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Originally Posted by Chris
Wow. Head in the sand, much? 
Banks staying closed and imposing withdrawal limits "doesn't necessarily mean something is happening"?
On the contrary, it means something very serious *is* happening, and the authorities are taking last resort emergency measures to try to stop it.
The ECB will not increase the total amount it is prepared to feed into the Greek banking system, because it is not allowed to provide liquidity beyond the level where the system would be bankrupt. The Greek banking system has immediately - immediately - taken extreme measures to prevent capital flight. This tells you everything you need to know about how close the Greek banking system itself has come to outright collapse.
This, by the way, is not even the same issue as the one the Greek government has been negotiating with the Eurozone over, for the past several days. Those negotiations are about making loans to the Greek state to enable it to fulfil its various financial obligations. The failure of those negotiations will have many serious consequences, and the banking crisis that is now coming to a head is just one of them, and arguably isn't even the most serious. |
It's not head in the sand. It just means that it doesn't only point one way. It is that people would have continued to behave as if the ATMs would be closed in the future. They would continue to take money out. Withdrawing money from ATMs hardly comes under capital flight. How much can they take out at one time? People still need cash to pay for everyday things.
It could mean that something is happening, but on the other hand they would not give any warning of it. Eg Any printing of a new replacement currency would be done in secret for 2 weeks beforehand.