Bank Run in Greece as Nation Plans for New Elections

Angelos Tzortzinis/AFP/Getty Images

Bank Run in Greece as Nation Plans for New Elections

Around €4 billion a week is leaving Greece, say financial experts, as people pull their money from Greek bank accounts. A caretaker government was appointed May 16 and a fresh round of elections scheduled for June 17 as all parties failed to form a coalition government.

The instability is causing “great fear” that could become panic, Greece’s President Karolos Papoulias warned on Monday. He told party leaders that people had withdrawn €700 million from banks on Monday alone. Reuters reported a similar level of withdrawals the next day.

Saxo Bank’s Steen Jakobsen warned that open plans for a Greek euro exit was adding to the problem.

“This has a self-fulfilling prophecy built into it, and I don’t think we can get to June,” he said. “The fuse is burning and the only two options now are a controlled explosion where Germany steps in to ensure an orderly exit, or an uncontrolled explosion.”

The Telegraph’s Ambrose Evans-Pritchard warned: “JP Morgan said Greek banks have already exhausted their collateral. A refusal by the ecb to ease [lending] rules would amount to expulsion, forcing Greece ‘to issue its own money.’”

Even if Greece does make it to fresh elections, they seem poised to make matters worse. During the coalition negotiations, the radical-left Syriza has risen to become Greece’s most popular political party. Seeing as the winner of the election gains 50 bonus seats, that puts it in a strong position.

Syriza is fiercely anti-bailout. Its leader, Alexis Tsipras, called it “barbaric.” A Tsipras-led government would be on a collision course with Europe. Greece’s troubles are putting pressure on Spain and Italy, too. A bailout for one of these countries would really cause trouble for Europe.

Watch events in Europe closely—they’re quickly building toward a crisis point that will revolutionize the Continent.