Greek banks down to €500m in cash reserves as economy crashes

The party's hardline chief and defence minister, Panos Kammenos, dismissed them contemptuously. "We are at war and there will be no backing down. Whoever does not have the stomach for war, be gone," he said... Mr Varoufakis vowed to resign if the Greek people voted yes. "I prefer to cut off my own arm rather than sign an agreement without debt restructuring," he told Bloomberg TV. He said there is not a "smidgeon of an iota of possibility" that the terms on offer can lift the Greek economy out of a deflationary tailspin, insisting that the talks broke down because the creditors refused to face up to the fact that Greece's debt is unpayable...Yiorgos Kaminis, the mayor of Athens, said...If Greece votes 'no' we will be obliged to go back to the drachma immediately, and sooner of later we may be forced to leave the EU as well. I don't want my children to be part of North Africa," he said.

And you really think the Greeks are going to keep paying it? With what?

Go ahead and give a homeless some money and see how much you’re going to get back.

What the germans and others are getting back is their own money that they lent the greeks to repay their loan.

In your case it would be like the bum you lent money to stops repaying you (because he doesn’t have any money) you lend him more money which he uses to repay you with.

Smart move grania.

I’ve spent two vacations in Greece, and a third in nearby Cyprus. So I can make some observations on a personal level.

There’s four basic industries in existence: (1) fruit and vegetable export, (2) wine industry, (3) small ship construction, and (4) tourism. Greeks will say a fifth exists....tax avoidance, but it’s ill defined even when an intellectural Greek is explaining it as an industry.

So, tourism is what turns the economy on each island and generates a fantastic revenue situation from April to September each year. Booze, airline traffic, buses, fuel, taxi fares, food, tours to Zeus’s cave (every island has some claim of having a Zeus cave....don’t ask, and don’t waste any money on this stupid walk through a cave).

Most everything is a cash deal except for hotel payments and airline tickets. Those are all legit and reported as taxable revenue. Beyond that....everything is cash and reported at a 50-percent rate.

At the public level....there’s an awful lot of pension deals that exist, and tons of Greeks try to get early medical retirements. This puts them in a awkward position...medical retire early but collect a marginal amount of money for pension (you could be talking about $700 a month). Then they turn around and do work under the table and non-taxed....but wake up at 65 to 70 years old....can’t survive off the $700 a month. Yeah, imagine that.

Medical stuff? In smaller towns with public care in effect....go try to find a doctor at 1PM. They disappear and usually are working on a second job (private clinic) and collecting two pay-checks. Yeah....imagine that....so low of pay on the public clinic, that they can’t make it. So they charge full-time on public clinic and spent half the day over at the private clinic.

I would strongly urge people...especially if they ever clear this business....to take ten days and go to Greece. It is an eye-opening experience. Some of the nicest people in the world, some of the best food, some of the best wine, and extremely safe (the drunk Brits are your worst threat). But behind it all....it’s a semi-failed socialist experiment, and there are hundreds of things you will notice on a typical day.

for decades, the USSR sold weapons to deadbeats taking various financial instruments for payment. the deadbeats included syria and iraq. they may had some money but the soviets accepted financial instruments

the sales produced jobs for the workers that were required to meet production quotas set by the planners. The weapons company purchasing agents bought materials from other soviet companies using money received from banks. the funding was not really a loan because the banks got the financial instruments from the customers

By 1990 , the banks had tons of the foreign payment guarantee instruments but still no money. the system unraveled

In that time, American companies were allowed to visit on trade missions. the russians wanted everything, especially computers and fax machines. selling was easy, make an offer at reasonable price. the problem was getting paid. the money men of say the Hermitage Library had no money with which to pay the American company. so, they dug around in the safe and came up with the Iraqi payment instruments. as Payment for the computers, the russians offered the paper obligating the Iraqi government to pay in Iraqi currency on a date now past.

it was pathetic...... and true

“for decades, the USSR sold weapons to deadbeats taking various financial instruments for payment.”

Sounds very similar to this...

China sells their wares to deadbeat US taking dollars in payments. These dollars are used to buy US debt instruments (treasuries).

“the sales produced jobs for the workers that were required to meet production quotas set by the planners.”

No change here.

“The smart move for Greeks would be to not pay and set up a reasonable budget to live by, without debt. Germany took the risk, and part of risk is loss.”

I agree, but you make it sound painless.

Greece may eventually do that, but it’s going to be traumatic. They’re complaining of “austerity” now for making some minor cuts. Wait till they actually default and don’t have any access to credit to fund their deficits. Then they’ll have two choices, live within their means, which means no deficits and thus substantial cuts to public spending, or go on a drachma printing spree and face out of control inflation.

There are no easy ways out.

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