Elderly people, who usually get their pensions at the end of the month, wait outside a closed bank in the northern Greek port city of Thessaloniki, Monday, June 29, 2015. Greece’s five-year financial crisis took its most dramatic turn yet, with the cabinet deciding that Greek banks would remain shut for six business days and restrictions would be imposed on cash withdrawals. (AP Photo/Giannis Papanikos)
From the WSJ’s report on the current state of the Greco-Euro Crisis:
Three-and-a-half billion euros. That is roughly how much cash Greece’s banks need to get through the week if each adult takes out the €60 ($67) they are allowed each day. It isn’t much for Greeks to live on, but it may be more than the banks have.
This is how close the Greek financial system is to collapse. If the European Central Bank demanded repayment of banks’ emergency funding, that would be the end. Fortunately, there is leeway to avoid this as long as the political will remains.
Beyond Greece, the rest of the eurozone must look to an acceleration of full banking union to protect weaker banks in Portugal, Austria and other countries.
The Journal buried the lede however, way down in the ninth graf:
Although Greece won’t make a payment to the International Monetary Fund on Tuesday, ratings companies have said this doesn’t mean a wider default on government bonds, which the ECB accepts. July 20 is the next date for a bond repayment.
Boom. Greece is in partial default. The ratings companies can make all the soothing noises they want, but that doesn’t change the fact that Greek banks don’t have enough deposits to cover the grocery money for next month, much less the Visa payment.
Our domestic markets are “rattled” right now, but don’t be surprised if they’re buoyed by yet another influx of worried capital from abroad.
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