Banks Prepare for the Worst in Greece
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  • “many banks are already scouring legal records to ensure that they will be prepared for the lengthy court challenges that will inevitably arise should Greece leave the Euro. . .”

    But unfortunately for them you can’t get blood out of a stone. They loaned, they assumed the risk.

  • You can’t both have “an appetite for risk” — I hate that phrase — and not be prepared to swallow the losses.

  • Toby Blyth

    Maybe, but it may work the other way. A deposit at the bank is legally a debt owed by the bank to the depositor. I have 100 euros on deposit and the Greek govt says you must now repay me 100 drachma. Bank buys it in currency market at its true price of 10 euros and makes a killing. If a German company agrees to sell machinery to Greece for 1000 euros each, that’s a problem if the Greek state changes the currency as the seller is taking a 90% hit.
    Of course if the Greek state requires banks to exchange 1 euro for 10 drachma, probably closer on real price to 1:1, its a problem for the bank.
    Those whom the gods wish to destroy, they first make mad, I suppose.

  • Gary L

    If there were any justice in the world the Greek bankers would be in the streets marching to protest the morals of the ordinary Greek citizen.

    – Michael Lewis, Boomerang: Tales from the New Third World (2011)

  • Bruce B

    Of course the Greeks want to keep the Euro. Estimates are that the drachma will depreciate 50% versus the Euro on day 1. Who wants to see their savings sliced in half in one day? Furthermore, as long as the Greeks can keep Europe holding on to the illusion that the system is salvageable, Germany will continue to fund Greek social spending, although that’s a time bomb. Greeks don’t would want to give up free money. “Let Germany pay for it,” until they won’t anymore (which is soon).

  • Kris

    “voters continue to support parties that oppose the bailout on which it depends”

    If I may be that guy, I doubt many people actually oppose a bailout (more’s the pity); they are simply outraged that the Germans dare attach any conditions to it.

    [email protected]: “But unfortunately for them you can’t get blood out of a stone.”

    No, but you can go for some catharsis, even if it’s counterproductive.

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