Monday, June 29, 2015

Greece Declares Bank Holiday, Capital Controls Imposed

Greece Declares Bank Holiday, Capital Controls Imposed

by Stephen Lendman

Fast-moving weekend events included an impasse in bailout talks, Greek MPs approving a July 5 referendum on whether to accept or reject greater Troika austerity demands, its refusal to extend bailout aid, and the ECB capping Greece's Emergency Liquidity Assistance (ELA) instead of cutting it off entirely as some media reported. 

Word is it'll decide day-to-day whether to lend insolvent Greek banks more funds to prevent their declaring bankruptcy and closing down altogether.

Earlier, Greek banks could borrow through private markets. No longer with access cut off - dependent wholly on ECB funding. On Sunday, it signaled additional steps would be taken as needed to prevent Eurozone contagion - likely greater QE than its current 60 billion euro monthly bond buying program.

Following these events, Prime Minister Alexis Tsipras explained his action Sunday on national television, saying:

"Yesterday's decision by the Eurogroup to withhold approval of the request of the Greek government for a short extension of the program - which would allow the public to decide in a referendum on the demands of lenders - is an unprecedented act.

This decision…led the ECB to withhold an increase in liquidity to Greek banks and forced the Bank of Greece to recommend measures for a bank holiday and a limit on bank withdrawals. 

It is more than clear that this decision had no other aim but to blackmail the will of the Greek people and obstruct the smooth democratic process of the referendum.

They will not succeed. This will bring the precise opposite effect. The Greek people will be more resolute in its choice of rejecting the unacceptable bailout proposals and the ultimatum of lenders.

One thing is clear: The refusal of a short extension, and the attempt to nullify a democratic procedure, is an act deeply offensive and shameful for the democratic traditions of Europe."

Tsipras assured Greeks their deposits are safe. As are salaries and pensions. They won't be confiscated or suspended, he implied. It remains to be seen what happens if Athens exhausts funds to pay bureaucrats and run daily operations. 

Anything is possible under these circumstances, including haircuts on depositors - bail-ins to recapitalize bankrupt banks and perhaps fund essential government services, grand theft by any other name.

Earlier articles discussed the views of euro expert Bernard Connolly. Before its introduction, he called it a harebrained idea, doomed to fail.

He explained one or more of Europe's weakest countries would face rising budget deficits, troubled economies, and a "downward spiral from which there is no escape unaided." 

"When that happens, the country concerned will be faced with a risk of sovereign default."

In 1979, Europe's Exchange Rate Mechanism (ERM) was introduced. It's part of the European Monetary System (EMS). It was intended to propel the continent to one European currency unit (ECU).

ERM never worked. ECU failed. Connolly's views were prescient. His "central thesis is that the ERM and the EMU (European Monetary Union, the mechanism which ultimately brought the Euro into technical existence) are not only inefficient but also undemocratic: a danger not only to our wealth but to our freedom and ultimately, our peace."

A system doomed to fail was fraudulently reengineered to look workable. Europe is banker occupied territory. So is America.

Finance is a new form of warfare. Banking giants run things. Whatever they want they get. Economies like Greece are easy marks - strip-mined for profit.

Communities are laid waste. High-pay, good-benefit jobs disappear - offshored to low-wage countries. Rotten ones replace them for workers lucky to have any employment. 

Ordinary people are impoverished - increasingly left on their own to survive. Essential social services are eliminated.

Bankers hold nations hostage. They're more powerful than standing armies - turning crises into catastrophes for ordinary people. Greece is Exhibit A - raped and pillaged for profit at the expense of serving all its people equitably.

Greeks awakened Monday to capital controls and a bank holiday to stem mass depositor outflows - continuing at least through the July 5 referendum, but who knows what's coming under increasing crisis conditions.

For now, Greeks are limited to $66 daily ATM withdrawals - the only way they can get bank funds from their accounts. Internal transactions alone are allowed - no foreign transfers. 

Some German newspapers (Greece's largest creditor country) headlined "Game Over?" and the word "Exit" in ancient Greek.

Here's what Greeks are asked to vote on July 5 - obscurely worded to be incomprehensible and misleading to most anyone not familiar with Troika demands, stating:

"Greek people are hereby asked to decide whether they accept a draft agreement document submitted by the European Commission, the European Central Bank and the International Monetary Fund, at the Eurogroup meeting held on on June 25 and which consists of two documents:

The first document is called Reforms for the Completion of the Current Program and Beyond and the second document is called Preliminary Debt Sustainability Analysis.

Those citizens who reject the institutions' proposal vote Not Approved/NO

Those citizens who accept the institutions' proposal vote Approved/YES."

How much sense this makes to ordinary Greeks may give many pause which way to go. Instead of itemizing Troika demands in simple, understandable terms, convoluted language substituted.

Most importantly, governments are instituted to serve all their citizens equitably. At least that's how democracies are supposed to work. They rarely do - virtually never in Western countries.

Previous articles explained what a responsible government should do. The euro straightjacket is destroying Greece's economy, relegating its citizens to indentured servitude to bankers wanting their interests alone served.

SYRIZA was elected on a mandate to end austerity.  Instead it increased it and agreed to most Troika demands for greater harm to its own people - instead of renouncing its odious debt, exiting the Eurozone, and reclaiming Greece's national sovereignty despite enormous transitional pain.

It's the only way Greece can survive economically - intermediate-term pain for longterm gain. Remaining subject to Troika diktats assures turning the nation in a greater dystopian wasteland than already. 

Previous governments and SYRIZA never should have let things get this catastrophic in the first place. They capitulated to bankers instead of serving their own people responsibly. 

Will things change for the better ahead? Given war on working people throughout Western and most other societies, don't bet on it.

Stephen Lendman lives in Chicago. He can be reached at 

His new book as editor and contributor is titled "Flashpoint in Ukraine: US Drive for Hegemony Risks WW III."

Visit his blog site at 

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