Investor warns we are going to see bank runs happening
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Is the world about to unravel? Investor warns we are going to see bank runs happening all over Europe
May 16, 2012 – ATHENS – The bank runs that we are watching right now in Greece are shocking, but they are only just the beginning. Since May 6th, nearly one billion dollars has been withdrawn from Greek banks. For a small nation like Greece, that is an absolutely catastrophic number. At this point, the entire Greek banking system is in danger of collapsing. If you had money in a Greek bank, why wouldn’t you pull it out? If Greece leaves the euro, all euros in Greek banks will likely be converted to drachmas, and the value of those drachmas will almost certainly decline dramatically. In fact, it has been estimated that Greek citizens could see the value of their bank accounts decline by up to 50 percent if Greece leaves the euro. So if you had money in a Greek bank, it would only make sense to withdraw it and move it to another country as quickly as possible. And as the eurozone begins to unravel, this is a scenario that we are going to see play out in country after country. As member nations leave the eurozone, you would be a fool to have your euros in Italian banks or Spanish banks when you could have them in German banks instead. So the bank runs that are happening in Greece right now are only a preview of things to come. Before this crisis is over we are going to see bank runs happening all over Europe. A Greek exit from the euro would not only result in a run on Spanish and Italian bonds, but it would also likely result in a run on Spanish and Italian banks. Meanwhile, banks in other troubled European nations are already on shaky ground. The Spanish banking system is an absolute disaster zone at this point and on Monday night Moody’s downgraded the credit ratings of 26 Italian banks. The situation in Italy is especially worth keeping a close eye on. As Ambrose Evans-Pritchard recently noted, things are not looking good for Italy at all: Italy’s former premier Romano Prodi said the EU risks instant contagion to Spain, Italy, and France if Greece leaves. “The whole house of cards will come down”, he said. Angelo Drusiani from Banca Albertini said the only way to avert catastrophe is to convert the European Central Bank into a lender of last resort. Otherwise Italy faces “massive devaluation, three to five years of hyperinflation, and unbearable unemployment.” –ETF Daily
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Euro: Is this how it ends?
The dark scenarios are piling up. Here's a roundup of who's saying what about Europe's never-ending crisis. It's the story that just doesn't seem to end, and one that could affect the entire global economy. Yes, dear readers, Greece is back in the global business and economics headlines today. In a big fat way.A Grexit — this is what fun-loving economists are calling the possibility of a Greek exit from the euro — is once again the talk of the internets.Never mind that the European Union doesn't even have a process that legally allows member states to leave the single currency (the Lisbon Treaty only permits nations to leave the EU entirely).
Never mind that Greece doesn't have a stable government, or a real plan for returning to the drachma, or that any new Greek currency would likely plummet in value as investors raced to cash out, driving the troubled Greek economy into even more short-term chaos.
The mood around Europe is so grim that even Brussels technocrats are attempting to face it with a degree of humor.
Here's how one Brussels jokester put it to Reuters today:
"...it's a bit like the drummer in the band — if the band doesn't like the drummer, there are ways of getting rid of the drummer."
For a more serious look at what is a very serious matter, see Paul Krugman's bleak assessment of the Greek situation in last night's New York Times.
The Nobel Prize-winning economist darkly muses over the possibilities of Greece leaving the euro, and even laid out a five-step approach to the "end game," which Krugman warns could happen in months, not years:
"1) Greek euro exit, very possibly next month. 2) Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany. 3a) Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals. 3b) Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing. 4a) Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or: 4b)End of the euro."
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I definitely don't want to be a Greek at this moment of time... lol... but if the same thing happens in Singapore, I'll be the first to go given how the government loves foreigners so much... Singapore is a country (of foreigners) not worth protecting anymore... PAP wants more foreigners to come in, so be it... Majority of my assets are already overseas, just anytime I can leave... PAP wants to play the game, then we have to be better players and not mere pawns...
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what has the import of foreigners in singapore got to do with the greek issue? dont complain just for the sake of it.
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Originally posted by dragg:
what has the import of foreigners in singapore got to do with the greek issue?
dont complain just for the sake of it.
Times are bad.
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Eurozone ‘storm’: Banks nearly collapsed; Greeks withdraw €3bn in 10 days; UK makes contingency plans
(May 17) Economists warned that the Greek financial system could crumble within weeks or days unless the European Central Bank (ECB) steps up support. The euro fell to a four-month low against the dollar and global stocks dropped on Tuesday as Greece’s decision to hold new elections added to uncertainty about its future and a possible exit from the euro zone.
In an interview with the BBC to be broadcast on Thursday, Benoît Coeuré, executive director of the ECB, said: “In the autumn of 2011 the conditions were very dangerous … European banks were facing severe difficulties to fund themselves, to access finance, and we were very close to having a collapse in the banking system in the euro area, which would have also led to a collapse in the economy and to deflation. And this is something that the ECB could not accept.” The concern about the state of the banking system led to €1tn being lent to banks through three-year loans. Those contingency plans are now being dusted down amid speculation over a Greek exit, a once taboo possibility that European leaders have now begun to discuss openly.
Greek President Karolos Papoulias told party leaders that banks had lost €700m in withdrawals alone on Monday and €3bn in 10 days since the election on May 6 as citizens rush to pre-empt capital controls. Between January 2010 and March 2012, Greeks have already been withdrawing their savings from banks at a sharp clip – nearly a third of bank deposits were withdrawn. The capital of four Greek banks was so low that they were operating with negative equity. JP Morgan said Greek banks have already exhausted their collateral. A refusal by the ECB to ease rules would amount to expulsion, forcing Greece “to issue its own money.”
The growing alarm comes as judge Panagiotis Pikrammenos was picked as Greece’s caretaker leader until the next vote on June 17. While the timing of any exit is not clear, in their preparations bank banks are assuming a decision would be made quickly as the country would need to close down its borders and its banks to stop funds flooding out of the country.
If Greece is to slide out of the euro and collapse, how are they going to protect Ireland, Portugal, Spain and Italy? European leaders who once denied vociferously that they were fretting over Greece leaving their currency union have given up pretence. Asked if he was concerned about a Greek exit, European Central Bank chief Mario Draghi said simply: “No comment”. German chancellor Merkel tells Greece to back cuts or face euro exit. International Monetary Fund (IMF) chief Christine Lagarde warned of “extremely expensive and hard consequences, and not just for Greece” were Greece to leave the euro zone, As the nation descended into political chaos, the fears that Greece’s dire state could drag the euro zone deeper into crisis rattled financial markets across the globe are becoming very legitmate now. The IMF’s sister organization, the World Bank, said the crisis could spread beyond Greek borders to far bigger euro zone economies that are in trouble.
Sources: Reuters May 15, Reuters May 16 10:50am; Reuters May 16 7:20pm, The Guardian, The Telegraph
The Bank of England has been making contingency plans for the break-up of the euro – saying the eurozone “storm” is still the main threat to UK recovery. The eurozone crisis was not the only issue weighing on the UK economy, with volatile energy and commodity costs, and the squeeze on household earnings also having an impact. On May 10, thousands of off-duty police officers took to the streets in London on Thursday in a rare display of collective anger against government austerity measures, joining a mass protest by public sector workers including immigration officials, healthcare workers and prison officers. The Daily Telegraph reports that David Cameron is considering extra £25bn of welfare cuts.
Sources: BBC, National Post, The Telegraph
What happens in the eurozone in the coming weeks and months will have a great impact on the weakened global economy. In order to bring about one international government, there would have to be a one-world monetary system. The elite class will push for the international currency to shore up failing nations, and will be instrumental in bringing prophecy to bear concerning the mark of the beast. But some nations will oppose this rule.
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Damn scary.
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Originally posted by charlize:
Damn scary.
but....
we wouldn't get affected.
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Originally posted by Summer hill:
but....
we wouldn't get affected.
Yes, we will be affected. As business collapses, it's like a domino effect. It's only a matter of how big the first fallen domino is and how many dominos are after it. -
Originally posted by FunGuyWorkaholic:
Yes, we will be affected. As business collapses, it's like a domino effect. It's only a matter of how big the first fallen domino is and how many dominos are after it.remember, some guy said we wouldn't get affected by inflation.
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No heard of contagion.
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Europe so far away won't affect Sg one.
How many days it takes to walk from Europe to Sg?
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Global debt bomb: Irish banks fall on hard times, may need a second bailout
May 19, 2012 – IRELAND - Ireland’s bailed-out banks may need as much as €4 billion more loan loss provisions than assumed in stress tests last year, which could “tip the balance in favor” of the country requiring a second aid program, Deutsche Bank said in a report today. “A new, even modest, increase in capital requirements could deter sovereign investor participation and tip the balance in favor of the sovereign requiring a second loan program,” said Deutsche Bank analysts David Lock and Jason Napier. The government’s plan to introduce new personal insolvency laws creates “risks,” even as politicians and the financial regulators seek to avoid widespread residential mortgage debt forgiveness, the bank said. “Although resilient during 2009 and 2010, mortgage arrears have risen sharply over the past year, house prices are continuing to fall, market liquidity is limited, and over half of customers are now in negative equity,” said Deutsche Bank analysts in the report. “We fear the size of negative equity balances for some mortgage holders may greatly reduce their incentive to cooperate, pushing them towards default.” –Irish Times
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Bad news for retailers: downtrend of sales will persist
Analyst says Singapore will not be immune from a corresponding fall in global risk appetite.
OCBC Investment Research said:
With the weakening of equity markets in Apr and exacerbation of the European debt situation by Greece, we expect the downtrend of retails sales to persist as consumers continue to tighten up.
Should a Greek exit from the Eurozone materialize, market confidence will naturally be adversely affected as the contagion effects spread to other Eurozone economies.
Singapore will not be immune from a corresponding fall in global risk appetite and growth could come in at the low end of the official 1-3% forecast.
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Originally posted by Summer hill:
but....
we wouldn't get affected.
how can we not be affected. its gloal economy. lehman also nothing to do with us but look at what happened!! -
Originally posted by dragg:
how can we not be affected. its gloal economy. lehman also nothing to do with us but look at what happened!!Agreed...
We might be affected indirectly.
