Greeks Panic, Pull Nearly $900M Out Of Their Banks In a Day

[Anonymous]

Greeks Panic, Pull Nearly $900M Out Of Their Banks In a Day

Thing One: Greeks Walk, Don’t Run, From Banks: It’s not exactly a panic or a full-blown bank run yet, but it looks like Greece is starting to speed-walk away from its banks — and maybe the euro.

Greeks pulled nearly $900 million out of their banks on Monday and seemed to be withdrawing money at a similar pace on Tuesday, Reuters reports. It could be the early, warm-up phase of a full-fledged bank run, which would be very bad news indeed for Greece and the rest of Europe, and probably the U.S., too. Greek banks are leaning ever more heavily on the European Central Bank for funding, writes the Wall Street Journal. The bank withdrawals came after Greek political parties failed to come up with a coalition government, meaning there will be elections next month, from which anti-austerity parties are likely to gain even more strength. That makes it even more likely that Greece will back out of deals to exchange austerity for bailout cash. That makes it even more likely that Greece will end up leaving the euro zone.

And that’s why people are pulling their cash out of banks now — if Greece is going to leave the euro, Greek deposits could suddenly lose value in a big hurry. The risk is that a full-on bank run could bring down the Greek financial system, causing the euro exit that depositors fear anyway, the WSJ writes. New French President Francois Hollande, after having his airplane struck by a lightning bolt from Zeus, met with German Chancellor Angela Merkel to discuss the European mess, and they offered to help Greece grow as long as it stayed committed to austerity. There may need to be quicker action than that soon, or this could be another ugly summer for markets and the economy on both sides of the Atlantic.

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May 17, 2012 at 7:54 AM