June 17th is the date for new Greek elections but it looks like the Greek people are already voting (with their money):
Greek politics: Slouching towards the drachma | The Economist: "Today, cash was being taken away from the banks in orderly fashion. There were no queues outside branches in central Athens or its suburbs. Customers ordered cash by telephone and picked it up 24 hours later. Some went straight into safety-deposit boxes at the same bank; some was stashed beneath mattresses in case Greece has to re-adopt the drachma. "People are taking preventive measures," says one veteran banker. "If you own a pile of euros, you’ll feel rich in a drachma environment."
Despite their enthusiasm for holding on to the euro, Greeks are fed up with the austerity that German politicians say is the price of continued membership. . ."
Paul Krugman: Jogging for the Exit "What’s happening now is a “bank jog” — Greeks are pulling euro deposits out of banks fairly rapidly, but not quite fast enough to be called a bank run. But where are the euros coming from? Basically, banks are borrowing them from the Greek central bank, which in turn must borrow them from the European Central Bank. The question then becomes how far the ECB is willing to go here; is it willing, in effect, to lend enough money to buy up the entire balance sheet of the Greek banking sector, given the likelihood that this sector will be left insolvent by Greek default? Yet if the ECB says no more, Greek banks stop operating — and it’s hard to see how they can be restored to operation except by ditching the euro and using something else. And if that happens, surely depositors in other European countries will start their own bank jogs …"
Question: If you owned a pile of euros, wouldn't you be better off converting them to pound sterling or U.S. dollars?
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When the facts change, I change my mind. What do you do? -- John Maynard Keynes
Wednesday, May 16, 2012
Greece and the Eurozone: Voting with your Money
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