The Greek Bank Run Begins – ATMs Run Out Of Cash

The Dollar Vigilante began in 2010, just a few months after Greece's last government debt crisis.  That crisis was “solved” by putting a bankrupt country into more debt.  We commented at the time that not only did that not actually fix the problem but it just made it worse.

At the time, we commented that all they were doing was kicking the proverbial garbage can down the road.

Since, of course, debt to GDP has risen from 129.7% to over 175% by 2013, and once again the Greek government is out of funds.  Negotiations have gone on for months about whether the Greek government would cut back expenses dramatically (like any regular business in this situation would) – a process called “austerity” – or if the country and its reluctant officials would be ejected from the EU.

In January of this year, the “anti-austerity” Syriza party ran on the platform of not making budget cuts AND still staying in the eurozone.  That would be like you being bankrupt but still living in a nice house with a mortgage and telling the bank, “I'm sorry, we took a vote at home and we aren't going to pay back the mortgage and we are just going to stay in the house.”

Greece is the birthplace of democracy, after all, so they are going to hold another vote this week… what the vote is about still remains a mystery, but the only reasonable vote, this time, would be whether you want to make massive budget cuts or if you'd like to stay in the eurozone.  Eventually reality has to hit.

In the meantime, a clearly clueless Greek public just this weekend realized that maybe it should take some funds out of the country's bankrupt banking system!

Within a matter of hours most bank machines already were out of cash.

One woman fainted when she found out the bank was out of cash and many are beginning to panic.

It's hard to feel sorry for these people, however, as what kind of clueless lunatic would keep their life savings in a Greek bank for the last few years?  Many figured that since they “voted” that they don't want austerity AND want to keep the euro that that was the end of that!

Anyone aware of reality however should have known this was a very risky thing to do.

The sad thing is that it is very easy to open bank accounts around the world (TDV Offshore offers numerous jurisdictions with no travel necessary).  All anyone in Greece had to do to avoid this issue was to have a bank account in another jurisdiction.  Or own some precious metals.  Or even some bitcoin (all of these things we recommend highly and give specifics on how in the TDV newsletter).

WHAT HAPPENS NEXT

So, what will happen?  Will Greece undertake austerity (which includes major pension cuts) or will they Grexit and leave the euro behind and even the EU.

Either path contains a lot of pain for many Greek citizens and will surely aggravate the current quasi-depression.

I am going to make a guess, however, and say that Greece ends up with some sort of austerity. Part of this is theater, after all. Eurocrats love to approach the brink before pulling back. It places the spotlight on them endlessly while reinforcing the idea that only a handful of souless bureaucrats have the power to make Europe and its citizens solvent or insolvent.

Then there are the polls  (who can believe polls these days?) that show many Greeks apparently prefer to be in the EU and euro rather than out.

The architects of the EU are well aware that the EU is part of a greater scheme toward building a one-world government. In fact, those negotiating Greek's status on BOTH sides of the table have a stake in that noxious program, and having such a high profile failure would surely undermine that plan.  A Greek default would cause financial reverberations throughout Europe and likely set off yet another full-blown crisis.

Of course, maybe that is the idea as well. Create an unmanageable crisis and then seize yet more centralized power using the “emergency” as a justification.

What is certainly clear is that many Greeks evidently waited until what may be the final weekend of this rolling collapse to take their funds out of their bankrupt banks.  It's really incredible and just goes to show the old saying, “better a year early than a day late” is wise.

Don't be smug about what's going on Greece (if you have the temptation). One way or another – sooner or later – this will happen throughout most of the Western world. And it will happen in America.  Are you prepared or are you going to wait until the very last day to try to salvage your assets?