Greece'' s Tsipras said his proposals will be based on genuine reforms, and Germany said it needs an offer by Sunday.
Top News & & Analysis The bank
runs that we are seeing today in Greece are stunning, but they are only simply the beginning. Since May 6th, nearly one billion dollars has actually been withdrawn from Greek banks. For a small nation like Greece, that is a definitely disastrous number.
At this point, the whole Greek banking system remains in threat of collapsing. If you had cash in a Greek bank, why would not 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 probably decrease significantly. In fact, it has been approximated that Greek residents might see the value of their bank accounts decline by approximately 50 percent if Greece leaves the euro. So if you had cash in a Greek bank, it would just make sense to withdraw it and move it to another nation as rapidly as possible. And as the eurozone begins to decipher, this is a circumstance that we are going to see play out in country after country. As member countries 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 today are only a preview of things to come. Before this crisis is over we are going to see bank runs taking place all over Europe.
If Greece leaves the euro, the effects are most likely to be quite untidy. Those that are promoting the concept that a “Grexit” can be carried out in an organized fashion are not being especially truthful. The following is from a current short article in the Independent …”Whoever informs you a Greek exit would be no huge deal is an idiot, lying or disingenuous,” stated Sony Kapoor of the European think-tank Re-Define. Economists fear that a disorderly exit would trigger a big run by financiers on Spanish and Italian financial obligation, forcing those countries to look for support from an EU bailout fund, which, with a capability of just EUR500bn, is commonly considereded as too little to handle those pressures.
A Greek exit from the euro would not only lead to a work on Spanish and Italian bonds, but it would also likely result in an operate on Spanish and Italian banks.
If Greece is allowed to leave the euro, that will be a signal that other countries will eventually be permitted to leave too. Nobody in their best mind would desire their euros stuck in Spanish or Italian banks if those nations end up transforming back to nationwide currencies.
Worry is an effective motivator. If Greece transforms their euros back to drachmas, that will be a clear signal that all euros are not created similarly. The race to move cash into German banks will speed up significantly.
And a Greek exit from the euro is looking more most likely with each passing day. Even the IMF is now admitting that it is a very genuine possibility … Christine Lagarde, head of the IMF, warned she was “technically prepared for anything” and stated the utmost effort needs to be made to guarantee any Greek exit was orderly. The result was most likely to be “rather messy” with dangers to growth, trade and financial markets. “It is something that would be incredibly expensive and would pose great threats but it belongs to options that we must technically think about,” she said.
http://www.infowars.com/the-bank-runs-in-greece-will-soon-be-followed-by-bank-runs-in-other-european-nations/
by Michael Snyder
The Economic Collapse
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