Widespread Civil Unrest, ‘Financial Armeggedon’ Looms As Greeks Withdraw Billions From Banks

Greeks withdraw billions of euros from banks as the country’s president warns of ‘panic’ over Euro exit that will be ‘somewhere between catastrophic and Armageddon’.

The news coming out of Europe just keeps getting dire as the run on Greek banks continues prompting the nation’s banks to warn of a complete banking collapse as an exit from the EU appears to be inevitable.

At the same time, the a report on the Telegraph warns a Greek exit will be somewhere between ‘somewhere between catastrophic and Armageddon’ as European leaders warn of civil widespread civil unrest as a result of the fallout.

Of course, we heard these same threats before when we were warned of a global financial Armageddon if Greece defaulted on its debt.

However, after the Greek default actually happened it was a non-event which could lead to conclusion the media’s headlines were nothing more than fear-mongering to push the people of Greece into accepting their plunder to pay for banker bailouts through unimaginable austerity measures in the midst of a nearly 5 year-long depression.

On the other hand, it is quite possible that the default truly was the first domino to fall in a series of events that will ultimately lead to financial Armageddon, because here we are again with media again warning of a global financial Armageddon following Europe’s Bear Stearns moment last week.

A key difference is the Great Depression style run on Greece’s Banks, which started last year, has now grown to epic proportions while rumors spread around the internet that Greek banks are moving to limit withdrawals to 50 euros following Spain’s ban on all cash transactions over $2,500 Euros.

Those same issues are coupled with the threat of financial Armageddon in Spain.


Financial Armageddon Approaches: Spain is About to Enter a Full-Scale Collapse

Economic data and technical data coming out of Spain is telling us point blank that disaster is looming and will trigger the dominoes to fall across Europe.

The perfect storm of an economic collapse fueled by an all out housing and mortgage crash, a sovereign debt crisis, and a run on the over-leveraged unregulated Spanish banks is hammering Spain right now.

The IMF and the ECB knows that Spain is too big to bail out which is really bad news considering the economic data and technical indicators show irrefutable evidence that Spain is about to enter a full-scale collapse which will in turn send the dominoes falling across Europe.

Last year we were repeatedly warned that if Greece defaulted the result would be Financial Armageddon and even warned America could lose its financial sovereignty.

The when Greece finally defaulted, the media downplayed the ramifications and claimed the debt contagion wouldn’t spread.

They lied and there is a reason that Spain has banned all cash transactions over 2,500 Euros and the IMF is raising the alarm that the debt crisis will persist throughout all of 2012.

There is a reason that the IMF is warning of a collapse of the Euro and full-blown financial panic.

Read The Rest

From the Telegraph:


IIF’s Charles Dallara says Greek exit ‘somewhere between catastrophic and armageddon’

The damage to the rest of Europe from Greece leaving the euro would be “somewhere between catastrophic and Armageddon”, the chief negotiator for the body representing private sector holders of Greek bonds said on Wednesday.

Charles Dallara, who as head of the International Institute of Finance (IIF) spent months in Athens negotiating the largest ever sovereign debt restructuring, also said he had seen evidence that more people were moving their cash out of Greece.

“There has been a pick up of deposit flight from Greece,” Mr Dallara told reporters, but added he thought this could be stabilised “once you get a new government in place, if that government reaffirms its intention to remain in the euro zone”.

He was speaking on a visit to Ireland, which followed Greece into an international bailout in 2010 but has been far more successful in boosting exports to keep the economy afloat while slashing government spending.

Policymakers have begun to speak openly of the risk that Greece, now in its fifth year of recession, might leave the euro. Mr Dallara said the costs of a Greek exit would be so severe that Europe has to find a palatable way of solving their woes.

“I think that it (a Greek exit) is possible, but I wouldn’t call it inevitable and I wouldn’t even call it likely because the costs for Greece, for Europe and for the global economy are likely each in their own way to be immense,” Mr Dallara said in a speech.

“The pressures on Spain, Portugal, even Italy and conceivably Ireland could be immense and the need for Europe to step up with much greater support for the banking systems would be substantial.”


Source: The Telegraph

From the Telegraph’s Debt Crisis Live Blog Today


Debt crisis: as it happened – May 16, 2012

Greece names senior judge Panagiotis Pikramenos as caretaker Prime Minister and sets a date for a second election after leaders fail to form government, while the Bank of England has said the UK economy won’t recover until 2014.

18.24 The British Standards Institution know all about risk and how to take precautions. Their chief executive, Howard Kerr, warns that businesses need to think ahead prepare for the worst – including civil unrest:

Businesses must be agile in this volatile environment and one of the immediate steps they must take is to consider the threats to their business; how will economic instability affect exports? Where do critical commodities and components come from and could the supply chain be impacted?

Equally, businesses must think about the realistic possibility of civil unrest and the possible impact to offices in those regions affected as well as the travel plans of employees and transportation of products.

A car explodes on Mare Street in Hackney during the London riots.

18.16 We have a date for the second Greek election, and also a fresh poll… The radical Syriza party is making gains and is on track to take a majority in five week’s time. A survey which polled Greeks from May 10 to 14 found that the anti-austerity party took 20.3pc of votes, up from the 17pc they won in the first election. New Democracy slipped to 14.2pc and PASOK dipped to 10.9pc, both below the results from the first ballot. If Syriza win and reject Greece’s austerity measures then the country could have its flow of bailout cash stemmed.

18.04 More from Charles Dallara now, the head of the IIF, who spent months negotiating the largest ever sovereign debt restructuring (Greek bond haircut, to you and I). He says the damage to Europe from Greece leaving the euro would be “somewhere between catastrophic and Armageddon”:

Quote I think that it is possible, but I wouldn’t call it inevitable and I wouldn’t even call it likely because the costs for Greece, for Europe and for the global economy are likely each in their own way to be immense.

I think it is incumbent on the rest of us – and I would suggest that includes other European leaders – to pause in what has become a very popular game of telling the Greeks how to run their lives.

17.54 German Foreign Minister Guido Westerwelle says that Greece’s new elections are a vote on the country’s future in Europe and the euro:

Quote The Greek people should know what they are voting about. It’s not about party politics, but about Greece’s future in Europe and the euro.


17.03 Vandals have attacked the Berlin home of an EU official, Horst Reichenbach, who’s working on the Greece economy. They also set fire to his wife’s car. A group called Friends of Loukanikos has claimed responsibility – Loukanikos (Sausage in English) was the name of a stray dog adopted by anti-austerity protesters in Athens.

A German paper recieved a letter which also threatened the “troika” inspectors in Greece: the EC, ECB and IMF.


16.33 The ECB has stopped monetary policy operations with some Greek banks as they haven’t been successfully recapitalised, sources told Reuters. The ECB declined to comment.

It was unclear exactly how many banks were affected. One person familiar with the matter said four Greek banks’ capital was so depleted they were operating with negative equity capital. According to its own rules, the ECB can’t provide liquidity to banks in such a situation.


Source: The Telegraph

ECB caught in a corner: needs to scare Greek to vote “pro bailout” by threatening to pull cash. But by doing so it risks bank run

— zerohedge (@zerohedge) May 16, 2012

From Stats Risk

BRUSSELS – Greeks have withdrawn billions of euros from their banks in recent days, with the country’s president warning of “panic” at the prospect of the country leaving the eurozone.

“My family already sent some €20,000 of our savings to my sister, who lives in Switzerland,” says M.S., a Greek citizen who lives in Brussels and works in the financial sector.

Like him, many Greeks are either transferring their savings abroad or taking them out of the banks, driven by fear that the country may have to leave the eurozone.

Anti-austerity parties that won the 6 May elections failed to form a government and new elections are now due on 17 June, with polls indicating that the pro-bail-out parties will lose even more seats in the new parliament.

Minutes of the meetings between President Karolos Papoulias and political leaders earlier this week show that the run on the banks has increased in recent days. The head of the Greek central bank, George Provovopoulos told the president that at least €700 million were withdrawn on Monday (14 May) alone.

“Mr Provopoulos told me there was no panic, but there was great fear that could develop into a panic,” the minutes quoted the president as saying.

A similar amount of €700-800 million was withdrawn by Tuesday night, central bank sources told Reuters. In Athens, several bankers voiced concern that over €5 billion have been taken out or transferred abroad since the 6 May elections.

Central bank statistics at the end of March spoke of €165 billion deposited in Greek banks. The eurozone bail-out fund (EFSF) already transferred €25 billion as part of the second bail-out package precisely for boosting the banks’ coffers. A further €23 billion can be transferred to the same purpose, provided Greece sticks to the bail-out conditions.

“Even if withdrawals were to continue at the same pace, they should survive until elections,” says ING senior economist Carsten Brzeski. But the wider consequences, especially on Spain, which is also struggling with ‘bad banks’, recession and high unemployment “may have to lead to a bail-out and more European Central Bank intervention,” he told this website.

Spain’s benchmark 10-year government bonds soared to a peak of 6.51 percent on Wednesday, a level considered too high for the state to afford over the longer term. At one stage, the difference between the interest rates demanded by investors for Spanish and German 10-year bonds shot past the 500 basis point level to hit its highest point since the euro was introduced in 1999.

The government in Madrid rushed through a banking sector reform last week, after having taken over Bankia, one of the major lenders. But Brzeski said the reforms were “too little, too late” and the contagion effect from Greece may force Spain to ask for EU money sooner than expected.

Source:Stats Risk


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