if the banks are fractional reserve banks, as all modern banks tend to be nowadays, then i wonder if the banks have enough to cover a bank run on savings and checking accounts.
if they do not have enough to cover a bank run, then the banks will collapse and people will soon run out of money.
income from tourism and shipping industry alone might not be sufficient to aid a short term recovery.
if so, the question then becomes what happens when most people in an entire country run out of money.
there is a fundamental misunderstanding of fundamental economics among ordinary people. the greeks are living proof of this. they vote themselves off an economic cliff.
maybe it is time for a few months of tough love and let the world discover what happens when economic fundamentals are ignored. Either that, or other countries will follow greece and have their hands out to more developed (and generally harder working countries).
i’ve traveled in greece recently and my observation is that in general the greeks are chiselers. in general they seem quite willing to cheat foreigners out of money, lie about their intentions, and treat others less well off than they are with contempt.
so, the only cure for greece in my mind is a few months (or a few years) of tough love.
Remember the Greeks also elected two hard core socialists before this government. Andres Papandreou and his son George
Papandreou. The problems of the Greek economy and spending other people’s money have been going on for probably at least 40 years.
“there is a fundamental misunderstanding of fundamental economics among ordinary people. the greeks are living proof of this”
Are you sure it’s the Greeks who don’t understand?
They seem to understand that debt is money, that the more you borrow the “richer” the lender becomes, and that paying it back is not a question of “fundamental economics” but rather a question of politics and poker.
I bet you that, in six months, Greece will have screwed over the German banks, that the German banks will grin and like it, because they have no choice, and that, like Iceland, the Greeks will be better off.