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Greek Banks, Stock Exchange to Remain Closed From Monday
- randomname2 11y agoBanks are to remain closed until at least July 6th: http://en.protothema.gr/breaking-capital-controls-taken-banks-to-remain-closed-for-one-week/ http://en.protothema.gr/breaking-capital-controls-taken-bank... The stock exchange will also remain closed according to Reuters: http://www.cnbc.com/id/102793367 http://www.cnbc.com/id/102793367
- zatkin 11y agoDid you mean July 6th?
- randomname2 11y agoYes, thanks. I have updated the comment. As a sidenote, this doesn't have to be a huge deal necessarily. Recall the US closed every bank for 8 days in March 1933. Life goes on.
- nkozyra 11y agoWell that was a pretty huge deal in the U.S. in 1933. Life goes on, but as many can attest having gone through the crisis worldwide at varying levels from 2008 -> 2013/2014/present, it's not always pleasant.
- agiamas 11y agoexactly. Life will always go on, but I can attest that it is a big deal, especially for businesses that already have a hard time surviving in the hostile Greek environment...!
- jotm 11y agoI doubt anyone here is able to recall that :-). And from what we know, those were some of the worst times in recent US history...
- pibefision 11y agoAs an argentinean, who lived the same experience in 2001, I can say this is very bad. I live in Europe now, and most people in this part of the world does not understand the idea and consecuencies of an economic issue like this. My hope is that the greek government, in some way, find a new agreement soon.
- vonklaus 11y agoCan you provide some color on this? What was it like when a gov't closed banks to avoid a financial apocalypse? edit: would be interested in your experience if you feel comfortable giving it. Interested if new mediums of exchange took place and just generally how it played out as I am not familiar with the Argentinean crisis at all.
- the-dude 11y agoNot OP, not Argentian but watched a proper Dutch documentary about it : http://tegenlicht.vpro.nl/afleveringen/2011-2012/Argentinie.html http://tegenlicht.vpro.nl/afleveringen/2011-2012/Argentinie.... Teachers don't get paid : need to fabricate and sell souvenirs to tourists on the beach. Every day. Large black markets are created, adhoc currencies get created, lots of crime ( burglaries, robberies ), people living of collecting waste paper etc.
- VLM 11y ago"adhoc currencies get created" Remember that day Google shut down Reader, and ready or not it was demo day for every competing rss feed reader? This is demo day for bitcoin or dogecoin or whatever other digital currency you can think of. Now I'm not claiming any will succeed, but I am claiming its going to be demo day, ready or not. My gut level guess is the next Greek currency is far more likely to be the Ruble than BTC, but whatever, its still gonna be demo day for BTC even if it fails. The next quarter or so will be an exciting time to work at a place like Coinbase.
- Frondo 11y ago
- fweespeech 11y agoWell this is terrible for the Greek people in the short term but its probably for the best in the long term. They have to default and the ECB just won't allow that.
- fiatmoney 11y agoHistory is full of examples of disallowed things happening.
- fweespeech 11y agoOf course but that doesn't change the fact the ECB would cut off the tap in that scenario.
- VLM 11y agoThis a really good system design example, if a situation is possible and you don't design that situation into the system, then you will run the system in uncharted territory, eventually. Probably running it off the rails.
- spacefight 11y agoThis is really bad for the people of Greece. I have seen small bank runs with my own eyes where folks queued for hours to get their savings rescued. ($bigCorp going down with internal bank). Bad sad bad.
- matt4077 11y agoIt worked out quite well in Cyprus in 2012. So just by itself, capital controls aren't the end of the work.
- spacefight 11y agoGreece is much larger than Cyprus, their debt is much bigger in absolute values and the outcome of the current status so unknown that it's very difficult to compare the current capital controls against those implemented in Cyprus.
- drinchev 11y agoHey there, are there any Greeks in startup/tech scene that want to express opinion on whether the government is doing the right thing about this referendum? I'm really short on quality, direct feedback about what Tsipras is doing. All I can read about the topic is politics influenced.
- mhb 11y agoI don't know why Greek geeks, in particular, would have any insight, but here is what some economists think: http://marginalrevolution.com/marginalrevolution/2015/06/the-not-very-serious-people-call-for-greferendum.html http://marginalrevolution.com/marginalrevolution/2015/06/the...
- orless 11y agoNot sure if it's of much relevance, but my ex-collegue blogs on Greek start-ups: * http://eulenausathen.com/ http://eulenausathen.com/ * https://twitter.com/eulenausathen https://twitter.com/eulenausathen
- geonik 11y agoGreek startup owner here. Our government is trying to recover from a mistake by commiting a bigger one. Our Varoufakis-illusioned prime minister thought that he could force a better deal from Eurozone members by blackmailing with a worldwide economic Lehman Brothers moment. This obviously didn't work, and the referendum theatre was setup to cover up the failure. That in turn, is a huge gamble, putting the country's prospects for generations to come at risk.
- crdoconnor 11y ago>Our Varoufakis-illusioned prime minister thought that he could force a better deal from Eurozone members by blackmailing with a worldwide economic Lehman Brothers moment. "Better deal" meaning "a deal which doesn't involve breaking promises they made to the electorate". Clearly such a deal wasn't possible, hence here we are. The idea that this is somehow blackmail is ludicrous.
- 11y ago
- ucha 11y agoI recommend reading this short article published on The Economist to get a grasp of the consequences of Greece defaulting. For Greece the gains from defaulting would be slight, and the costs potentially vast. True, the country could walk away from debts of €317 billion, or almost 180% of GDP. But that is worth less to Greeks than it sounds. Although the debt is huge, it is at bargain-basement interest rates and repayable over decades. Interest payments until the early 2020s are just 3% of GDP a year. Even for Greece, that is manageable. Nor would leaving the euro do much good. In theory, with a new drachma and its own central bank, Greece could devalue and gain competitiveness. But Greece’s trade is modest. And it has already lowered nominal wages by 16% without a boom in exports. The costs of Grexit still outweigh the benefits By contrast, the cost of Grexit would be exorbitant: bust banks, slashed savings, broken contracts and shattered confidence (see article). Politics could be devastated. Syriza, Mr Tsipras’s hard-left party, is anti-market and anti-enterprise. Neo-fascist Golden Dawn and the Communists, with a combined 12% of the vote, would thrive. Most of the parties in the middle, already discredited, would struggle. This week Mr Tsipras was due to play footsie with Vladimir Putin in Russia. Ejected from the euro, and possibly the EU, a country with a history of coups would risk becoming violent and even more corrupt. http://www.economist.com/news/leaders/21654598-greece-and-euro-zone-are-stuck-abusive-relationship-my-big-fat-greek-divorce http://www.economist.com/news/leaders/21654598-greece-and-eu...
- toyg 11y agoPolitics are already devastated, for the simple reason that all governments pre-Syriza put the country in this mess to begin with, and then simply couldn't find a way out that didn't involve huge social strife. The EU should help the new government correct the situation, if anything because they were elected with a relatively large mandate to do just that, and they clearly have the brains to do it (they took a smalltime ultraleft party and brought it in government, they can't be stupid). Instead, EU governments are scared of... What exactly?
- jacquesm 11y ago> Instead, EU governments are scared of... What exactly? Their own electorate.
- randomname2 11y agoOfficial now, latest headline: GREEK PM TSIPRAS SAYS ECB'S ACTIONS HAVE FORCED THE CENTRAL BANK TO RECOMMEND A BANK HOLIDAY AND CAPITAL CONTROLS
- filereaper 11y agoI'm not very well educated in this area, for anyone else like me, this infographic video really helped explaining the European Debt Crisis. [0] https://www.youtube.com/watch?v=C8xAXJx9WJ8 https://www.youtube.com/watch?v=C8xAXJx9WJ8
- gizmo 11y agoThe first half was reasonable, the second half just bad. It literally portrays Greek people as drinking grappa on the beach while hardworking Germans pay for their lifestyle. Greek people as immoral, Germans as respectable and responsible. That kind of cultural stereotyping is toxic. It's also analytically bad. It argues the problem is fiscal irresponsibility, even though Spain had a budget surplus before the crisis hit. Spain was a model of fiscal responsibility (and was lauded as such), and yet they too went into a deep depression with 50% youth unemployment. The video doesn't even mention the most important cause of the crisis: balance of payments between the north and south.
- adventured 11y agoSpain was wildly fiscally irresponsible in numerous ways. Their total government spending went from $280 billion Euros in 2002, to $450 billion Euros just six years later in 2008. That's a 60% increase in government spending in six years. The government premised their spending on the real estate bubble, which was floating their growth for years prior to the crash. The fall-out from that behavior of course was a tripling of their debt to GDP ratio in just seven years when the crash hit. Their household debt to income ratio went from about 70% in 2000, to 125% by 2007. Spain was living far beyond its means for years, with the bubble temporarily holding off the consequences of that behavior. They weren't being fiscally prudent, they were being fiscally irresponsible by spending as though the bubble would go on forever.
- gizmo 11y agoNot so. Spain's gov't spending to GDP ratio developed in the same way as the Netherlands: http://imgur.com/I5AZaN9 http://imgur.com/I5AZaN9 Spain had a housing bubble, of course. And the housing bubble was the primary cause of the crisis. But there was a bubble in the responsible northern countries too. And in the USA. So it's not the case that Spain was an outlier in terms of fiscal responsibility. Don't forget that Spain had a lower debt to GDP ratio than Germany at the start of the crisis: http://krugman.blogs.nytimes.com/2012/03/07/finally-spain/ http://krugman.blogs.nytimes.com/2012/03/07/finally-spain/ If Spain was irresponsible, then Germany and the Netherlands moreso. Private and commercial borrowing in Spain was a big part of the problem, but because the Eurozone has no trade barriers the government in Spain can't stop it. I'm not saying Spain isn't partially to blame for the mess, but it's not a case of fiscal irresponsibility.
- lordnacho 11y agoThe worst thing is the duration of this. If you're a young Greek, like some of my friends, you're screwed. You either leave your family and go to a foreign country, or you stay and try against hope to get a job so you can start a family. Now it's been several years of this crap and it's going to leave a lasting scar on just about everyone who's old enough to remember it. Whatever they decide, they should have decided it long ago. Go bankrupt, or get a (sensibly sized) haircut from the creditors. But decide before everyone's life is ruined living in a zombie economy.
- bby 11y agoWhy should they care about personal grooming at a time like this?
- TheAlchemist 11y agoAt this point, we can safely say that whatever the scenario, it's going to be very ugly for Greece and not only in the short term. In Europe, there is little compassion for this country though, due to their reputation for laziness and huge tax evasion schemes. I actually remember my holidays there some years ago (beautiful country btw) - most things were paid in cash and in many grocieries I didn't even see a cash register.
- swanson 11y agoThis sounds terrible but how should I invest to capitalize on this? Is there something on Vanguard I can throw some money at and be glad I did in 5+ years?
- ghaff 11y agoIf you feel the need to ask on an Internet discussion board where you should invest to profit from $X, that's probably a good sign that you should just keep your money where it is. Flippancy aside, the most likely result is going to be downward pressure on stocks generally and European stocks in particular.
- Alkim 11y agoSome think the modest rise in bitcoin prices is a consequence of the Greek difficulties. For example: http://www.reuters.com/article/2015/06/16/us-eurozone-greece-bitcoin-idUSKBN0OW2DS20150616 http://www.reuters.com/article/2015/06/16/us-eurozone-greece...
- tomp 11y agoIt's really hard to capitalize on this, because noone really know what's going to happen. The only thing you can bet will happen is an increase in volatility in financial markets, but I'm sure that the counterparty would take that into account and appropriately increase the price of volatility bets. The only thing you can really do is take a one-sided bet (e.g. short/buy Greek bonds), you win if you're right, lose if you're wrong.
- elmar 11y agoBitcoin is not the solution for the Greek government, but could probably be the solution for the Greek people. Why Greece Should Not Switch To Bitcoin http://techcrunch.com/2015/02/28/why-greece-should-not-switch-to-bitcoin/ http://techcrunch.com/2015/02/28/why-greece-should-not-switc...
- bjourne 11y agoI really hope Greece does not cave in to ECB:s demands. Because if they do, it will spread first to Portugal and then to the rest of the EU. And I don't want to have to work until I'm 75, have my vacation weeks cut and my future pension decimated. And I don't think the EU should interfere in how Greece wants to raise their state's income. If they think it is better to raise corporate taxes rather than decrease pensions, the ECB can't just say that's wrong and if you don't do as we say you won't get any money.
- raesene9 11y agoAs far as I'm aware it wasn't so much the ECB that were worried about the debt sustainability of the latest greek proposals as the IMF, who felt that more of the gap should be filled with cuts to benefits as opposed to increases in taxes. The problem with not "caving in" to the demands of their creditors is that if Greece defaults, it's likely to have serious consequences for the affordability of their pension arangements. Whether those are more, or less, serious than the consequences of acceding to the requirements of their creditors is unknown.
- MisterWebz 11y ago...more of the gap should be filled with cuts to benefits as opposed to increases in taxes. What's their reasoning behind this?
- raesene9 11y agoMy understanding (which is purely derived from reading news sites FWIW) is that IMF view heavy tax increases as likely to reduce economic activity in Greece (i.e. companies will go elsewhere to do business) and that this would have a bad effect on tax receipts, so would be in essence, self-defeating...
- smitherfield 11y agoBecause tax evasion is so rampant in Greece, the IMF reasons (correctly) that tax increases wouldn't raise anywhere remotely as much revenue as Syriza claims they would.
- Alkim 11y agoIt is interesting to speculate how the climate in Greece might be different if bitcoin had been more widely adopted there prior to this meltdown. No central control. No banks to close. It is something that Greek officials joke about: http://www.reuters.com/article/2015/06/05/us-digital-currency-greece-idUSKBN0OL0JR20150605 http://www.reuters.com/article/2015/06/05/us-digital-currenc...
- quonn 11y agoThe greek people have made it very clear that they want the euro. They don't even want their own currency and they certainly don't want bitcoin.
- raesene9 11y agoIn some ways it might improve things in the short term as financial transactions could continue absent banking requirements, however in the long term I would suggest it would be a bad thing for the greek economy. One of the major recurring themes of the greek economic problem, has been tax avoidance/evasion which has reduced the amount of money that the government have to support themselves. With bitcoin's less traceable nature, it seems likely that it's introduction would make the job of efficient tax collection even harder, which would in turn cause even more problems for the greek economy.
- Alkim 11y agoRecent events in the Silk Road criminal trials suggest that governments have the ability to trace BTC transactions to a useful degree--witness the guilty pleas of two former federal law enforcement personnel for enriching themselves via extorting bitcoin. Yes, it does take a different mind set from conventional banking records, but ultimately everything is recorded in the blockchain.
- raesene9 11y agoThose were 2 very specific cases, I don't think you can usefully extrapolate to a government level ability to track blockchain transactions to real identities, especially when one of the main selling points of bitcoin transaction is that (if done correctly) they cannot be tied to a real identity!
- guelo 11y agoWhat's crazy is that EU won't give Greece an extension for the referendum. The negotiations stalled over small issues like if they're going to raise the retirement age to 67 in 2022 or 2025. This all seems like political moves, the EU wants to force a failure of the leftist party and make an example of the country.
- thesumofall 11y agoI don't see it the same way. A referendum can be acceptable (but why so late and why behind the backs of the Eurogroup?). But what is not acceptable is that Tsipras is telling the public to vote No. Why would anyone want to extend loans to someone who does not want a deal to come through?
- guelo 11y agoThe EU is also free to tell the people how to vote, and they've already started doing this. But they don't like populism, they'd rather governments impose austerity via diktat.
- tomp 11y agoTsipras is telling the public that he does not support the agreement. The public will have to decide if they want to avoid the potential negative consequences of no agreement (exit of Euro, EU, ...) more than they dislike the agreement.
- raesene9 11y agoThe problem with the extension for the referendum is that it would cost the ECB Billions of Euros in increased ELA support that would need to be provided (without capital controls this week, it's a fair bet that anyone who can get their money out of a greek bank, will get their money out of a greek bank). when you have the ruling party actively campaigning for a No vote, that could be seen as throwing good money after bad, and at the end of the day the other member states will ahve to pick up the tab for any money that is lost if Greece defaults on their debts.
- DangerousPie 11y ago
- chinathrow 11y agoThis is a perfect reminder for everyone about how the fractional reserve banking systems works and where the limitations and risks are. We as a society (all of us including the rich and the poor, the bright and the dumb) need to rethink how we allow the banks to (be it accidentally or not) destabilize a financial system only by the volume of its debt. Some say capital controls are only of temporary measures but still, I feel that this is something which must be avoided by future rules and regulations. https://en.wikipedia.org/wiki/Fractional-reserve_banking https://en.wikipedia.org/wiki/Fractional-reserve_banking
- jayess 11y agoI don't understand the munchhausen syndrome-like attachment to the Eurozone that Greece seems to have. Are we not noticing some hugely important positive benefit from eurozone membership that Greece has enjoyed? Enough to virtually completely give up sovereignty and self-determination? Enough to subject the nation to foreign oppression by technocrats and bankers? How is it even a close question?
- chinathrow 11y agoNo exchange rates for trade are considered "hugely important positive" for all countries within the EU who are part of the Euro. But yes, your other points sure are valid remarks and I bet those questions are being posed nonstop within .gr.