A tsunami of capital flight from Greece threatens to overwhelm the authorities, forcing the country out of the euro before fresh elections in June. Economists warned that the Greek financial system could crumble within weeks or days unless the European Central Bank steps up support.
In which case the Greek financial system will crumble within weeks...
President Karolos Papoulias told party leaders that banks had lost €700m in withdrawals on Monday alone as citizens rush to pre-empt capital controls and a much-feared return to the Drachma.
He cited central bank warnings that "great fear" might soon escalate to panic. The leaked details lend credence to claims that capital flight by both savers and firms have reached €4bn a week since the triumph of anti-bailout parties on May 6.
Steen Jakobsen from Danske Bank said outflows are becoming unstoppable, not helped by open talk in EU circles of `technical' plans for Greek withdrawal.
"This has a self-fulfilling prophecy built into it and I don't think we can get to June. The fuse is burning and the only two options now are a controlled explosion where Germany steps in to ensure an orderly exit, or an uncontrolled explosion," he said.
The economist Bill Black recently had the following to say about the TBTF banks and the disingenuous Jamie Dimon: All of the systemically dangerous institutions failed [since 2008] in large part because of these financial derivatives - what we call the green slime. That's what brought down Fannie and Freddie and Lehman Brothers and Bear Stearns and Washington Mutual, Lehman, Merrill Lynch and Wachovia. After those catastrophic disasters that caused the Great Recession, cost six billion [sic] Americans their jobs directly, prevented another five to eight million jobs from being created, helped lead to a global crisis called the Great Recession--after that, the banks still fought to be allowed to do exactly the same kind of derivative trades [that largely caused the current Recession]. And even when the Volcker Rule was adopted, over the banks' opposition and over the opposition of the Federal Reserve and of Treasury Secretary Timothy Geithner, they gutted the rule--at least the draft rule to implement the Volcker Rule. Unless it is changed, the Volcker Rule will be essentially unenforceable, because the current draft allows financial institutions to simply call their trades "hedges", even though they operate exactly opposite to the way a hedge would work.
Bill Black will never appear on "The View". He is not simple-minded enough to appeal to the constituency of "The View".