Euro Panic around the Corner....

Discussion in 'Economics' started by achilles28, Jun 14, 2012.

  1. Not surprised this wasn't mentioned already, but Europe's nosedive has accelerated:

    News of capital and travel controls for Europe were reported this week. Electronic bank runs are in full swing in Greece. The developments are in anticipation of the Greek national elections held this Sunday night (June 17). It's expected the most radical of the two candidates will win (Alexis Tsipras), and Greece will be forced out of the Union. The Drachma could be revalued at 30-40% (a possibly *tripling* of import prices, like gas, medicine, cars etc). Greeks will head for the doors, but judging by recent news, they won't be allowed out! Those with cash are getting their money out now. Oanda, a large retail FX bucketshop announced trading halts Sunday morning through early evening in anticipation of "exceptional volatility". FXDD, another retail shop, notified customers to extreme volatility Sunday through Monday. Next week should be wild. Good luck.


    Bank Runs.

    (May 28, 2012) Financial advisers and private bankers whose clients have accounts too large to be covered by a Europe-wide guarantee on deposits up to 100,000 euros, are reporting a "bank run by wire transfer" that has picked up during May.

    Much of this money has headed north to banks in London, Frankfurt and Geneva, financial advisers say.

    "It's been an ongoing process but it certainly picked up pace a couple of weeks ago. We believe there is a continuous 2-3 year bank run by wire transfer," said Lorne Baring, managing director at B Capital, a Geneva-based pan European wealth management firm.

    http://www.reuters.com/article/2012/05/28/euro-transfers-idUSL5E8GO4SF20120528

    (Jun 12, 2012) Greece’s banking system has continued to hemorrhage deposits this month, amid uncertainty over the outcome of elections on June 17, Kathimerini reported, without saying how it got the information.

    Many people are putting money in shares of mutual funds denominated in dollars because of the bureaucratic difficulty of taking money out of Greece, or are keeping cash at home, the newspaper said.

    Deposits are leaving the banking system at a rate of 100 million to 500 million euros ($125 million to $625 million) a day, Kathimerini said, without specifying over how long a period that rate of outflow has continued.

    http://www.bloomberg.com/news/2012-...thdraw-deposits-in-june-kathimerini-says.html

    (12 Jun 2012) Greek newspaper Ekathimerini reported bank withdrawals in Greece have hit a rate of up to €500m per day, a level expected to accelerate in the aftermath of Greek elections on Sunday.
    http://www.telegraph.co.uk/finance/...eparing-secret-plans-for-Greek-euro-exit.html


    (Wed Jun 13, 2012) Greeks pulled their cash out of the banks and stocked up with food ahead of a cliffhanger election on Sunday that many citizens fear will result in the country being forced out of the euro.

    Bankers said up to 800 million euros ($1 billion) were leaving major banks daily and retailers said some of the money was being used to buy pasta and canned goods in case of shortages, as fears of returning to the drachma were fanned by rumors that a radical leftist leader may win the election...

    Bankers said the pace was picking up ahead of the vote, with combined daily deposit outflows from the major banks at 500-800 million euros ($625 million to $1 billion) over the past few days, and 10-30 million euros ($12-36 million) at smaller banks.

    "This includes cash withdrawals, wire transfers and investments into money market funds, German Bunds, U.S. Treasuries and EIB bonds," said one banker, who spoke on condition of anonymity.

    Retailers said consumers were stocking up on non-perishable food while almost all other goods were seeing a huge drop in sales as cash-strapped Greeks have no money to spare in the country's fifth year of recession.

    http://uk.reuters.com/article/2012/06/13/us-greece-banks-idUKBRE85C0E720120613



    Capital and Travel Controls.

    (June 11, 2012) European finance officials have discussed....limiting the size of withdrawals from ATM machines, imposing border checks and introducing capital controls in at least Greece should Athens decide to leave the euro...

    As well as limiting cash withdrawals and imposing capital controls, they have discussed the possibility of suspending the Schengen agreement, which allows for visa-free travel among 26 countries, including most of the European Union...

    Another source confirmed the discussions, including that the suspension of Schengen was among the options raised....

    In a conference call on May 21, the Eurogroup Working Group told euro zone member states that they should each have a plan in place if Greece were to leave the currency.

    http://money.msn.com/business-news/article.aspx?feed=OBR&date=20120611&id=15208663

    (12 Jun 2012) EC preparing secret plans for Greek euro exit. Legal advice on capital controls, including limits on withdrawals from Greek bank accounts, and emergency border restrictions, has been provided by the European Commission to eurozone governments drawing up plans for Greece to leave the euro...

    Capital restrictions, including limits on cash-machine withdrawals, are legal under Article 65 of Europe's internal market rules allowing emergency measures to preserve "public security" in the event of a Greek exit, said a Commission official.

    Eurozone governments have also sought advice on suspending the EU's passport-free travel zone in order to introduce border checks to stop Greeks taking money out of Greece or to limit the numbers of people fleeing political chaos...

    European diplomats have expressed anger at officials briefing the content of confidential discussions deemed so sensitive they are "forbidden from being written on paper".

    "You have to wonder at the mentality of someone who plans capital controls and then tells the world about it in advance," said a diplomat.

    http://www.telegraph.co.uk/finance/...eparing-secret-plans-for-Greek-euro-exit.html

    (Jun 14, 2012) Swiss National Bank Chairman Thomas Jordan and the country's finance minister, Eveline Widmer-Schlumpf, on Thursday both threatened capital controls to prevent the franc soaring if Europe's crisis deepens.
    http://www.reuters.com/article/2012/06/14/us-eurozone-centralbanks-idUSBRE85D1FW20120614



    Retail FX Trading Halts

    Due to the extreme volatility some market analysts foresee could result in the coming days, OANDA fxTrade will not accept any trading activity from 6:00 AM EST until approximately 3:00 PM EST, on Sunday, June 17, 2012. OANDA believes the convergence of a major market event during off-market hours represents a potential trading risk and has taken this rare step to protect traders from excessive rate fluctuations.

    Please note that during this halt in trading, you can still access your account details but no trading activity will be accepted. For this reason, OANDA strongly recommends that all traders consider minimizing currency exposures prior to the trading halt.

    If you do intend to maintain open positions during this period, be aware that OANDA will hold exchange rates steady during the trading halt. However, when trading resumes, rates will immediately adjust to the current market rate and it is possible that the updated rate could result in a margin closeout if the price has moved significantly against your positions.

    Therefore, it is your responsibility to ensure you have adequate funds in your account to prevent a margin closeout.

    OANDA apologizes for any inconvenience this may cause.

    For more information, please contact a Customer Service representative.

    Best regards,
    The OANDA team

    https://fxtrade.oanda.com/community/forex-forum/topic/54000803/


    [​IMG]



    G20 Prepared to Intervene if all Hell Breaks Loose

    Central Bankers preparing credit facilities for Greek election fallout
    http://www.reuters.com/article/2012/06/14/us-eurozone-centralbanks-idUSBRE85D1FW20120614

    Britain Prepares For Greece Exit From Euro. The Government and Bank of England are putting in place billions of pounds worth of emergency lending facilities for Britain's banks to prepare them for a Greek euro exit.
    http://news.sky.com/home/business/article/16247260


    More Trouble on the Horizon

    (June 13, 2012) European Banks Preparing To Boycott Big Three Rating Agencies
    http://blogs.news.sky.com/kleinman/Post:e717183a-bc6f-41fd-a283-2448cc76c4eb

    (June 13, 2012) Egan Jones Cuts France To BBB+, Outlook Negative
    http://www.nasdaq.com/article/egan-jones-downgrades-france-20120614-01254

    (Jun 14, 2012) Moodys Cuts Spain to Baa3 - One Step Above Junk
    http://www.bloomberg.com/news/2012-...er-with-moody-s-downgrading-spain-cyprus.html

    (Jun 14, 2012) Spanish Home Prices to fall ANOTHER 25 PERCENT: S&P
    http://in.reuters.com/article/2012/06/14/idINWLA868020120614
     
  2. you have your facts wrong. Oanda trades 24/7 including sat and sun, they are halting sun until 3 p.m

    read the shit before you post it
     
  3. The next article is so important I'll quote it (and highlight relevant sections), in it's entirety. A brief summary: the Drachma could be revalued at 30% of the Euro. From the article, Greece imports 40% of its food, nearly all energy products, drugs, and although the article doesn't mention it, likely all of it's consumables (electronics, auto's, computers, appliances, clothing etc). What does that mean? Energy prices will TRIPLE. Drug and medication prices - not subsidized by the Government (and the Government has stopped paying pharmacies under the national drug plan) will TRIPLE. Cars, computers, clothing etc will TRIPLE. Food staples will appreciate over 80%. Perhaps double. This is why the EU is preparing to LOCKDOWN Greece. Naturally, Grecians will want to GFTO, but they won't be allowed.... Bear in mind, the Greek economy has already contracted 20%. Now, with unemployment currently at 22%, they face a 70 PERCENT DEVALUATION of their currency... This is Argentina, folks. Total societal breakdown ahead




    Nightmare foretold if Greece heads for euro exit
    By Harry Papachristou and Giles Elgood
    http://www.reuters.com/article/2012/05/18/us-greece-grexit-idUSBRE84H0HW20120518

    ATHENS/LONDON | Fri May 18, 2012 8:19am EDT

    (Reuters) - In Athens, the homeless are on the streets in growing numbers, soup kitchens feed twice as many people as a year ago, and the poor are diving into garbage bins in search of scrap they can sell.

    Greece is close to breaking point as it struggles with austerity targets set by creditors, but this is just a foretaste of the nightmare of unrest, hunger and even anarchy that could engulf the debt-crippled nation if it is forced out of the euro.

    If the exact economic impact of such a move is hard to nail down - newly issued drachmas devalued by up to 70 percent, runaway inflation, a banking meltdown, a collapse in trade - the implications for ordinary Greeks crushed by the debt crisis are even harder to predict.

    Without international bailout cash, salaries and pensions would go unpaid and violence, political extremism and uncontrolled emigration could quickly follow.


    After voting inconclusively for parties that opposed foreign-imposed austerity, including the neo-Nazi Golden Dawn, Greeks head to the polls again in a month's time. This election is being portrayed internationally as a referendum on the single currency, even if Greeks do not yet see it that way.

    A Greek exit from the 17-nation euro zone, or "Grexit" as some economists have called the once unthinkable eventuality, risks turning the nation into what would be close to a failed state on the edge of the European Union, one of the most prosperous societies the world has ever known.

    Greece imports 40 percent of the food it consumes, nearly all of its oil and natural gas and much of its medicine. It has long been clear to some commentators that there could be trouble ahead.

    Confronted with post-exit turmoil, foreign suppliers would simply put up the shutters until the situation becomes calmer, leading to acute shortages of basic commodities, which could fuel serious civil unrest, according to Bank of Greece Governor George Provopoulos.

    Even if Greece did manage to import limited amounts of food and other basics, they would be cripplingly expensive.

    Provopoulos warned as long ago as December that a return to the drachma would be "real hell", with Greeks forced to resort to barter during the transition period between the two currencies, "trading a kilo of olive oil for three kilos of flour".

    "NIGHTMARE SCENARIO"

    "There will be shortages in basic staples. Without fuel, the army and the police would not be able to move their vehicles. After a long period, things will return to a better balance. But during the first transitional phase we would be experiencing a nightmare scenario," Provopoulos said.

    A former finance minister, Yiannos Papantoniou, saw trouble ahead nearly a year ago: "Greece would not be able to support 11 million people so there will be huge emigration flows," he told Reuters Insider television last July. "Disruptions, social disruptions will come. I would say a regime of total anarchy."


    Last year 23,800 Greeks emigrated to Germany alone, 90 percent more than the previous year, German data show and Greeks are queuing up to learn German.

    Most economists agree the austerity measures Greece is laboring under offer it little hope of recovery near term, and some argue that if it leaves the euro, it could export its way back to health on the back of a vastly devalued currency.

    But, barring tourism, it does not have businesses or industries that could drive such a recovery.

    Even if freed of its debt-cutting targets, the fact the country runs a primary deficit - spending more than it takes in taxes - means it would have to continue austerity measures and, because it would be shut out of international markets, it would have no one to borrow from.

    "Even if you strip interest payments, with a primary current account deficit at about 10 billion euros, it would mean economic life would grind to a halt," said Yannis Stournaras, head of Greek think tank IOBE.(NOTE: CURRENT GREECE BORROWING IS 9% OF GDP. RETURN TO THE DRACHMA = NO MORE FOREIGN BORROWING = ANOTHER DROP of 9% GDP x FISCAL MULTIPLIER!!!

    "Greece would have a hard time to import oil, foods, medicines and other primary inputs. Imagine the navy, police, without fuel. Natural gas spigots would close. GDP would be hurt by a battered banking system. Public debt would increase."


    Greece's recent history gives a taste of the political turmoil that could follow.

    After German occupation in World War Two, the country plunged into bitter civil war during the 1940s. Political turbulence in the 1960s was capped by a colonels' coup d'etat in 1967, with democratic elections not held until seven years later.

    Conditions are already hard for business people in Greece, with the country in its fifth year of recession.

    "The first shortages have begun to appear," said Melina Ferousi, a businesswoman who imports paper and stationery items. "French and Spanish suppliers are still selling on credit but German ones are particularly strict and are refusing to do so."

    Some German suppliers have said they could not extend credit to Greece even if they wanted to because their insurers are refusing to cover the merchandise.

    Greek importers and exporters alike are finding it difficult to do business with foreigners, said Vassilis Korkidis, chairman of the retailers' union ESEE.

    "It's not that they're not trusting their individual Greek business partners anymore, it's the Greek banks they no longer trust," Korkidis said.

    But business people do not see an exit from the euro as solving anything. Greece imports practically all its machinery, tools and software, so companies would be unable to grow.

    "If we return to the drachma, nobody will be able to do business abroad anymore," said Iraklis Megas, who imports animal food. "I'll have to shut down my company the next day and so will thousands of others."


    How Greece would manage a transition from euro to drachma is unclear. A possible precedent is the split of Czechoslovakia into two countries with their own currencies in 1993.

    All cross-border money transfers between them were halted and border controls were tightened. Stamps printed secretly in Britain were glued on 150 million banknotes, which were trucked around the country with the help of police and the army.

    "DRACHMAGEDDON"

    Greece would have to try something similar, with some suggesting euro notes might be stamped with a D for drachma, but there are doubts whether it could introduce a new currency in a short period of time.

    "In my assessment, Greece does not have the strength of institutions to pull that one off in an orderly way. Instead, it's likely to be a slippery slope, which - through chaos and ruin - may then end the same way months or years down the road," said Erik Nielsen, global chief economist at Unicredit.

    In the end, since the International Monetary Fund, the European Central Bank and euro zone governments are now left holding most of Greece's 250 billion euro debt mountain, they may decide it is best to try and keep things going rather than drop the curtain on Greece's euro dream and face heavy losses themselves.

    That is the calculation being made by the SYRIZA party, which had until recently been surging ahead in opinion polls with its radical anti-austerity platform that European leaders say will lead to certain bankruptcy and an exit from the euro.

    But a poll on Thursday showed a return in support for the establishment parties that negotiated the bailout, a sign the nightmare scenario of life outside the euro may be sinking in.

    Some have even been able to see the funny side. "Drachmageddon", on Radio Arvyla TV in November, told how the drachma, kicked into outer space in 2001, crashed back to earth as a meteor and destroyed everything.

    "The main reason we expect Greece to stay in the union is that as bad as things are now, it will be worse out," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

    "It seems far too simple to think that a devaluation is all Greece needs."
     
  4. Get the f outta my thread, thanks. *corrected*.
     
  5. at anyrate, they are not going to leave no matter who is elected. They might be forced out eventually. It will probably take more social unrest to finally get it all straightened out.
     
  6. I can tell you haven't followed what's going on in Greece. Let me explain this to you in very simple terms:

    The media spun the Grexit story completely backwards. The decision to stay or leave is not in the Greeks hands! Both leading candidates intend to roll-back austerity measures - it's just a question of how much. Greece's deficit is still at 9% GDP. Iow, both candidates intend to INCREASE IT. The leading candidate, is about is green as they come, intends to roll back all austerity measures (ALL OF THEM), cut taxes, hire back all public servants, and give them all RAISES! Under that "scheme", Greece's deficit would balloon to well over 14% of GDP! Do you think the Germans will support Merkel if she stands aside and hands over German taxpayer money to finance more debt-parties for Greece. NO. If Greece stays, MERKEL GOES. Merkel knows this. GREECE WILL BE FORCED OUT OF THE EURO. And you're telling me to get my facts straight... *Read the news*
     
  7. that's what they promise. Obama promised hope and change.
     
  8. The frontrunner is a hardcore socialist, my friend. Did you even bother to read the articles? Look at the preparations going on. It's a done deal. KA-BOOOM
     
  9. non event, except for the riots, most likley at the bank this time

    those guys who write the articles don't know anymore than the guys who write articles telling you what the stock market will do

    they were writing articles about how devestating it would be if S&P downgraded US debt

    somebody will decide what is best for USA (or western interest i.e. the corporation) in or out, and that will be how it goes
     
  10. Then WTF isn't the EURUSD at par? All these wires to AUD and USD and the Euro was UP against both this week.
     
    #10     Jun 14, 2012