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Rich Man’s Bank Hit by Bank Run, Collapse, “Bail-In”
Rich Man’s Bank Hit by Bank Run, Collapse, “Bail-In”
In Europe nary a day seems to go by without some mention or rumor of a bank run or bank closure. Ground Zero of the current troubles is Greece, whose broken financial system is now wholly dependent on regular infusions of euros from the ECB. The moment those infusions stop – something the ECB has warned could happen at any time – the country’s banking system collapses. On Wednesday Greek banks saw deposit outflows of €300 million, the highest in a single day since a February deal with the euro zone that staved off a banking collapse.
But it’s not just on Europe’s periphery that banks are experiencing problems. At the beginning of this month, Austria sent shockwaves throughout the old continent’s financial markets when the Austrian government refused to grant the scandal-tarnished, “bottomless pit” bank Hypo Alde another taxpayer-funded bailout. Instead, bondholders, even those with bonds guaranteed by the Austrian state of Carinthia, were made to eat the losses in one of the first cases of bank bail-ins since sweeping changes to EU-wide legislation last year [It was a “long-yearned-for shock of liberation” for taxpayers; read… Austria ‘Pulls Ripcord’ on Bailouts, Lets ‘Bottomless Pit’ Hypo Alpe Bank Drag State of Carinthia into Bankruptcy].
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German DAX Surges Over 12,000 On Greek Optimism, But The Money Has Run Out
German DAX Surges Over 12,000 On Greek Optimism, But The Money Has Run Out
Moments ago, the German DAX roared gingerly back over 12,000 dragging US equity futures alongside it, with the catalyst cited as the somewhat optimistic tone following the three hours of talks held late last night to try to break an impasse that risks sending Athens stumbling of the euro zone. As a result, a smiling if only through his teeth, Tsipras said Greece was “moving swiftly to meet creditors’ demands for a detailed economic reform plan” and assured euro zone leaders his leftist-led coalition would speed up work to avert bankruptcy.
Still, nothing that happened last night actually unlocks any new money. Reuters reports that “while a joint statement by the EU institutions spoke of a “spirit of mutual trust” and Tsipras said he left feeling more optimistic, German Chancellor Angela Merkel stressed no money would be released before Athens implements budget measures and other reforms that it has so far been reluctant to accept.”
The risk of a continued standoff, exactly a month after Greece secured a last-gasp four-month extension of an EU/IMF bailout, was highlighted by different descriptions by Tsipras and Merkel about what reforms Athens would need to launch.
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History In the Balance: Why Greece Must Repudiate Its “Banker Bailout” Debts And Exit The Euro
History In the Balance: Why Greece Must Repudiate Its “Banker Bailout” Debts And Exit The Euro
Now and again history reaches an inflection point. Statesman and mere politicians, as the case may be, find themselves confronted with fraught circumstances and stark choices. February 2015 is one such moment.
For its part, Greece stands at a fork in the road. Syriza can move aggressively to recover Greece’s democratic sovereignty or it can desperately cling to the faltering currency and financial machinery of the Euro zone. But it can’t do both.
So by the time the current onerous bailout agreement expires at month end, Greece must have repudiated its “bailout debt” and be on the off-ramp from the euro. Otherwise, it will have no hope of economic recovery or restoration of self-governance, and Syriza will have betrayed its mandate.
Moreover, the stakes extend far beyond its own borders. If the Greeks do not take a stand for their own dignity and independence at what amounts to a financial Thermopylae, neither will the rest of Europe ever escape from the dysfunctional, autocratic, impoverishing superstate regime that has metastasized in Brussels and Frankfurt under cover of the “European Project”.
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ECB warns Greek funding access hinges on keeping bailout
ECB warns Greek funding access hinges on keeping bailout
(Reuters) – Greek banks’ access to European Central Bank funding beyond February will depend on Athens successfully completing a final bailout review and reaching a deal on a follow-up plan with its EU/IMF lenders, the ECB said on Thursday.
The statement was the clearest warning yet that Athens cannot expect to rely on ECB funding if it reneges on its obligations under the 240 billion euro bailout program, the prospect of which has grown as Greece prepares for snap polls.
Opinion polls show leftist party Syriza poised to win the Jan. 25 election. The party has promised to cancel the austerity terms of the bailout and demand a renegotiation of debt.
Hammered by the country’s prolonged economic crisis, Greek banks have reduced their exposure to ECB funding in recent months but still depend on the central bank for liquidity.
The ECB has helped out Greek banks by exempting them from requirements on the collateral it accepts for access to funding.
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EU Showdown: Greece Takes on the Vampire Squid
EU Showdown: Greece Takes on the Vampire Squid
Greece and the troika (the International Monetary Fund, the EU, and the European Central Bank) are in a dangerous game of chicken. The Greeks have been threatened with a “Cyprus-Style prolonged bank holiday” if they “vote wrong.” But they have been bullied for too long and are saying “no more.”
A return to the polls was triggered in December, when the Parliament rejected Prime Minister Antonis Samaras’ pro-austerity candidate for president. In a general election, now set for January 25th, the EU-skeptic, anti-austerity, leftist Syriza party is likely to prevail. Syriza captured a 3% lead in the polls following mass public discontent over the harsh austerity measures Athens was forced to accept in return for a €240 billion bailout.
Austerity has plunged the economy into conditions worse than in the Great Depression. As Professor Bill Black observes, the question is not why the Greek people are rising up to reject the barbarous measures but what took them so long.
Ireland was similarly forced into an EU bailout with painful austerity measures attached. A series of letters has recently come to light showing that the Irish government was effectively blackmailed into it, with the threat that the ECB would otherwise cut off liquidity funding to Ireland’s banks. The same sort of threat has been leveled at the Greeks, but this time they are not taking the bait.
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Greece Is About To Dance A Wild Sirtaki
Greece Is About To Dance A Wild Sirtaki
On January 22, the ECB has another meeting, and investors – as well as EU governments – are still thinking Draghi will announce full-blown QE. With the Germans resisting the way they consistently have for years now, I wouldn’t count on it. It’ll be extremely hard to push through the German court system. But Merkel’s government still ‘leaked’ to Der Spiegel yesterday that a Grexit would have limited consequences. That’s just bluff, they’re scared sh*tless. They have no way of overseeing anything at all, no more than you or me.
But three days after the ECB meeting, on January 25, there are general elections in Greece, because PM Samaras wasn’t paying attention last month. And everyone’s very nervous about a Syriza victory, since that party is supposed to be extremely marxist, communist, Leninist, you name it. They will be called a lot worse names over the next three weeks, and if g-d forbid they win, much worse still. Syriza is calling the EU-ECB-IMF troika’s bluff. And they don’t like that one bit. And lest you forget, they’ve forcibly installed technocrat governments before. We can’t have the people speak.
Germany Believes Eurozone Could Cope With Greece Exit
The German government believes that the euro zone would now be able to cope with a Greece exit if that proved to be necessary, Der Spiegel news magazine reported on Saturday. Both Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble believe the eurozone has implemented enough reforms since the height of the regional crisis in 2012 to make a potential Greece exit manageable.”The danger of contagion is limited because Portugal and Ireland are considered rehabilitated,” the magazine quoted one government source saying.
In addition, the European Stability Mechanism (ESM), the eurozone’s bailout fund, is an “effective” rescue mechanism and was now available, another source added. Major banks would be protected by the banking union. It is still unclear how a eurozone member country could leave the euro and still remain in the European Union, but Der Spiegel quoted a “high-ranking currency expert” as saying that “resourceful lawyers” would be able to clarify”. According to the report, the German government considers a Greece exit almost unavoidable if the leftwing Syriza opposition party led by Alexis Tsipras wins an election set for Jan. 25.
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IMF holds back Cyprus bailout funds | World news | theguardian.com
IMF holds back Cyprus bailout funds | World news | theguardian.com.
The International Monetary Fund has said it will not release a further €88m (£69m/US$108m) in bailout money for Cyprus on Friday after the country’s parliament delayed a key foreclosure law that was due to take effect at the end of December.
“Following today’s suspension of the existing legislation on foreclosure, critical requirements for the completion of the fifth programme review are now no longer met,” the IMF said in a statement. Its board had been set to discuss Cyprus’s progress with the loan programme on Friday and was thought likely to release the next instalment of aid.
Cyprus needed an international bailout of €10bn (£7.8bn/US$12bn) from the European commission and the monetary fund in early 2013, largely due to problems in its banking sector.
The eurozone released its latest tranche of bailout loans to Cyprus in November after the government amended laws on foreclosures and on forced sales of mortgaged property in line with the conditions of the loan. The original laws would have made it easier for the country’s hobbled banks to start collecting on bad loans, which account for around half of all loans.
