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Old 06-28-2015, 02:10 PM   #61
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My view hasn't changed since last year, in this post:

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A little bit of the abstract, but looking at the situation in Greece today, could be a microcosm of what could happen to the US as the FED stops selling bonds, and goes away from quantitative easing. Greece is considering some options to stop relying on the IMF, World Bank, and the European Central Bank. They are also looking at departing the Euro. None of these options are good, and could result in bankruptcy.

In any case, Greece could be a bellwether for the US... not today or tomorrow, but in the years ahead. The current US Debt is $18 trillion, or about $56K per US citizen, while the total unfunded liabilities are more than $115 trillion, which works out to nearly $1 million per Taxpayer. It's not possible for the FED to print that much money.

So, just for curiosity's sake, watching what happens with Greece in the next year, should prove interesting. Of all the PIGGs plus Ireland, Greece may be the closest parallel with the US.

Nothing to fear in the near time, but 5 to 10 years is well within current company's lifespan.
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The only recent factors that seem to be potentially influential in the transition might be the new position of Cash, and negative interest rates. It appears that banks will not be required to mark to market, avoiding the ultimate danger.

Imagine... prognostications from one who has been wrong about the market for four years.

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Old 06-28-2015, 02:31 PM   #62
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Bloomberg reports Greece has temporarily closed it's banks. Greece Shuts Banks to Avert Collapse After ECB Freezes Support - Bloomberg Business

I lived through a banking shut-down and partial collapse, and it is truly painful. I feel for the Greek people, there is much pain ahead and now no way to avoid it.

Edit to add: FT with more detail http://www.ft.com/intl/cms/s/0/49775...#axzz3eN7R3Ond

This is a real challenge - capital controls when the gov't does not manage the currency.
I know you mentioned this before and I forget what South American country it was.

This has been such a slow moving drama, I don't know why any moderately intelligent citizen wouldn't have taken all of their money out of short term checkings and savings months ago. Plus moved any long term money to another country. Or is is more complicated and harder to do this than I'm imagining.

Could you explain what happened to you before and during the bank shut down and default.
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Old 06-28-2015, 02:33 PM   #63
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Where would they be taking the money?

Most of the affluent Greeks probably already have accounts in other countries.
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Old 06-28-2015, 03:13 PM   #64
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Where would they be taking the money?

Most of the affluent Greeks probably already have accounts in other countries.
Clearly sticking it under the mattress is a better spot than having it in a Greek bank. Depositor lost money in Cyprus, no reason to suspect it won't happen in Greece.
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Old 06-28-2015, 03:15 PM   #65
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I know you mentioned this before and I forget what South American country it was.

This has been such a slow moving drama, I don't know why any moderately intelligent citizen wouldn't have taken all of their money out of short term checkings and savings months ago. Plus moved any long term money to another country. Or is is more complicated and harder to do this than I'm imagining.
There are many reasons to have cash or liquid assets in the country, "take the money out" is much easier said than done and really isn't an option for most people or enterprises. Most people and businesses in Greece and the rest of the world are just like we are in the US - not a lot of cash or liquid assets sitting there doing nothing. People on this forum are different.

The banking system needs to reopen quickly - Wednesday or Thursday. The continuous flow of money is critical for an economy to work, and this one has been interrupted. The gov't will want to allow the flow of currency for day to day needs and business operations but interrupt the flight of large amounts. Easier said than done, eh? They will probably attempt to impose transaction limits. The problem is that business operates on credit, that has come to a halt, so the recession in Greece is now a reality. It will get much worse from here unless Greek banks can extend credit when they reopen, and for that they need the ECB backstop.

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Could explain what happened to you before and during the bank shut down and default.
I lived through capital controls twice and one banking system default. The banking crisis was easy enough, The top 2 banks collapsed one week, then 8 of the next 12 went over a few months. The total cost was about 30% of the GDP. The gov't announced an FTIC type solution where it guaranteed some deposits, and was good to it's word - a year later, after about 65% inflation, people got back some of their money.

A few of us were fortunate to have our bank accounts in one of two banks that took personal accounts and paid less than half the interest everyone else paid but was balance sheet strong made it through without any paper losses. Over the following year we all still lost from 65% inflation and 25% interest, and around a 70% loss in currency value. Crime skyrocketed as people were forced to shop with cash - no checks or credit cards.

It was a real blow to one's net worth, but there was no way out.
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Old 06-28-2015, 03:35 PM   #66
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With the amount of tax evasion going on, a lot of tourist businesses probably only take cash.

Sounds like a lot of the hospitality industry on the islands want to keep the gravy train going so would oppose anything that would disrupt business, especially now the peak tourist season.
In Athens, just about everyone will take credit. But cash is encouraged, many times you'll get a generous discount. Think about that...

In rural areas, some only take cash. But still, credit is accepted most places.
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Old 06-28-2015, 05:19 PM   #67
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Worldwide, Greece has the largest commercial fleet than any country (including US & China), and that income is untaxed by international treaties.
Except the moment they try taxing that fleet it will be gone. Easy to change a ship's flag and once that is done Greece can try taxing foreign tonnage, but it will be pretty much impossible to make it stick for more than 6 to 12 months.
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Old 06-28-2015, 05:20 PM   #68
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In Athens, just about everyone will take credit. But cash is encouraged, many times you'll get a generous discount. Think about that...

In rural areas, some only take cash. But still, credit is accepted most places.

In Italy, some businesses will shake their head if you try to use a card, especially on a small transaction, or say their terminal is broken, or just ask for cash.

Of course the Italians are also known for tax evasion.

I've gotten to asking restaurants before I sit down or order whether they will take credit cards. I think they get the hint that if they say no, I may go elsewhere or not order as much.
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Old 06-28-2015, 05:23 PM   #69
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The Guardian is tracking the event here:

Greek crisis: Banks shut for a week as capital controls imposed - live updates | Business | The Guardian

Some of the interesting items being claimed, which I haven't seen elsewhere:

1. Banks will be closed until July 7th.
2. ATM withdrawals may be limited to €60 a day.
3. Jack Lew has urged the IMF, France and Germany to act.

Oh and this, Dow futures off by over 320 points, S&P by 40 points, NASDAQ by over 70 points Sunday evening.
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Old 06-28-2015, 05:45 PM   #70
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Originally Posted by explanade View Post
The Guardian is tracking the event here:

Greek crisis: Banks shut for a week as capital controls imposed - live updates | Business | The Guardian

Some of the interesting items being claimed, which I haven't seen elsewhere:

1. Banks will be closed until July 7th.
2. ATM withdrawals may be limited to 60 a day.
3. Jack Lew has urged the IMF, France and Germany to act.

Oh and this, Dow futures off by over 320 points, S&P by 40 points, NASDAQ by over 70 points Sunday evening.
Considering the market moves I saw in 2008, that seems like peanuts.

It isn't obvious to me why Greece should not be left to default and leave the Euro. They don't seem to want to stay in and it would be a good object lesson for any other periphery nations thinking about backsliding.
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Old 06-28-2015, 05:51 PM   #71
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Sounds like a buy opportunity

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Old 06-28-2015, 06:09 PM   #72
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So the thing to look for is not the Euro but the periphery bond markets.

IOW, look for signs of contagion or investors betting on contagion.
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Old 06-28-2015, 06:17 PM   #73
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So the thing to look for is not the Euro but the periphery bond markets.

IOW, look for signs of contagion or investors betting on contagion.
Just a guess, but before the Euro bond markets open I would expect the EU finance apparatus to announce support measures for non-greek bonds.
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Old 06-28-2015, 06:24 PM   #74
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So that means they would support other countries which are also in trouble but it's just Greece they want to cut loose?
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Old 06-28-2015, 07:13 PM   #75
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As of now: Banks to close

Greece will close banks Monday as panic spreads - The Washington Post

From crisis to crisis...
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File Type: jpg 2300Greece.jpg (483.1 KB, 19 views)
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Old 06-28-2015, 07:13 PM   #76
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The Economist has a well-written and concise (as usual) recap of the Greek situation (here), written just prior to the Greek decision not to open their banks tomorrow. Things are changing quickly, and it appears that the thing the Greek referendum is about (to accept EU austerity measures in order to gain more support from the EU) is not even on the table anymore.

In part:
Quote:
After having insulted his euro-zone partners last night Mr Tsipras said he would ask them for a "short extension" of Greece's bail-out, which expires on June 30th, to cover the period of the referendum. At their meeting today, finance ministers outright rejected that suggestion. Without a radical change of direction from Mr Tsipras, therefore, the bail-out will expire on June 30th, along with €16.3 billion in potential bail-out support, and Greeks will be voting on a defunct proposal. The meaning of a "yes" vote will be impossible to divine.
But, the good news: Investors can get Greek 3 yr Treasury bonds that yield over 20%. The bad news: They'll be paid in "New Drachmas" physically available in attractive Greek coins made of a very attractive zinc/Bakelite alloy.
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Old 06-28-2015, 07:23 PM   #77
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Within the first 24 minutes of trading today the Australian stock market is down 1.98%
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Old 06-28-2015, 07:29 PM   #78
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In Italy, some businesses will shake their head if you try to use a card, especially on a small transaction, or say their terminal is broken, or just ask for cash.

Of course the Italians are also known for tax evasion.

I've gotten to asking restaurants before I sit down or order whether they will take credit cards. I think they get the hint that if they say no, I may go elsewhere or not order as much.
Yes, this describes Greece well too.
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Old 06-28-2015, 07:30 PM   #79
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Watch what Russia does here. Putin will not miss a chance to stick a thumb in the eye of Europe even if it costs his kleptocracy some resources it can ill afford to part with. It's a situation made for him.
He'll offer Tsipras something, and Tsipras will take it to spite Brussels, and to demonstrate to the public that they don't need those who are "trying to humiliate the Greek people."
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Old 06-28-2015, 07:31 PM   #80
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...This has been such a slow moving drama, I don't know why any moderately intelligent citizen wouldn't have taken all of their money out of short term checkings and savings months ago...
Complacency or inertia, I guess. Plus it is human nature to be optimistic, to think that things will work out somehow, some way. People keep shaking their head, saying "Nah, no way it could get that bad". That attitude happens time and time again through history. Not just in financial crises, but when wars or revolutions broke out, some people are still in denial mode till the end.
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