Greece imposes capital controls, banks to remain shut

[webfact]

Greece imposes capital controls, banks to remain shut
ELENA BECATOROS, Associated Press
DEMETRIS NELLAS, Associated Press

ATHENS, Greece (AP) — Greece's five-year financial crisis took its most dramatic turn to date Sunday, with the prime minister announcing Greek banks would remain shut indefinitely and restrictions would be imposed on cash withdrawals.

The decision came on the recommendation of the Bank of Greece, Prime Minister Alexis Tsipras said during a televised address to the nation. He didn't immediately say what types of capital controls would be imposed.

The developments have thrown into question Greece's financial future and continued membership in the 19-nation shared euro currency — and even the European Union.

For the past two days, Greeks have been rushing to ATMs to withdraw money across the country following Tsipras' sudden weekend decision to call a referendum on creditor proposals for Greek reforms in return for vital bailout funds.

The government is urging Greeks to vote against the proposals, arguing that they are humiliating and that they would prolong the country's financial woes.

Spooked by rumors concerning impending fuel shortages, drivers flooded gas stations across Greece, prompting the country's largest refiner, Hellenic Petroleum, to issue a statement reassuring there are sufficient reserves of gasoline to last several months. The rush to gas stations may have been prompted less by worries about shortages than rumors that only withdrawals of up to 60 euros ($66) per day from ATMs will be allowed and that use of credit or debit cards will not be permitted.

The referendum decision, which was ratified by parliament after a marathon 13-hour session that ended in the early hours of Sunday, shocked and angered Greece's European partners. The country's negotiations with its European creditors have been suspended, with both sides accusing each other of being responsible.

Earlier Sunday, the European Central Bank decided not to increase the amount of emergency liquidity the lenders can access from the central bank — meaning they have no way to replenish fast diminishing deposits.

"It is now more than clear that this decision has no other aim than to blackmail the will of the Greek people and prevent the smooth democratic process of the referendum," Tsipras said.

"They will not succeed. These moves will have the exact opposite effect. They will make the Greek people more determined in their choice to reject the unacceptable ... proposals and ultimatums of the creditors," he said.

The referendum is set for next Sunday. But Greece's current bailout expires on Tuesday, and the 7.2 billion euros ($8 billion) remaining in it will no longer be available to Greece after that date.

Without those funds, Greece is unlikely to be able to pay a 1.6 billion-euro ($1.79 billion) International Monetary Fund debt repayment due the same day.

Tsipras said he had renewed a request for the bailout to be extended by a few days to allow for the referendum — a request which was rebuffed during the weekend by Greece's European creditors.

Tsipras gave no details of how long banks will remain closed or what restrictions will be placed on transactions. Two financial sector officials said the banks would likely remain shut for several days, and the Athens Stock Exchange would also not open on Monday.

Some European officials called for renewed efforts by both sides.

"We don't know — none of us — the consequences of an exit from the eurozone, either on the political or economic front. We must do everything so that Greece stays in the eurozone," French Prime Minister Manuel Valls told France's i-Tele TV earlier Sunday.

"But doing everything, that means respecting Greece and democracy, but it's also about respecting European rules. So Greece needs to come back to the negotiating table," he said.

On the streets of Athens, reactions to Tsipras' referendum call were mixed.

"I have no idea what we are voting for. Yes or no, we don't know what to say," 67-year-old Triandafila Bourbourda said as she walked in the capital's main Syntagma Square. "I think we shouldn't have gone so far to get into this mess."

But Voula Lambrou, attending a Sunday morning church service, said she believed Greece would be better off outside the 28-nation EU.

"If we exit the European Union, I believe things will be very good for Greece," she said. "It will be tough for some time, but we will be able to find strength in order to carry on ahead. We don't need the Europeans."

Two opinion polls published Sunday indicated that more Greeks want to stay in the eurozone and make a deal with creditors than want a rupture with the country's European partners. Both polls were conducted before Tsipras' referendum call, but they provide an indication of public sentiment.

In the poll by Alco for the Proto Thema paper, 57 percent said they believed Greece should make a deal while 29 percent wanted a rupture of ties. A Kapa Research poll for To Vima newspaper found that 47.2 percent would vote in favor of a new, painful agreement with Greece's creditors, compared to 33 percent who would vote no and 18.4 percent undecided.

Both polls were conducted from June 24-26 and had a margin of error of about 3.1 percent.

On the banking front, the ECB has said it could reconsider its decision on credit levels.

"We continue to work closely with the Bank of Greece and we strongly endorse the commitment of member states in pledging to take action to address the fragilities of euro-area economies," ECB chief Mario Draghi said.

Yannis Stournaras, governor of the Bank of Greece, said the bank would "take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances."
___

David McHugh in Frankfurt, Geir Moulson in Berlin and Jamey Keaten in Paris contributed to this report.


-- (c) Associated Press 2015-06-29

[Steely Dan]

And so falls the first domino, the bond markets will soon focus on the next weakest economy. The Euro may not be around in five years time.

[ezzra]

There's a country who has borrowed many billions of Euros under the guises of deep reforms and than ending up giving the middle finger to those who tried helped it....

Little they knew that things don't work that way, and what you have borrowed, you have to repay, so the next few days will be very interesting to watch....

[TheAppletons]

There's a country who has borrowed many billions of Euros under the guises of deep

reforms and than ending up giving the middle finger to those who tried helped it....

Little they knew that things don't work that way, and what you have borrowed, you

have to repay, so the next few days will be very interesting to watch....

The Greeks still don't get it....they elected a government who promised them that the country could stay in the Euro without having to abide by Eurozone agreements. Mutually exclusive concepts.

Now, again, the citizens are calling for an end to "austerity" but public opinion polls show most want to stay in the Euro.

And their current PM...what a coward.

[sdanielmcev]

Cows have already left the barn, now they close the doors.

[trogers]

"I think we shouldn't have gone so far to get into this mess."

If only such a thinking was there before signing all those IOUs and getting into deep deep debts...

[Always18]

And so falls the first domino, the bond markets will soon focus on the next weakest economy. The Euro may not be around in five years time.

It's been a long time coming but this artificial currency union was ALWAYS destined to fail.

My only comment is Good Riddance and may the idea of a federal Europe soon follow in it's footsteps.................

[jpinx]

Now watch for a move by Putin. He already expressed willingness to help Greece. It's all about timing. Tsiparis has played his hand excellently, against the EU who have to play their hand by committee. Running the negotiations with EU/ECB/IMF up to the end of a week, getting a referendum (effectively bluffing for another extension) but knowing the backstop is that the euro countries are actually afraid of the unknown consequences of the Grexit. The IMF are the ones who get to call foul on their loan first, with Brazil and Ireland baying for blood apparently. LeGuarde has hinted that it'll be immediate and draconian. The ECB can still relent once Greek capitol controls are seen to be in place. It's stand-up poker - with russian roulette as the option. You couldn't make this story up......

Edited June 29, 2015 by jpinx

[theguyfromanotherforum]

As usual sheep lining up ATM after the fact. I think I'm gonna get me some Thai gold this afternoon.

[h90]

There's a country who has borrowed many billions of Euros under the guises of deep

reforms and than ending up giving the middle finger to those who tried helped it....

Little they knew that things don't work that way, and what you have borrowed, you

have to repay, so the next few days will be very interesting to watch....

Make a reality check......

The previous government borrowed many billions and payed back the money they borrowed from the banks.

Means: the EU just took over the debt from the banks and almost no money ended in Greek.

The EU opposed taxes for the huge companies but forced Greek to cut the minimum pensions and unemployed get 0 now.

Of course Greek didn't do any meaningful reforms......they didn't do them since WW2 and everyone knew it, what the EU wants is a disaster for the country.

Greek can never repay these debts, but as well Germany, USA, France, Italy can never repay their debts.

[losworld]

There's a country who has borrowed many billions of Euros under the guises of deep

reforms and than ending up giving the middle finger to those who tried helped it....

Little they knew that things don't work that way, and what you have borrowed, you

have to repay, so the next few days will be very interesting to watch....

Yeah no question Greek was living well above its means but it takes two to tango or to tangle. Don't ever forget that just like personal loans there always exists creditors who can gain greatly if a country cannot meet the loan obligations they so happily lent earlier.

[Friendly Stranger]

Now watch for a move by Putin. He already expressed willingness to help Greece. It's all about timing. Tsiparis has played his hand excellently, against the EU who have to play their hand by committee. Running the negotiations with EU/ECB/IMF up to the end of a week, getting a referendum (effectively bluffing for another extension) but knowing the backstop is that the euro countries are actually afraid of the unknown consequences of the Grexit. The IMF are the ones who get to call foul on their loan first, with Brazil and Ireland baying for blood apparently. LeGuarde has hinted that it'll be immediate and draconian. The ECB can still relent once Greek capitol controls are seen to be in place. It's stand-up poker - with russian roulette as the option. You couldn't make this story up......

Good call. Just like how the Americans stepped up for Cuba when they saw what may transpire.

But then again, are they willing to just flush away seeing how their own fragile economy has been suffering.

[TheAppletons]

There's a country who has borrowed many billions of Euros under the guises of deep

reforms and than ending up giving the middle finger to those who tried helped it....

Little they knew that things don't work that way, and what you have borrowed, you

have to repay, so the next few days will be very interesting to watch....

Make a reality check......

The previous government borrowed many billions and payed back the money they borrowed from the banks.

Means: the EU just took over the debt from the banks and almost no money ended in Greek.

The EU opposed taxes for the huge companies but forced Greek to cut the minimum pensions and unemployed get 0 now.

Of course Greek didn't do any meaningful reforms......they didn't do them since WW2 and everyone knew it, what the EU wants is a disaster for the country.

Greek can never repay these debts, but as well Germany, USA, France, Italy can never repay their debts.

Yes, the previous government paid back the money they borrowed from the banks with the money they borrowed from the EU. So the question remains: what did they do with the original money they borrowed? Answer: squandered it.

No matter how you try to spin it, the Greeks are finding out that you can't live forever on someone else's dime.

[jpinx]

There's a country who has borrowed many billions of Euros under the guises of deep

reforms and than ending up giving the middle finger to those who tried helped it....

Little they knew that things don't work that way, and what you have borrowed, you

have to repay, so the next few days will be very interesting to watch....

Make a reality check......

The previous government borrowed many billions and payed back the money they borrowed from the banks.

Means: the EU just took over the debt from the banks and almost no money ended in Greek.

The EU opposed taxes for the huge companies but forced Greek to cut the minimum pensions and unemployed get 0 now.

Of course Greek didn't do any meaningful reforms......they didn't do them since WW2 and everyone knew it, what the EU wants is a disaster for the country.

Greek can never repay these debts, but as well Germany, USA, France, Italy can never repay their debts.

Here's your reality check -- no country is expected to actually pay the loans, but servicing the repayments is what went missing here. The issue is not even that they missed a repayment, the issue is that they refused on numerous occasions to actually do anything meaningful about their continuously failed economy. For example -- their pension schemes are outrageously generous in UK/German terms, their ability to collect the taxes due is laughable. So it's a no-brainer for them to put a proposal together of more taxes and less cuts. Such a "reform" keeps the money in private hands within Greece -- and that is where the wealth of Greece really lies. Anyone who has been watching this develop could tell that the endgame would always be a Grexit. You have to remember that they openly admitted cooking their own books in order to get into the euro in the first place. Now they've had all the handouts possible, so really they don't give a damn about leaving. They can resurrect the Drachma, loosely tie it to the euro for the sake of saving policital face, but fund it with roubles

Edited June 29, 2015 by jpinx

[Srikcir]

Some Greek political intrigue going on now and the Greek people are being taken to the olive pits.

Tsipras has trapped himself politically. And deservedly so with his absurd promises to Greeks for better bailout options with little more than window dressing austerity.

He can't outright accept the EU terms for financial survival if he wants to remain in power. But he can't outright refuse as he would be blamed for immediate termination of EU assistance.

So he has called for a referendum and he has advised Greeks to reject the EU deal. In this way the Greek people have only themselves to blame for requiring him to reject the EU terms and conditions. He stays in power, albeit with a country that may not exist after July 2015.

[gigman]

It must be really bad deals now prepared for Greece from it's lenders. ...

just wander that no one sees this on the beginnings on this union.. .

Yes Putin and some Greek's knew what will happen.

Greece always was a friend with Russia and we will see it's effects soon.

[AG1]

And so falls the first domino, the bond markets will soon focus on the next weakest economy. The Euro may not be around in five years time.

It was somehow forseeable which Mess Alexis Tsipras and Yanis Varoufakis will create, lets see if the Markets already priced in the Troubles, or if we get another Crash.

[Publicus]

Greece is a loser country and so is Russia which is mortgaging its state corporations to Beijing to get hard cash so neither Greece nor Russia have any future under present ongoing circumstances.

Russia can borrow from China so Greece can borrow from Russia = same same same loser's club..

[BuaBS]

I'm all for austerity and COMPLETE repayment of debt , to the last eurocent. But if Greece can light the fuse on the collaps of the euro , the EU , the banks , central banks , it should default on any repayment.

(and I hope it will ). The 350 Billion will be money well spent.

Of course this is not going to happen. Even if there is a Grexit , the euro banks will be swiftly replenished with freshly created money , and preventing a derivative bomb along the way.

The euro will go down on the news , but will be stronger thereafter because , bad boy Greece is no problem anymore.

Edited June 29, 2015 by BuaBS

[Basil B]

I hope this will be the end of the Euro, once a supporter of the UK membership I can clearly see I was wrong and thankfully we did not join...

THE EU needs reform, I do not want to see the UK out but the power of the union need curtailing.

The EU needs to look at itself and understand why it was formed in the first place and that was as a trading organisation not the United States of Europe.

Edited June 29, 2015 by Basil B

[jpinx]

I hope this will be the end of the Euro, once a supporter of the UK membership I can clearly see I was wrong and thankfully we did not join...

THE EU needs reform, I do not want to see the UK out but the power of the union need curtailing.

The EU needs to look at itself and understand why it was formed in the first place and that was as a trading organisation not the United States of Europe.

It all started because of the Common Market. The French didn't want UK in it. The history of how it went only varies according to the political leanings of the historian

A common market would be a great idea, but the euro came along because of the iniquitous banking costs of foreign exchanges, and the EU started making rules so that everyone would get the same size egg, tomato, whatever -- and it all went downhill from there

[Baerboxer]

I hope this will be the end of the Euro, once a supporter of the UK membership I can clearly see I was wrong and thankfully we did not join...

THE EU needs reform, I do not want to see the UK out but the power of the union need curtailing.

The EU needs to look at itself and understand why it was formed in the first place and that was as a trading organisation not the United States of Europe.

A federal Europe, the vision and agenda of some countries and politicians, would need a common currency. A common currency won't work without a federal Europe and real central controls.

This was the tail wagging the dog. Introduce a common currency, the need for more central controls becomes apparent, leads more and more to a federal state.

A common currency for a common market - nice idea but highly impracticable and a gift for the federalists to use for their own agenda.

Now, should, as expected, Greece default and leave the euro, the matter of Greek debt, interest repayments, loan repayments and the criminal accountability of those who cooked the books and forged figures to gain entry should and must not be simply forgotten. A few of Greek's neighbors may be getting sweaty palms thinking of where this might go.

[SheungWan]

And so falls the first domino, the bond markets will soon focus on the next weakest economy. The Euro may not be around in five years time.

It's been a long time coming but this artificial currency union was ALWAYS destined to fail.

My only comment is Good Riddance and may the idea of a federal Europe soon follow in it's footsteps.................

Actually no. The Euro will probably (famous last words!) strengthen if Greece can be navigated out.

Edited June 29, 2015 by SheungWan

[Baerboxer]

I hope this will be the end of the Euro, once a supporter of the UK membership I can clearly see I was wrong and thankfully we did not join...

THE EU needs reform, I do not want to see the UK out but the power of the union need curtailing.

The EU needs to look at itself and understand why it was formed in the first place and that was as a trading organisation not the United States of Europe.

It all started because of the Common Market. The French didn't want UK in it. The history of how it went only varies according to the political leanings of the historian

A common market would be a great idea, but the euro came along because of the iniquitous banking costs of foreign exchanges, and the EU started making rules so that everyone would get the same size egg, tomato, whatever -- and it all went downhill from there

Not the French but De Gaulle. He wanted a dominant France and was determined to keep Britain out. He seems to have underestimated the ability of Germany to rebuild to.

The Common Market, was and is, a great idea. As with all things, the devil is in the detail. The PC, socialist, federalist, bureaucrats who love taking control through any means saw it as a conduit to change things as they wanted. That's why it's become something totally different to the initial idea.

[jpinx]

I hope this will be the end of the Euro, once a supporter of the UK membership I can clearly see I was wrong and thankfully we did not join...

THE EU needs reform, I do not want to see the UK out but the power of the union need curtailing.

The EU needs to look at itself and understand why it was formed in the first place and that was as a trading organisation not the United States of Europe.

A federal Europe, the vision and agenda of some countries and politicians, would need a common currency. A common currency won't work without a federal Europe and real central controls.

This was the tail wagging the dog. Introduce a common currency, the need for more central controls becomes apparent, leads more and more to a federal state.

A common currency for a common market - nice idea but highly impracticable and a gift for the federalists to use for their own agenda.

Now, should, as expected, Greece default and leave the euro, the matter of Greek debt, interest repayments, loan repayments and the criminal accountability of those who cooked the books and forged figures to gain entry should and must not be simply forgotten. A few of Greek's neighbors may be getting sweaty palms thinking of where this might go.

The architect of the euro said publicly that the way it was introduced was wrong. No central bank had control over it or it's use by member states. Now there's the ECB but it's a bit late when so many countries owe so much already. Watch the Grexit and see Spain, Portugal, Italy and maybe even Ireland contemplating the same move. They've had the initial EU handoutsand loans, and now the hard work of actually making the boosted economy produce enough to service the loans is proving too much for them. They were lazy before the euro, and they're even more lazy now,,,,,,,

[SheungWan]

I hope this will be the end of the Euro, once a supporter of the UK membership I can clearly see I was wrong and thankfully we did not join...

THE EU needs reform, I do not want to see the UK out but the power of the union need curtailing.

The EU needs to look at itself and understand why it was formed in the first place and that was as a trading organisation not the United States of Europe.

A federal Europe, the vision and agenda of some countries and politicians, would need a common currency. A common currency won't work without a federal Europe and real central controls.

This was the tail wagging the dog. Introduce a common currency, the need for more central controls becomes apparent, leads more and more to a federal state.

A common currency for a common market - nice idea but highly impracticable and a gift for the federalists to use for their own agenda.

Now, should, as expected, Greece default and leave the euro, the matter of Greek debt, interest repayments, loan repayments and the criminal accountability of those who cooked the books and forged figures to gain entry should and must not be simply forgotten. A few of Greek's neighbors may be getting sweaty palms thinking of where this might go.

The architect of the euro said publicly that the way it was introduced was wrong. No central bank had control over it or it's use by member states. Now there's the ECB but it's a bit late when so many countries owe so much already. Watch the Grexit and see Spain, Portugal, Italy and maybe even Ireland contemplating the same move. They've had the initial EU handoutsand loans, and now the hard work of actually making the boosted economy produce enough to service the loans is proving too much for them. They were lazy before the euro, and they're even more lazy now,,,,,,,

Ireland has the fastest GDP growth in Europe: 4.8% last year. Your assertions are the lazy ones.

[jpinx]

I hope this will be the end of the Euro, once a supporter of the UK membership I can clearly see I was wrong and thankfully we did not join...

THE EU needs reform, I do not want to see the UK out but the power of the union need curtailing.

The EU needs to look at itself and understand why it was formed in the first place and that was as a trading organisation not the United States of Europe.

A federal Europe, the vision and agenda of some countries and politicians, would need a common currency. A common currency won't work without a federal Europe and real central controls.

This was the tail wagging the dog. Introduce a common currency, the need for more central controls becomes apparent, leads more and more to a federal state.

A common currency for a common market - nice idea but highly impracticable and a gift for the federalists to use for their own agenda.

Now, should, as expected, Greece default and leave the euro, the matter of Greek debt, interest repayments, loan repayments and the criminal accountability of those who cooked the books and forged figures to gain entry should and must not be simply forgotten. A few of Greek's neighbors may be getting sweaty palms thinking of where this might go.

The architect of the euro said publicly that the way it was introduced was wrong. No central bank had control over it or it's use by member states. Now there's the ECB but it's a bit late when so many countries owe so much already. Watch the Grexit and see Spain, Portugal, Italy and maybe even Ireland contemplating the same move. They've had the initial EU handoutsand loans, and now the hard work of actually making the boosted economy produce enough to service the loans is proving too much for them. They were lazy before the euro, and they're even more lazy now,,,,,,,

Ireland has the fastest GDP growth in Europe: 4.8% last year. Your assertions are the lazy ones.

That was after they had been squeezed by their problems and had to introduce serious austerity measure. By "lazy" I refer to the politicians and their laziness to actually run the country efficiently and stop lining their pockets. A fast GDP growth is absolutley no measure of success -- there's been so many boom-and-bust scenarios the only amazing thing is that politicians are unable to recognise any other measure of success.

[khunken]

A federal Europe, the vision and agenda of some countries and politicians, would need a common currency. A common currency won't work without a federal Europe and real central controls.

This was the tail wagging the dog. Introduce a common currency, the need for more central controls becomes apparent, leads more and more to a federal state.

A common currency for a common market - nice idea but highly impracticable and a gift for the federalists to use for their own agenda.

Now, should, as expected, Greece default and leave the euro, the matter of Greek debt, interest repayments, loan repayments and the criminal accountability of those who cooked the books and forged figures to gain entry should and must not be simply forgotten. A few of Greek's neighbors may be getting sweaty palms thinking of where this might go.

The architect of the euro said publicly that the way it was introduced was wrong. No central bank had control over it or it's use by member states. Now there's the ECB but it's a bit late when so many countries owe so much already. Watch the Grexit and see Spain, Portugal, Italy and maybe even Ireland contemplating the same move. They've had the initial EU handoutsand loans, and now the hard work of actually making the boosted economy produce enough to service the loans is proving too much for them. They were lazy before the euro, and they're even more lazy now,,,,,,,

Ireland has the fastest GDP growth in Europe: 4.8% last year. Your assertions are the lazy ones.

That was after they had been squeezed by their problems and had to introduce serious austerity measure. By "lazy" I refer to the politicians and their laziness to actually run the country efficiently and stop lining their pockets. A fast GDP growth is absolutley no measure of success -- there's been so many boom-and-bust scenarios the only amazing thing is that politicians are unable to recognise any other measure of success.

You don't know what you're writing about.

The politicians in Ireland weren't lazy, they were corrupt and worked hand-in-hand with a crony bank and loads of cronies in various aspects of the construction business. They were kicked out in an election - too late to stop them seeking (during a night-time session) a 40 billion Euro loan to keep the crony bank afloat. The rest was a domino effect on other banks & the economy.

Ireland is now back in business, easily servicing & repaying, in instalments, their debts & the unemployment rate has dropped significantly. A fast GDP is one measure, probably the best, of a successful economy. Boom & bust is an inevitable effect of unregulated capitalism.

Edited June 29, 2015 by khunken

[jpinx]

As a previous customer of the AIB - I can safely say I do know the subject rather too well I am really pleased that Ireland came to it's senses in time, but the problem for Greece now is that they can vote either way in this referendum and it's not going to be less painful. If the vote to stay in - it's serious austerity, if they vote to leave - it's freefall without a parachute for a while.

Edited June 29, 2015 by jpinx

[bangon04]

"The government is urging Greeks to vote against the proposals, arguing that they are humiliating and that they would prolong the country's financial woes."

ie the Greeks do not need Foreigners trying to humiliate them, they are quite capable of doing it themselves....

sound familiar?