Greek Banks On Verge Of Total Collapse: Bank Run Surges "Massively" As Depositors Yank €700 Million Today Alone

While the Greek government believes it may have won the battle, if not the war with Europe, the reality is that every additional day in which Athens does not have a funding backstop, be it the ECB (or the BRIC bank), is a day which brings the local banking system to total collapse.

As a reminder, Greek banks already depends on the ECB for some €80.7 billion in Emergency Liquidity Assistance which was about 60% of total deposits in the Greek financial system as of April 30. In other words, they are woefully insolvent and only the day to day generosity of the ECB prevents a roughly 40% forced "bail in" deposit haircut a la Cyprus.

The problem is that a Greek deposit number as of a month and a half ago is hopefully inaccurate. It is also the biggest problem for Greece, which has been desperate to prevent an all out panic among those who still have money in the banking system.

Things got dangerously close to the edge last Friday (as noted before) when things for Greece suddenly looked very bleak ahead of this week's IMF payment and politicians were forced to turn on the Hope Theory to the max, promising a deal with Europe had never been closer.

It wasn't, and instead Greece admitted its sovereign coffers are totally empty this week when it "bundled" its modest €345 million payment to the IMF along with others, for a lump €1.5 billion payment, which may well never happen.

And the bigger problem for Greece is that after testing yesterday the faith and resolve of its depositors (not to mention the Troika, aka the Creditors) and found lacking, said depositors no longer believe in the full faith (ignore credit) of the Greek banking system.It may have been the Greek government's final test.

Because accoring to banking sources cited by Intelligent News, things today went from bad to horrible for Greek banks, when Greeks "responded with massive outflows to the Greece's government decision to bundle the four tranches to IMF into one by the end of the June."

According to banking sources, the net outflows sharply increased on Friday and the available liquidity of the domestic banking system reduced at very low and dangerous levels.

The same sources estimate the outflows on Friday around 700 million Euros from 272 million Euros on Thursday. The available emergency liquidity assistance (ELA) for the Greek banks is estimated around 800 million Euros. In addition, the outstanding amount of the total deposits of the private sector (households and corporations) has declined under 130 billion Euros or lower than the levels at early 2004.

The total net outflows in the last 7 business days are estimated 3.4 billion Euros threatening the stability of the Greek banks.

This means 2.5% of all Greek deposits were pulled in just the past 5 days! Indicatively, this is the same as if US depositors had yanked $280 billion from US banks (where total deposits amount to about $10.7 trillion)

As further reported, the Bank of Greece is set to examine on Monday if Greece will urgently ask additional ELA. However, since one of the main conditions by the ECB to keep providing ELA to Greece is for its banks to be "solvent" (a condition which is only possible thanks to the ECB), one wonders at what point the Troika, whose clear intention it has been from day one to cause the Greek bank run in the process leading to the fall of the Tsipras government, will say "no more."

For those interested, according to IN, the deposit (out)flows in the last 7 business days are as follows:

Finally, for those who missed it, here is the first hand account of the Greek bank run from precisely a week ago as retold by ZH contributor Tom Winnifrith:

Witnessing the great bank run first hand as I deposit money in Greece

Jim Mellon says that the Greeks should build a statue in my honour as on Friday I opened a bank account in Greece and made a deposit. Okay it was only 10 Euro, I need to put in another 3,990 Euro to get my residency papers so I can buy a car, a bike and a gun, but it was a start. But the scenes at the National Bank in Kalamata were of chaos, you could smell the panic and they were being replicated at banks across Greece.

For tomorrow is a Bank Holiday here and if you are going to default on your debts/ switch from Euros to New Drachmas a bank holiday weekend is the best time to do it. And with debt repayments that cannot be met due on June 5 (next Friday) Greece is clearly in the merde. If it defaults all its banks go bust.

But I had to open an account and make a deposit. Outside the bank in the main street of Kalamata there are two ATMs. The lines at both were ten deep when I arrived and when I left an hour later. Inside I was directed to the two desks marked "Deposit". You go there to put in money, to open an account or if you are so senile that you cannot do basic admin of your account without assistance. As such it was me depositing cash and four octogenerians who had not got a clue about anything. Actually I lie. These folks may have been gaga but they were not so gaga that they were actually going to deposit cash, I was the sole depositer.

Friday was also the day when pensions are paid into bank accounts. On the Wednesday and Thursday it was reported that Greeks withdrew 800 million Euro from checking accounts. Friday's number will dwarf that. Whe you go to a Greek bank you pull off a ticket and wait for your number to be called. The hall in my bank contains about 60 seats all of which were filled. There were folks standing behind the seats and in fact throughout the hall, all wanting to get their cash out before the bank closed at 2 PM.

At the side of the room, shielded by a glass screen sat a man behind a big desk. He tapped away at his screen and made phone calls. Ocassionally folks wandered over, shook papers in his face and harangued him having got no joy elsewhere. So I guess he was the bank manager. I rather expected him to end one phone call and stand up to say "That was Athens - all the money has gone, its game over folks." But he didn't. He may well do so at some stage soon.

Eventually I got the the front of my five person queue of the senile and opened my account. Passport, tax number, phone number all in order. I handed over a 10 Euro note and the polite - if somewhat stressed - young man gave me about ten pieces of paper to sign and stamped my passbook. I have done my bit for Greece and have given it 10 Euro which I will lose one way or another in due course. So Jim - time to lobby for that statue.

The Government did not put up a default notice on Friday as I half expected. The can kicking goes on. The ATMs will be emptied this weekend and on Tuesday and in the run up to a potential default day next Friday the banks will be packed again with folks taking out whatever money they can.

It is not just the bank coffers that are being emptied. To get to The Greek Hovel where I sit now from my local village of Kambos is a two mile drive. On my side of the valley there is some concrete track but it is mainly a mud road. On the other side of the valley there is a deserted monastery so to honour the Church - even if there are no actual monks there - a concrete road was built in the good times. By last summer it was more pothole than road.

By law, since I have water and electricity, I can demand that the road be mended and so last summer I went to the Kambos town hall (4 full time staff serving a population of 536) and did just that. They said "the steam roller is broken and we have no money but will try to do it in the Autumn." They did not.

But last week a gang of men appeared and the road is now pothole free, indeed in some places we have a whole new concrete surface. And as I head towards Kalamta there are extensive road mending programmes. At Kitries, the village has found money to renovate its beach front. It is a hive of activity across the Mani.

Quite simply each little municipality is spending every cent it has as fast as it can. The Greek State asked all the town halls to hand over spare cash a few weeks ago to help with the debt repayment. The town halls know that next time it will not be a request but an order. But by then all the money they had hoarded will have been spent. That is Greekeconomics for you.

Everyone knows that something has to give and that it will probanly happen this summer. The signs are everywhere

http://www.zerohedge.com/news/2015-06-05/greek-banks-verge-total-collapse-bank-run-surges-massively-depositors-yank-%E2%82%AC700-mill

Greece Unable To Make €300 Million IMF Payment, Requests "Bundling"

With Greece and creditors unable to come to a compromise on a deal over the past several days, we've said repeatedly that despite claims to the contrary by Greek economy minister George Stathakis,Greece will not make Friday’s €300 million payment to the IMF and will instead request to have the payments bundled so as to buy PM Alexis Tsipras a few extra weeks to negotiate a deal and pass an agreement through parliament. 

Indeed, we said the following on Sunday:

It's quite possible the sense of urgency around the negotiations has now eased because, as we mentioned on Saturday, it looks as though Greece can buy a few weeks by opting to "bundle" its June payments to the IMF, something the Greek government has denied (meaning it's probably assured) but which seems increasingly likely especially given cryptic comments like this one from economy minister George Stathakis:

• STATHAKIS SEES `TECHNICAL SOLUTION' SOON TO MEET IMF PAYMENTS

While it's unclear whether that means the country will find yet another channel by which they can ask creditors to pay themselves back as they did with the IMF last month or whether that's a reference to bundling the payments is unclear, but here's what Stathakis told Corriere della Sera:

"There shouldn't be any neeed [to bundle the payments]"

We shall see. 

And then yesterday following the latest failure to reach a deal:

However, Christine Lagarde was confident as recently as three hours ago:

IMF chief Christine Lagarde said Thursday that she was "confident" that Greece will make a key debt payment on Friday, as the country mulls a new proposal from official creditors.

Lagarde said the proposal offered by European creditors in talks Wednesday, with revised performance requirements for the Greek government, "clearly demonstrated significant flexibility on the part of the institutions."

Needless to say, we were rather skeptical when she said it:

Now may be an opportune time for Lagarde to update everyone her "confidence" level, because moments ago, what we knew was inevitable, was confirmed:

• DJ GREECE SUBMITTED A REQUEST FOR BUNDLING JUNE IMF PAYMENTS INTO ONE -- GREEK GOVERNMENT OFFICIAL

And Reuters:

Greece has asked to bundle its four debt payments to the International Monetary Fund that fall due in June so that it can pay them in one batch at the end of the month, Greek newspaper Kathimerini reported on Thursday.

The request is expected to be approved by the IMF, the newspaper said. That would mean Greece does not have to pay the first tranche of 300 million euros that falls due on Friday.

Greece faces a total bill of 1.5 billion euros owed to the IMF over four installments this month.

And just like that, after effectively defaulting to the IMF a month ago, Greece has just re-effectively re-defaulted to the same IMF on its payment due tomorrow, which now will not be made, just as predicted.

Then, adding to the confusion, Greek PM Tsipras tweeted some token statement which for some inexpicable reason had a photo of himself in the tweet:

In any event, with one payment delayed, there are just a few more left.

http://www.zerohedge.com/news/2015-06-04/greece-unable-make-%E2%82%AC300-million-imf-payment-requests-bundling

Richard Russell – The Truth Behind The Government Propaganda, Lies And Manipulations

As people continue to digest breaking news out of Greece and around the world, the Godfather of newsletter writers, 90-year-old Richard Russell, discusses the truth behind the governments lies, propaganda and manipulations.  Russell also warns about the flow of power in today's world.

Richard Russell:  "This year marks the 57th year that I’ve been writing about the markets. During all these years a lot has changed, and I have changed too. Rather than write about every little jiggle in the markets, I now prefer to stick to the big picture.

The Big Picture

The big picture, minus manipulations, propaganda and lies, is that the US is on the long road to deleveraging and deflation, which, of course, is a correction of the years since World War II, when the trend was towards inflation and leveraging. With the advent of the internet and email, this business has become increasingly difficult and not only have many newsletters dropped out of the field, but many hedge funds and money managers have thrown in the towel.

John Williams Exposes The Truth Behind The Lies

I’ve been reading John Williams’ newsletter on the economy. John calls his newsletter Shadow Statistics, and by that he means that he’s telling the true story about the American economy minus government propaganda and Fed lies.

I’ve been wondering what to make of the major averages and indexes, whipping up and down within their trading ranges. Now it occurs to me that investors’ reaction to this oscillation is, “So what?” The stock market is going nowhere in a hurry. Thus investors have been lulled to sleep by the seemingly trendless activity of the major averages. Based on recent action in the stock market, I think the market could correct by 10% or more before investors will take it seriously.

My intuition tells me that John Williams and his Shadow Statistics are telling us the real story. I also suspect that the Fed agrees with the negative scenario that John Williams has presented. Therefore I assume that the Fed will not raise rates in the June session nor will it raise rates in September. After that comes an election year, during which the Fed will surely not raise rates. So it could easily be 2017 before we see the first rate rise by the Fed.

U.S. Debt Headed To $20 Trillion

In the meantime I expect the national debt to compound and accelerate, moving the national debt into the 18 to 20 trillion dollar zone. This will have its impact on the US dollar, which is now overbought and overloved. If the dollar crashes, the US will almost surely lose its reserve status. At that point I believe the Chinese yuan will share reserve status with the US dollar.

Gold Tracks The Direction Of Power

Throughout history, the path of gold has traced out the direction of power. But despite all this, I am an optimist. I believe we’ve reached the time when war between major powers has ended. Unbeknownst to most, spirituality and love are beginning to creep like a huge blanket over mankind."

http://kingworldnews.com/richard-russell-the-truth-behind-the-government-propaganda-lies-and-manipulations/

Greece Government Favours Drachma – Vows Will Not “Bow to Blackmail”

Greece Government Favours Drachma – Vows Will Not “Bow to Blackmail”

- Merkel, Hollande, Juncker, Lagarde and Draghi in “emergency” meeting re Greece
- Bankrupt Greece must find €1.6 billion to pay IMF in June
- First instalment of €300 million due on Friday
- Leaders of EU, IMF and ECB hold emergency summit in Brussels
- 58% of Syriza membership in favour of returning to Drachma
- Unforeseeable consequences and risks of 'Grexit'

An emergency meeting was held in Berlin last night between Angela Merkel, Francois Hollande, EU Commission President Junker, Christine Lagarde of the IMF and ECB president Mario Draghi. The meeting was reported to have continued past midnight.

The discussions were apparently aimed at formulating a "take it or leave it" offer that would be acceptable to the Syriza government that would allow the remaining €7 billion of the existing bailout package to be unlocked so that cash can be handed back to Greece's creditors and avoid a default.

Greece, a country whose own finance minister has described it as "bankrupt" is due to pay the IMF €1.6 billion over the course of June. The first instalment of four - totalling €300 million is due this Friday.

There were fears that the country would not be able to pay its public sector wages in May demonstrating the very fragile state of its finances. It would appear that the European leadership and that of the IMF and ECB also fear the state of Greece's finances and its ability to make its payments to the IMF this month.

A recent poll suggests that 58% of Syriza supporters would rather return to the Drachma than to remain in the single currency while severe austerity measures are imposed. Syriza have a 26 point lead over the next most popular party, New Democracy.

From this point of view it is, therefore, not entirely politically untenable for Syriza to choose the default and exit option should the "institutions" fail to respect Prime Minister Tsipras's "red line" on VAT hikes, pension cuts and labour market reforms.

Greek 10-year bond yields have been creeping higher - currently at 11.49% - indicating that the markets view the risk of a default as being quite high.

The "institutions", however, are likely to want to keep Greece in the fold at any cost. In a softening of tone Junker told German newspaper Süddeutsche Zeitung yesterday:

"Anyone who doesn’t see there is a humanitarian crisis in Greece is deaf and blind to what is happening there."

The unforeseeable risks posed by a default and "Grexit" to the Euro project are too great for the powers that be to wilfully allow it to happen. It could trigger credit default swaps and a derivatives crisis in the banking system.

It might also lead to a geopolitical crisis should erstwhile NATO member Greece turn to Russia for financial assistance in the form of funding, trade, economic and other cooperation agreements.

The consequences of making an acceptable offer to Greece may also be unforeseeable. In the short term it may buy time but in the longer term it is hard to see how Greece can come off life-support without a large scale write-off of some of its debts.

It may also embolden anti-austerity groups across Europe, particularly those in heavily indebted Italy and Spain.

The threats posed by the Greek situation to the euro - and indeed the threat posed by the entire European economic situation to the euro - make holding gold outside the banking system a vital form of financial insurance.

History and recent academic studies show that gold protects wealth from financial and economic risks.

http://www.zerohedge.com/news/2015-06-02/greece-government-favours-drachma-%E2%80%93-vows-will-not-%E2%80%9Cbow-blackmail%E2%80%9D

Dijsselbloem Crushes Greek Deal Optimism, Says Deal "Not Theoretically Possible" This Week

Remember a couple of hours ago when WSJ reported that, after an emergency meeting between the IMF and EU creditors, the troika decided to help Greek PM Alexis Tsipras out by simply drafting an agreement for him and placing an X next to the line where he needed to sign? Well, it now appears that either those reports were misinformed or Tsipras has come back and politely asked to the troika to read the alternative proposal he sent over on Monday evening because Eurogroup President Jeroen Dijsselbloem has just thrown quite a bit of cold water on the idea that a deal will be struck this week. 

• DIJSSELBLOEM SAYS CREDITORS STILL FAR FROM A DEAL WITH GREECE
• DIJSSELBLOEM SAYS PROGRESS ON GREECE STILL SLOW, INSUFFICIENT

And in case there was any doubt about our contention that the institutions intend to break Syriza’s campaign mandate once and for all:

• DIJSSELBLOEM SAYS CREDITORS WON'T MEET GREECE HALF WAY
• DIJSSELBLOEM SAYS GREEK GOVERNMENT MUST BE "HONEST WITH VOTERS" ABOUT FINANCES

As for the IMF payment on Friday, that looks like a no:

• DIJSSELBLOEM SAYS: GREECE DEAL NOT THEORETICALLY POSSIBLE THIS WEEK

So: default on the IMF's June 5 payment?

Or perhaps it was all just a scramble to push the EUR lower after one of its sharpest surges in the past decade.

http://www.zerohedge.com/news/2015-06-02/dijsselbloem-crushes-greek-deal-optimism-says-not-possible-week

Kyle Bass Was Right: Texas To Create Own Bullion Depository, Repatriate $1 Billion Of Gold

Most investors have heard Kyle Bass' rather eloquent phrase, "buying gold is just buying a put against the idiocy of the political cycle. It's that simple." However, what few may remember was his warnings in 2011, suggesting the University of Texas Investment Management Co. take delivery of its gold- as opposed to trusting it in the 'safe' hands of COMEX massively levered paper warehouse. Now, as The Star Telegram reports, Texas is going one step further with State Rep. Giovanni Capriglione asking the Legislature to create a Texas Bullion Depository, where Texas could store its gold. The goal is to create a secure facility that would allow the state to bring home more than $1 billion in gold bars that are owned by UTIMCO and are now housed at HSBC in New York.

From 2011:

"The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion and is storing the bars in a New York vault, according to the fund’s board."

The decision to turn the fund’s investment into gold bars was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment’s board, Zimmerman said at its annual meeting on April 14. Bass made $500 million on the U.S. subprime-mortgage collapse.

“Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said yesterday in a telephone interview. “I look at gold as just another currency that they can’t print any more of.”

And now, as The Star Telegram reports, UTMICO would prefer a Texas depository than a New York one...

“We are not talking Fort Knox,” Capriglione said. “But when I first announced this, I got so many emails and phone calls from people literally all over the world who said they want to store their gold … in a Texas depository.

“People have this image of Texas as big and powerful … so for a lot of people, this is exactly where they would want to go with their gold.” And other precious metals.

House Bill 483 would let the Texas comptroller’s office establish the state’s first bullion depository at a location yet to be determined.

Capriglione’s changes to the bill must be approved by Monday, the last day of the 84th legislative session.

The goal is to create a secure facility that would allow the state to bring home more than $1 billion in gold bars that are owned by the University of Texas Investment Management Co. and are now housed at the Hong Kong and Shanghai Bank in New York.

“The depository would be an agency of the state located in the Office of the Comptroller, directed by an administrator appointed by the Comptroller with the advice and consent of the Governor, Lieutenant Governor and Senate,” according to a fiscal analysis of the bill.

The depository could also hold deposits of gold and other precious metals from financial institutions, cities, school districts, businesses, individuals and countries.

“This will allow for bullion to be deposited here, as well as any other investments that … any state agencies, businesses or individuals have,” Capriglione said.

Storage fees will be charged, perhaps generating revenue for the state. For instance, Texas pays about $1 million a year to store its gold in New York, Capriglione said.

A fiscal note attached to the bill states that the depository will have “an indeterminate fiscal impact” on the state, depending on the number of transactions and fees, but says it’s too early to determine the extent.

“It’s unusual,” said Cal Jillson, a political science professor at Southern Methodist University. “So far as I know, there are no states with bullion depositories.”

*  *  *

Perhasps the fact that Texas doesn't trust New York suggests the unitedness of the states is starting to quake and surely "the idiocy of the political cycle" has only got worse...

"buying gold is just buying a put against the idiocy of the political cycle. It's that simple."

This is Capriglione’s second attempt to create the depository.

Two years ago, then-Gov. Rick Perry was on board, saying work was moving forward on “bringing gold that belongs to the state of Texas back into the state.”

“If we own it,” Perry has said, “I will suggest to you that that’s not someone else’s determination whether we can take possession of it back or not.”

In 2013, the Legislature ended before Capriglione could win approval of the bill.

Jillson said the bill’s sentiment is consistent with the anti-federal approach that conservative lawmakers have taken this year. “It’s in line with the idea that Texas is exceptional and needs to keep a distance from the federal government that respects individual states’ depositories,” he said.

Sounds like Texas - just like Austria, Germany, Russia, and China to name just four - no longer trusts the status quo.

http://www.zerohedge.com/news/2015-06-01/kyle-bass-was-right-texas-create-own-bullion-depository-repatriate-1-billion-gold

Gold Spikes Above $1200, Silver Over $17 On Heavy Volume

For now, no catalyst - as if one is needed in this market - but gold and silver prices just spiked higher on heavy volume above $1200 and $17 respectively...

Charts: Bloomberg

http://www.zerohedge.com/news/2015-06-01/gold-spikes-above-1200-silver-over-17-heavy-volume