Talk Is Not Enough: Bank Run And Default This Week In Greece?

It’s the morning of Tuesday, April 14, here in Europe and so far I see no reports indicating Greek banks won’t open after a long Greek Orthodox Easter holiday weekend. Presumably the European Central Bank today and throughout the week will be monitoring for signs of a serious bank run and/or to see if Athens steals more pension money to pay €1.4 billion in short-term Treasury bills maturing today plus another €1 billion maturing on Thursday and if it intends to forgo its €460 million International Monetary Fund payment also coming due Thursday.

I will be monitoring the situation closely during the next few days and providing updates within the publicly open comments section at the bottom of this post. Those on the ground in Greece, please share your observations.

So unless the ECB is willing to go underwater on its credit line to Greek banks, a bail-in attempt is at hand. The ECB’s funding of Greek banks illustrated in this chart is from February. Now, in April, the amount could very well be greater than the sum of Greek bank deposits and set to go severely so. In effect, Greek bank depositors would be withdrawing funds on ECB credit.

For its part, the EU is trying to spread misdirection by always making it about “talks.” Athens is in no more a position to talk its citizens out of a bank run without closing banks and imposing severe capital controls than its leaders are in a position to “talk” their way out of a massive cascade of maturing debt. London’s Financial Times reports Greece has already decided to withhold its IMF payment for May and June in order to pay its pensioners. I don’t see how it could rescind such a statement, even if it makes it as far as May.

While this crisis is dead ahead, gold algos are doing dollar correlation paper trades as if there will be no fallout from what’s about to transpire in Greece. This is being conducted against very poor trading volume at the Crimex. Volume (physical settlement) has been rising on the SGE. Gold is in backwardization in London again, indicating physical shortage.