A tsunami of capital flight from Greece threatens to overwhelm the authorities, forcing the country out of the euro before fresh elections in June.
Economists warned that the Greek financial system could crumble within weeks or days unless the European Central Bank steps up support.
President Karolos Papoulias told party leaders that banks had lost €700m in withdrawals on Monday alone as citizens rush to pre-empt capital controls and a much-feared return to the Drachma.
He cited central bank warnings that “great fear” might soon escalate to panic. The leaked details lend credence to claims that capital flight by both savers and firms have reached €4bn a week since the triumph of anti-bailout parties on May 6.
Steen Jakobsen from Saxo Bank said outflows are becoming unstoppable, not helped by open talk in EU circles of `technical’ plans for Greek withdrawal.
“This has a self-fulfilling prophecy built into it and I don’t think we can get to June. 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,” he said.
[More]
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Afternoon Updates:
12:02 pm EDT, May 17th, 2012 — Greece eurozone exit could cost hundreds of billions in losses
12:03 pm EDT, May 17th, 2012 — Spain buckling under bond pressure, bank crisis, recession
12:04 pm EDT, May 17th, 2012 — ‘Vulture funds’ circle as Greece fears grow
12:06 pm EDT, May 17th, 2012 — Will Eurosceptics be blamed for Eurogeddon?
12:07 pm EDT, May 17th, 2012 — What on earth is Britain doing trying to save the euro?
12:08 pm EDT, May 17th, 2012 — Market rally on Greek exit?
12:09 pm EDT, May 17th, 2012 — Greek default, Euro collapse?
12:10 pm EDT, May 17th, 2012 — Leftists Target Head of EU’s Greece Task Force
Greece is looking more and more like Argentina. Really don’t understand why we are fixated on “fixing” the Greek problem. They broke it – they own it. Realignment of fiscal responsibility is long overdue. Better to get in and get it done – hanging on for a few more hours, days, weeks, months – is not going to change the inevitable.