Posted on 04/20/2015 7:07:12 PM PDT by Rusty0604
Earlier today, following weeks of speculation, Greece finally launched the first shot across the bow of capital controls, when it decreed that due to an "extremely urgent and unforeseen need" (ironically the need was quite foreseen since about 2010, but that is a different story), it would be "obliged" to transfer - as in confiscate - "idle cash reserves" located across the country's local governments (i.e., various cities and municipalities) to the Greek central bank.
Several hours later the decree which was posted in the government gazette has finally percolated among the population, and the response to what even ordinary Greeks realize is now the endgame, is less than exuberant.
Bloomberg reports, that "as Greece struggles to find cash to stay afloat, local authorities say they oppose a government decision to use their reserves for short-term financing."
“The government’s decision to seize our reserves not only raises legal and constitutional issues, but also a moral one,” said George Papanikolaou, mayor of Glyfada, the third-largest municipality in the metropolitan region of Attica after Athens and Piraeus. “We have a responsibility to serve our citizens,” Papanikolaou said by phone on Monday. Glyfada has about 16 million euros in cash reserves, he said.
George is unhappy because as recently as tomorrow, he will find there is precisely zero euros in his public bank account, as all the money has now been forcibly sequestered by the government in order to repay future Troika, pardon, IMF obligations.
Sadly for Greece, this is the only option left as the money has now fully run out: Greek Prime Minister Alexis Tsipras ordered local governments and central government entities to move their cash balances to the central bank for investment in short-term state debt.
From Bloomberg:
The decree to confiscate reserves held in commercial banks and transfer them to the Bank of Greece could raise as much as 2 billion euros ($2.15 billion), according to two people familiar with the decision. The money is needed to pay salaries and pensions at the end of the month, the people said.
“It is a politically and institutionally unacceptable decision,” Giorgos Patoulis, mayor of the city of Marousi and president of the Central Union of Municipalities and Communities of Greece, said in a statement on Monday.“No government to date has dared to touch the money of municipalities.”
It took the radical leftist one all of 2 months since coming to power.
And the punchline is that the use of confiscated proceeds is unclear: the government says it is to pay pensions and wages, but recall that the same government recently confiscated pensions to repay the IMF, so according to the chain of logic, the government first raided pensions, and now municipalities, just to repay the dreaded Troika.
The Athens city council and the union of municipalities and communities in Greece will convene tomorrow to debate the order, a press officer of the mayor’s office said.
And one everyone realizes what just happened, expect the riot cam and the Greek Pay-Per-Riot channel, which has been on hiatus since the summer of 2012, to be fully reactivated.
Yep and there are plenty of Freepers who won’t fight it so long as their Social Security checks keep flowing.
I was thinking about this.
If they go this route then people will start semi-retiring at 50 and consume their resources and then present themselves ready for SS at 62 or 65.
Why wouldn’t they? SS w/b just another welfare program at that point.
I do believe that we are seeing the final stages of ‘kick the can down the road’ economics. From a clinical point of view we need to watch what happens next very carefully. I believe that we will gain a clear view of our own future by doing so.
And perhaps prepare even better for that future.
Wait til the money inflates and people start to starve. This will end badly
Social Security IS already another welfare system to some extent; look at the abuse regarding “disabled” people receiving the supplememtal SS. For the rest of us, it won’t so much be another welfare system as much as a tiered system (like college financial aid) to give more to some to achieve equal outcomes.
With the inflation I expect to see, keeping money under the mattress isn’t much less foolish, unless it is in a foreign currency.
Go bigger than .22.
Lots of Greeks had their beebers stuned in a major that they’ll never forget. And they’ll never put their money in a bank again.
"While basic governing functions were taken up by very local bodies - or not at all - the nominal central authorities hunted for money. Already on the afternoon of October 25, and multiple times thereafter, Wiaczeyslaw Mezynski, another Polish Bolshevik (normally Russified as Menzhinsky), had taken an armed detachment over to the Russian State Bank. Mezynski, who had for a time worked as a bank teller for Credit Lyonnais in Paris, was the new "people's commissar for finance ministry affairs" - as if there would be no enduring financial commissariat in the new orders, just confiscations.From Stalin: Volume I: Paradoxes of Power, 1878-1928"His actions prompted finance ministry and Russian State Bank personnel to strike. Private banks shut their doors, too, and, when forced by armed threats to reopen, refused to honor checks and drafts from the Bolshevik government. Mezynski finally just robbed the State Bank and laid 5 million rubles on Lenin's table in Smolny. His heist inspired Bolshevik officials - and impostors - to seize more bank holdings.
"Holders of deposit boxes, meanwhile, under threat that their valuables would be confiscated, were compelled to appear for "inventories," but when they showed up with their keys, their valuables were confiscated anyway: foreign currency, gold and silver, jewelry, unset precious stones.
"As of December 1917, bond interest payments (coupons) and stock dividends essentially ended. By January 1918, the Bolsheviks would repudiate all tsarist internal and external state debt, estimated at some 63 billion rubbles - a colossal sum, including about 44 billion rubles in domestic obligations, and 19 billion foreign.
"Whatever the ideological fulminations, they were wholly incapable of servicing the debt. Shock waves hit the international financial system, the ruble was removed from European markets, and Russia was cut off from international financing. The country's financial system ceased to exist. Credit to industry was shut off. A paper money "famine" soon plagued the country."
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