$900M Greek Withdrawals Monday
From the WSJ:
Greek depositors withdrew €700 million ($898 million) from the country’s banks on Monday, fueling fears of a bank run amid the growing political disarray.
With deposits falling, Greek banks become even more dependent on the European Central Bank to meet their funding needs, exposing the central bank to potentially huge losses if Greece leaves the euro area.
From Chris Martenson:
[T]he real mystery to me is who still has 165 billion euros in Greek banks at this stage of the game? Also a mystery is why Greece has not yet imposed a withdrawal moratorium and capital controls? It is only a matter of time, perhaps days, before they do.
Of course, it is the contagion effect that most worries the market, because the same dynamic of utter insolvency leading to the intractable nature of Greece’s dilemma applies to Spain, Portugal, and Italy…
That the US stock market is only down less than 5% from recent highs is a testament to the power of the liquidity that the Fed and US banking system have directed at keeping things elevated. However, this cannot last, at least not without another big quantitative-easing (QE) injection from the Fed. Without such an infusion, I am calling for another 2008-2009-style market rout of at least -30% but possibly as much as -50%.
Of course, PIIGs being PIIGS:
The situation in Spain — which is big enough to matter — is truly dire, very large, and getting worse…
If Spain drops here, then you can just set an egg timer for when Italy will go. And then France. The dominoes will rapidly fall from there.
Concerning derivatives held by US banks:
[W]hatever losses are resident in a system with four decades of debt-fueled malinvestment and overconsumption are still there just waiting to be realized.