Greece Suffers Biggest Bank Run In History: January Deposits Plunge To 2005 Levels

Zero Hedge ^ | 02/26/2015 | Tyler Durden

[SeekAndFind]

One of the biggest question marks surrounding the Greek negotiation and ultimately, bailout extension, was just how panicked was the Greek population and domestic corporations. Recall that as explained previously, the tension boiled down to this: the Troika did everything in its power to accelerate the bank run in order to crush any negotiating leverage Varoufakis may have; Greece on the other hand was desperate to make its cash drain appear far better than rumored.

Moments ago the Bank of Greece presented its latest, January, deposit data. And it's a doozy: following a record €12.2 billion monthly outflow, greater in absolute and relative terms than anything experienced during any of the previous Greek crises and bailouts, the total amount of Greek corporate and household deposits has now tumbled to just €148 billion, down 7.7% from the month before, and down 10% since November. This number is in line with some of the more pessimistic expectations, and brings the total cash holdings at Greek banks to the lowest level since August 2005.

What's worse is that the outflow has most certainly continued in February, when according to rumors another €10 billion or more may have been withdrawn. And while the new FinMin is desperate to make it seem that now that Greece has a can kicking bailout extension "deal" the bank run has stopped, this is very much in doubt.

One thing is certain: Greek banks, already crushed by record NPLs somewhere in the 40% range, and without any equity buffer, are now all, without exception, dead banks walking following this latest cash rush. And absent another bailout - one which S&P calculated in October will need to fund Greece with more than €40 billion in additional cash - and one which will come with even more draconian conditions, we simply don't see how Greece gets away from its current "self-reinforcing feedback loop" predicament without Cyprus-style capital controls.

[Eric in the Ozarks]

If you like your money, you can keep your money...

[VanDeKoik]

Oops!

[circlecity]

After Greece previously confiscated a portion of everyone’s deposits following a freezing of accounts, I can’t believe anyone is leaving a dime in those banks. Certainly no more than necessary to cover the bare minimum monthly checks being written for rent and other expenses.

[grania]

After Greece previously confiscated a portion of everyone's deposits...

This I'd think is the final straw. People aren't going to leave money in banks if it's not safe.

We share a problem with Greece. The Greeks elected a government to do something. Instead it's "meet the new boss, same as the old boss".

[VRW Conspirator]

This is a slow-motion cascade of troubles.

[cuban leaf]

Certainly no more than necessary to cover the bare minimum monthly checks being written for rent and other expenses.

---

I live in Kentucky and that is my strategy regarding US banks. I have no money in banks other than my daily income and expenses. Anything extra is put into pre-paying loans, real estate and other tangible assets, including mattress cash.

[KarlInOhio]

What could happen? Well, the bank could shut down and keep your money. The government could confiscate it to keep the banks open. Withdrawals could be limited for the same reason. Greece could leave or be thrown out of the euro, converting all of your euros into plummeting new drachmas. And that might happen to the deposits of Greek citizens anywhere in the EU. The list of good results from keeping you money in the bank is considerably shorter.

If youu thought Greeks bearing gifts was dangerous, just wait until you see them bearing a tin cup.

[GBA]

I've heard, but not read the fine print, that the money we put in the bank (savings, checking, safety deposit boxes) becomes the bank's property and, should the SHTF, they don't have to give it back.

Has anyone read the fine print or researched this to know if it's true or if it's just a fear provoking rumor?

As fear provoking rumors go, it's pretty good and very effective on me.

[I want the USA back]

I don’t care what happens to a country that just elected communists.
Just don’t give them any money.

[dfwgator]

Who didn’t see this coming?

[catnipman]

“or if it’s just a fear provoking rumor”

There was some BS to this effect floating around the tinfoilhatosphere a few weeks ago about some world organization or other wanting to promulgate rules to this effect. But without a treaty anything like that would be meaningless in the U.S. On the other hand, Obama does whatever he wants anyway, so he if he declared all U.S bank assets frozen, then they’d be frozen, laws or no laws.

[PGalt]

Democritus contributed two important strands of thought to the development of economics. First, he was the founder of subjective value theory. Moral values, ethics, were absolute, Democritus taught, but economic values were necessarily subjective. “The same thing,” Democritus writes, may be “good and true for all men, but the pleasant differs from one and another.” Not only was valuation subjective, but Democritus also saw that the usefulness of a good will fall to nothing and become negative if its supply becomes superabundant.

Democritus also pointed out that if people restrained their demands and curbed their desires, what they now possess would make them seem relatively wealthy rather than impoverished. Here again, the relative nature of the subjective utility of wealth is recognized. In addition, Democritus was the first to arrive at a rudimentary notion of time preference: the Austrian insight that people prefer a good at present to the prospect of the good arriving in the future. As Democritus explains, “it is not sure whether the young man will ever attain old age; hence, the good on hand is superior to the one still to come.”

In addition to the adumbration of subjective utility theory, Democritus’s other major contribution to economics was his pioneering defense of a system of private property. In contrast to Oriental despotisms, in which all property was owned or controlled by the emperor and his subordinate bureaucracy, Greece rested on a society and economy of private property. Democritus, having seen the contrast between the private property economy of Athens and the oligarchic collectivism of Sparta, concluded that private property is a superior form of economic organization. In contrast to communally owned property, private property provides an incentive for toil and diligence, since “income from communally held property gives less pleasure, and the expenditure less pain.” “Toil,” the philosopher concluded, “is sweeter than idleness when men gain what they toil for or know that they will use it.”

Democritus (c.460-c.370 BC)

http://mises.org/library/it-all-began-usual-greeks

[familyop]

See Argentina.

[Reagan Disciple]

As much as the gov’t may want to freeze deposits here in the US given BO’s lawlessness, the fall out on the bond and stock markets would send the world into a tizzy. People will run sell what they can there in an attempt to circumvent the freeze, which would start a contagion.

It's not going to happen outright. You would need another depression (and one much larger than the one in the 30s) to provoke that action.

Not to say keeping money at home is a bad thing, it's not at all. Just no need to stuff every couch cushion.