Greeks Line Up at Banks and Drain ATMs as Tsipras Calls Vote (Or Why Greece Will Eventually Default)

Well, the Spanakopita really hit the fan Friday when Greek Prime Minister Tsipras called for a referendum on the deal with Greek creditors.

(Bloomberg) — Some Greek banks were beginning to limit cash transactions as hundreds of people lined up outside branches and drained cash machines after Prime Minister Alexis Tsipras called a referendum that could decide his country’s fate in the euro.

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Two senior Greek retail bank executives said as many as 500 of the country’s more than 7,000 ATMs had run out of cash as of Saturday morning, and that some lenders may not be able to open on Monday unless there was an emergency liquidity injection from the Bank of Greece. A central bank spokesman said it was making efforts to supply money to the system.

Some banks were placing limits in daily bank note and ATM transactions. Yiota Kardogianni, a manager at a branch of Piraeus Bank SA, said cash withdrawals were limited at 3,000 euros ($3,350) daily and ATM withdrawals at 600 euros. Alpha Bank AE had set a daily limit of 5,000 euros for most of its branches since last week.

“I’m here to take my mother’s pension out before the machine runs out of cash,” said Erato Spyropoulou, who was standing in a line of about eight people at one of National Bank of Greece SA’s ATMs. “It’s very worrying what’s happening because people don’t know what they’re being asked to vote for. It’s the last nail in Greece’s coffin.”

Tsipras’s decision to hold a referendum asking people to rule on a proposal to unlock 15.5 billion euros in aid for Greece in return for sales-tax increases and pension reforms came hours before euro-area finance ministers were due to meet for the fifth time within 10 days to discuss the same question.

While Greeks drain their bank accounts (or at least try to), there is only one certainty: Greece WILL eventually default unless their sovereign debt is forgiven.

Greece’s debt to GDP is over 170%, not a sustainable level (although Japan is at 228% Debt to GDP and is still afloat).

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Greece has a two year yield of 20.68% and an unemployment rate in excess of 25%. And Greece’s creditors think that raising taxes and cutting pensions will help???

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Here is Greece’s debt maturity structure. Notice a ticking bomb in the future?

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The Eurozone has rejected the Greece bailout extension. The current financial assistance arrangement with Greece will expire on 30 June 2015, as well as all agreements related to the current Greek program including the transfer by euro area Member States of SMP and ANFA equivalent profits.

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Suffice it to say, Greece is in serious trouble with regard to its economy and debt load. Eventually, Greece will default. It is just a matter of next Sunday (the referendum) or some point in the future. And it depends on how long Greece’s creditors want to string Greece along with their free hamburger strategy.

622Kass