Klunk – Member
Why keep your money in a Bank if its earning less than inflation ?
Its called financial repression and we will all have to come to terms with it. We will live with negative real interest rates for many years as governments seek to reduce the debt burden. Look at UK history 1940-60s, the same thing happened.
http://www.ft.com/cms/s/0/58078892-9abc-11e1-94d7-00144feabdc0.html#axzz1uyH0Nfwd
The financial crisis was caused primarily by excess liquidity from central banks at a time of historically low interest rates. And look what happened. And now we have, err, excess liquidity and negative real interest rates so you either essentially pay governments to borrow from you or your are a PIG bank and you play the current ponzi scheme of taking ECB cash and investing (sic) in your own country’s bonds where the credit rating is deteriorating by the hour and you are holding a depreciating asset. You couldn’t make this up….
Technically and legally, Greece can default and stay in the euro, but in practice this is most unlikely. For the very simply reason that it ignores the social impact. The Greek people have had enough of wage deflation and austerity and the hope of, err, stabilisation. Without an FX adjustment they cannot compete and the people will vote with their feet and their petrol bombs sadly. But can you blame them – betrayed by the Europeans, their own politicians and the financial markets (well done GS!?!). Extremely sad.
Money is now being withdrawn in Greece, Spain and Italy and Grexit talked widely. Its a matter of time now. They have 6 weeks before the next bill!!