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Greece
crisis deepens as banks close for a week after weekend that shook
euro
Greece’s
government says banks will stay closed until after snap referendum,
while stock exchange shut on Monday and cash machine withdrawals
limited
28
June, 2015
Report from Guardian cжrrespondant, Helena Smith
On
Monday morning Greeks will find their savings blocked and their banks
closed for a week following a fateful weekend that has shaken
Europe’s single currency.
The
Greek government decided on Sunday night it had no option but to
close the nation’s banks the following day after the European
Central Bank (ECB) raised the stakes by freezing the liquidity
lifeline that has kept them afloat during a six-month run on
deposits.
The
Athens Stock Exchange will not reopen on Monday either. The dramatic
move, after 48 hours of sensational developments in Greece’s
long-running battles with creditors, was sparked by the country’s
prime minister, Alexis Tsipras’s Friday night call for a referendum
on its creditors’ demands. That prompted finance ministers of the
eurozone to effectively put an end to his country’s five-year
bailout by the International Monetary Fund, the ECB and the European
commission.
In
a brief, televised address to the nation, Tsipras threw the blame
onto the leaders of the eurozone. But he did not say how long the
banks would remain shut, nor did he give details of how much
individuals and companies would be allowed to withdraw once they
reopened.
Greek
crisis: Banks shut for a week as capital controls imposed - as it
happened
Greek
banks will not open until July 7 in an attempt to avoid financial
panic, after ECB capped the emergency funds keeping them running
It
later emerged that the banks would be kept shut until after the
referendum on 5 July and there were reports that the withdrawals from
cash machines would be limited to €60 – about £40.
The
prime minister said that Saturday’s move by the eurozone’s
finance ministers to halt Greece’s bailout programme was
unprecedented. He called it “a denial of the Greek public’s right
to reach a democratic decision”.
Tsipras
added that the finance ministers’ initiative had prompted the ECB
to curb its assistance, forcing the government to take the steps that
it had. He said he had once again appealed for an extension of the
bailout until after the referendum, on 5 July, sending his proposal
to the president of the European council, Donald Tusk, the leaders of
the 18 member states of the single currency, the commission and the
ECB.
As
fears spread through Sunday that capital controls would need to be
put in place, growing numbers of depositors lined up at ATMs, even in
affluent city areas, to withdraw what cash they could.
The
country’s plight deteriorated sharply on Friday night when Tsipras
put his country’s future in the balance by suddenly calling a
referendum and arguing robustly for a rejection of the price set by
his creditors for saving Greece, at least for a few more months. This
Sunday’s vote will ask Greeks whether they approve or disapprove of
the last offer tabled by the creditors before the negotiations broke
down.
But
during a marathon parliamentary debate that ended in the early hours
of Sunday morning, opposition leaders argued that it was, in fact, a
vote on whether Greeks wished any longer to be part of the eurozone.
It will be Greece’s first referendum since the country voted to
abolish its monarchy in 1974.
The
European commission said on Sunday for the first time in the crisis
that it wanted to offer Greece debt relief, Tsipras’s central
demand during the five months of stalemated talks. Reports from
Berlin said that Angela Merkel and François Hollande shared that
view.
But
the potential concession appeared to come too late to prevent growing
chaos in Greece – and sparked concerns across the Atlantic. Barack
Obama was said to have called Merkel to urge her to take action. Jack
Lew, the US Treasury secretary, urged creditors to offer debt relief
to Greece.
Financial
analysts will be watching the impact on the markets, which have not
yet had the chance to react to the events of the last 48 hours. Mario
Draghi, the president of the ECB, tightened the screws somewhat on
the country.
The
governing council of the ECB decided to freeze emergency liquidity
assistance to the Greek banks, the lifeline that is keeping the
national financial system functioning. The ELA was capped at last
Friday’s level of €89bn. It meant that the banks could continue
to function, but the draining of money as people flocked to the ATMs
to retrieve their savings also meant they would run out of money that
could not be replenished by the central bank.
“We
continue to work closely with the Bank of Greece,” Draghi said.
Greece’s
financial stability committee, which includes the finance minister,
Yanis Varoufakis, and the central bank governor, Yannis Stournaras,
met on Sunday evening to discuss Greece’s rapidly shrinking
options. The high-level political confrontations on Friday and
Saturday produced the greatest uncertainty over Greece and in the
eurozone in the five-year debt saga.
The
fall-out from the collapse of negotiations and the calling of the
referendum brought recrimination on all sides and predictions of
gloom.
The
German finance minister, Wolfgang Schäuble, said he was “perplexed
and depressed” by developments. Jeroen Dijsselbloem, the Dutch
finance minister who heads the committee of eurozone finance
ministers, said that with his referendum call, Tsipras was thrusting
the country into a mess from which it would struggle to recover.
“We
are millimetres away from the total collapse of the Greek financial
system,” warned Herman Van Rompuy, until last year the president of
the European Council and heavily involved in years of Greek rescue
negotiations. “It’s actually suicide that’s taking place in
Greece right now.”
The
restrictions being imposed are anathema to Tsipras’s radical
left-led government – all the more so since it desperately needs to
keep public opinion on its side ahead of the referendum.
Varoufakis
told the BBC in a Sunday interview: “Capital controls within a
monetary union are a contradiction in terms.” But he was party to
Sunday night’s decision.
In
the early hours of Sunday, parliament voted 178 to 120 in favour of
holding the referendum. Embarrassingly for the government, the
neo-Nazi Golden Dawn movement joined Tsipras’s Syriza party and its
populist right-wing coalition partner, ANEL, in backing the proposal.
By
Sunday evening, however, it had not received the necessary
endorsement of Greece’s president, Prokopis Pavlopoulos.
According
to two polls published on Sunday, Tsipras faces an uphill battle to
secure the rejection he has indicated that he favours. One in the
right-leaning tabloid Proto Thema found 57% of those interviewed
favoured acceptance of the creditors’ latest offer. Another in the
centre-left To Vima put support at 47%.
Greek
Capital Controls Begin: Greek Banks, Stock Market Will Not Open On
Monday
28
June, 2015
Update
3: Bloomberg,
citing Kathimerini, reports that Greek banks will remain closed until
July 6.
- GREEK BANKS TO REMAIN CLOSED UNTIL JULY 6 : KATHIMERINI
- GREEK GOVERNMENT ISSUES CAPITAL CONTROLS, BANK HOLIDAY DECREE
Update
2: Greece's
Skai reports that if/when banks reopen (supposedly on Tuesday), a 60€
withdrawal limit will be imposed.
Update: In
a televised address to the nation, Greek PM Alexis Tsipras assured
Greeks that their deposits are safe despite an upcoming bank holiday
and despite the fact that Greek stocks will not open for trading on
Monday. Tsipras also said Athens has re-applied for a bailout
extension and urged Greeks to "remain calm" in the face of
what is sure to be a turbulent week.
- GREEK PRIME MINISTER SAYS GREEK PEOPLE SHOULD REMAIN CALM
- GREEK PM: BANK OF GREECE PROPOSED BANK TRANSACTION RESTRICTIONS
- GREEK PRIME SAID GREECE RE-APPLIED FOR BAILOUT EXTENSION
- GREEK PRIME MINISTER SAYS DEPOSITS ARE COMPLETELY SAFE
Earlier:
Despite
the reassurances from any and all elected (and unelected) officials,
given the run on bank ATMs in Greece has turned into a stampede, it
is not surprising that:
- GREEK BANKS TO REMAIN CLOSED FROM MONDAY FOR A WEEK: PIRAEUS BANK CEO
- PIRAEUS BANK CEO THOMOPOULOS SPEAKS TO REPORTERS IN ATHENS
The
announcement was made when Piraeus Bank CEO Anthimos Thomopoulos told
reporters after a meeting of the government’s financial-stability
panel on Sunday. The launch of capital controls just as the Greek
summer tourism season starts, is sure to be the final crushing blow
to Greece, whose entire economy will now grind to a halt.
At
the same time, Finance Minister Yanis Varoufakis said an announcement
would be made after a Cabinet meeting due to start imminently in
Athens. Which is ironic considering just earlier today Varoufakis
said he is opposed to the "very concept" of capital
controls:
Capital
controls within a monetary union are a contradiction in terms. The
Greek government opposes the very concept.
— Yanis Varoufakis (@yanisvaroufakis) June 28, 2015
Banks
will remain shut until at least after a July 5 referendum called by
Prime Minister Alexis Tsipras on whether to accept austerity in
exchange for a European bailout, Kathemerini newspaper reported,
citing unnamed sources.
Reuters
is also reporting that the Greek
stock market will not open on Monday
(leaving us wondering just what that will do to the Greek ETFs
liquidity in US markets) as hedgers scramble to
protect un-closable losses
wherever they can.
More
from Reuters, which reports that "Greece's banks, kept afloat by
emergency funding from the European Central Bank, are on the front
line as Athens moves towards defaulting on a 1.6 billion euros
payment due to the International Monetary Fund on Tuesday."
The ECB had made it difficult for the banks to open on Monday because it decided to freeze the level of funding support it gives the banking system, rather than increasing it to cover a rise in withdrawals from worried depositors.
Amid drama in Greece, where a clear majority of people want to remain inside the euro, the next few days present a major challenge to the integrity of the 16-year-old euro zone currency bloc. The consequences for markets and the wider financial system are unclear.
The head of Piraeus Bank, one of Greece's top four banks, speaking after a meeting of the country's financial stability council, said banks would be shut on Monday while a financial industry source told Reuters the Athens stock exchange would not open.
"It is a dark hour for Europe....nevertheless from where we're sitting we have a clear conscience," Greek Finance Minister Yanis Varoufakis said earlier in an interview with the BBC.
Greece's left-wing Syriza government had for months been negotiating a deal to release funding in time for its IMF payment. Then suddenly, in the early hours of Saturday, Tspiras asked for extra time to enable Greeks to vote in a referendum on the terms of the deal.
Creditors turned down this request, leaving little option for Greece but to default, piling further pressure on the country's banking system.
The creditors want Greece to cut pensions and raise taxes in ways that Tsipras has long argued would deepen one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed.
Pro-European Greek opposition parties have united in condemning the decision to call the referendum on the bailout terms, but people on the streets of Athens backed the decision.
"I want him (Tsipras) to knock his fist on the table and to say 'enough!'," said resident Evgenoula.
Many leading economists have voiced sympathy with the Greek government's argument that further cuts in spending risk choking off the growth which would give Greece some prospect of servicing debts worth nearly twice its annual national income.
The IMF has pressed European governments to ease Athens' debt burden, something most say they will only do when Greece first shows it is trimming its budget.
Long lines formed outside many ATMs on Sunday, including some of 40 to 50 people outside some in central Athens.
The Bank of Greece said it was making "huge efforts" to ensure the machines remained stocked.
The
German foreign ministry said tourists heading to Greece should take
plenty of cash to avoid possible problems with local banks and some
tourists said they were joining the ATM queues.
"I
am trying to go over to the bigger banks," said Cassandra
Preston, a Canadian tourist. "I am here for another month and I
would like to make sure I have some cash on me."
* *
*
In
other words, Greek speculators (and of course, those depositors who
were dumb enough to still have money in local banks) just got CYNK'd
- you can buy stocks all you want, but if the market is about to fall
out of the bottom, you simply are not allowed to sell.
Ignoring
Tsipras Plea For Calm, Greeks Storm ATMs, Stores, Gas Stations
28
June, 2015
Just
a few hours ago Greek
PM Tsipras addressed his nation imploring then to "remain calm"
and reassuring them that their "deposits were safe." It
appears the Greeks did not believe him. Many were wondering where
thGreek bank lines were for the past several months. Turns
out the local depositors were merely waiting until just after the
last minute to withdraw their funds... horde gas... and stack
food. Greece,
it appears is Venezuela - the new socialist paradise.
Tsipras
implored: "Keep Calm...."
They
did not listen...
Call
that an ATM line...
Now
THIS is an ATM line...
This ia an ATM queue in the centre of Athens now #Greece #Greferendum pic.twitter.com/lx12DYnJIW
— Loukia Gyftopoulou (@loukia_g) June 28, 2015
??????? ????????????. ??????. pic.twitter.com/pPy1HT5LaP
— Kosmas Themelis (@kosmasthem) June 28, 2015
How Greece looks like after capital control announcement by SYRIZA-ANEL #europe #euro #Eurozone#EuropeanUnion pic.twitter.com/x6nK9951H1
— Poseidon (@Kons_u) June 28, 2015
#ATM#thessaloniki#greece#krisis pic.twitter.com/Ly4g8B0Paj
— ????? ? (@sissy_mitr) June 28, 2015
Lines outside ATM in #Thessaloniki this evening via @gatosg. #greece #athens #Greferendum #dimopsifismapic.twitter.com/phf1050KMG
— Omaira Gill (@OmairaGill) June 28, 2015
ATM queues growing by the hour in #Greece. #euro #GreeceCrisis pic.twitter.com/IYx9KAyr2n
— New Europe Investor (@neweuropeinvest) June 28, 2015
Even
at the airports...
Resending this as there is at least one other ATM with cash at athens airport out of shot. I've joined the line.pic.twitter.com/EuoIcj9afb
— Elliott Gotkine (@ElliottGotkine) June 28, 2015
And
gas stations are overwhelmed...
Scene at the petrol station near my hotel. Busy, certainly. but not manic. #Greece #europic.twitter.com/zEODyhbkHk
— John Hooper (@john_hooper) June 27, 2015
As
grocery stores and general appliance stores come under seige...
???????? ??????? ???????, ????. ???? ??? ???? ?????????... pic.twitter.com/mWU7DHkl99
— ???????????????????? (@LPapastergiou) June 28, 2015
We
have seen this before - in Russia recently as the Ruble collapsed and
citizens spent any and every piece of currency they had on 'assets'.
Simply
put - it's all about inflation expectations. And unlike The Fed or
The BoJ, who keep trying to jawbone higher expectations into their
citizens' minds, the Greek government may have achieved it implicitly
through devaluation expectations and with it - a spending spree
before things get more expensive and implicitly a surge in GDP. Of
course, however, the spending surge can only be short-term and will
stop as soon as there are no more euros to spend.
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