of the titanic in a past life, were you?

Rubicon's picture

Congratulations on winning cock of the day!

ProtectiveFather's picture

I've been away for a while. Love the new avater, MDB. Keep keeping it real. Your satire is one of my favorite parts of ZH.

Winston Churchill's picture

Nice one MDB.

Time to change yor avatar to Dr.Mengele or maybe Rasputin.

ATM's picture

whether or not the Greeks accept more bailout doesn't matter. With or without bailouts the fact remains that the Greeks cannot repay their debt.

In the end everyone is going to end up paying for the irrational borrowing based on some mistaken future ability to pay.

What a bank run means is only that some people realize they can protect themselves somewhat from that repayment because ultimately repayment will come in the form of currency debasement.


Take the money now and spend it otherwise it wont buy anything later. Bailout now, bailou later all leads to money printing eventually. The longer it takes the worse it will be.

Iwanttoknow's picture

Fuck global banking sytem.Fuck you.

Jason Bourne's picture

Hey Million Dollar Bonus - Go fuck yourself.
Its exactly that bullshit pragmatic punk thinking that has us nowhere four fucking years later in the USA.
Fuck you and catastrophic warning. You sound like that prick
"Insolent Greek populism and ingnorance has been tolerated for far too long" - Fuck you and from whatever status quo bullshit system you came from.
ECB and Federal Reserve and IMF need to step in - FUCK OFF. Was that clear enough for you?

You sound like that prick Hank Paulson.

What Greece needs is a total reset.

Oh and btw, normal entitled greek citizens are not exempt either. They need to understand that its not going to work that way anymore. Fuck them too.


lakecity55's picture

It is Hank.

I thought the ECB gave a kind of FDIC insurance to the Euro bank depositors, FWIW.

MeelionDollerBogus's picture

Failure of the global finance-mafia system is good. It lets the rest of us actually have freedom. We don't benefit from how it works today.

vast-dom's picture


DeadFred's picture

As of 12:57 all I'm seeing is a moving toward the weighted average. I guess I (and everyone else) missed the rumor. I understand why you're jaded after sooo much BS has been shoveled at us but sometime or another the real thing will hit, This time is an excellent candidate. Still all in TZA.

edit- now two days below support. Real is becomes realer.

Peter Pan's picture

There is nothing wrong with a bank run other than the fact that it exposes the shortcomings of borrowing short and lending long as well as that small problem of fractional reserve banking.

MunX's picture

You're late to the party my friend.

BigJim's picture

Don't panic.

But if you do panic, panic early.

SilverRhino's picture

Jeremy Irons in Margin Call said it best 

John Tuld: If you're first out the door, that's not called panicking.

MonsterBox's picture

pull your cash out BEFORE the ATM/Bank Holiday.  it's only fiat, but it better than nothing.

Loose Caboose's picture


Your General Bert Video answers the burning question - What is Lee Marvin doing now?

Aside from that, there is nothing more despicable than whoring a "product", in this case, another "free" report in the midst of a global crisis - one that some believe may be an extinction level event - that will indeed take many innocent lives.


jus_lite_reading's picture

>>"What is Lee Marvin doing now?"<<

Came back from the grave...

I wasn't whoring anything caboose... This was a news article from Yahoo News

hedgeless_horseman's picture



"The lack of information is, however, a matter of State policy in Japan where it is now a felony offense to discuss negative aspects of either nuclear power or the Fukushima situation in particular."

jus_lite_reading's picture

Oh yes... truth is teason. Never question authority. They have YOUR best interests first.



First footage of drones flying over Chicago confirm the S is about to hit the big fan in a BIG way...

NOW could Greece be the first kicker to start the derivatives bowl!?! HOLD TIGHT!! shhhhhhhhhhhhhh!