MidnightWatcher – Prophecy in Motion

Reuters – “Charles Dallara, who as head of the International Institute of Finance (IIF) spent months in Athens negotiating the largest ever sovereign debt restructuring, also said he had seen evidence that more people were moving their cash out of Greece.

‘There has been a pick up of deposit flight from Greece,’ Mr Dallara told reporters, but added he thought this could be stabilised ‘once you get a new government in place, if that government reaffirms its intention to remain in the euro zone’.

He was speaking on a visit to Ireland, which followed Greece into an international bailout in 2010 but has been far more successful in boosting exports to keep the economy afloat while slashing government spending.

Policymakers have begun to speak openly of the risk that Greece, now in its fifth year of recession, might leave the euro. Mr Dallara said the costs of a Greek exit would be so severe that Europe has to find a palatable way of solving their woes.

‘I think that it (a Greek exit) is possible, but I wouldn’t call it inevitable and I wouldn’t even call it likely because the costs for Greece, for Europe and for the global economy are likely each in their own way to be immense,’ Mr Dallara said in a speech.” Read more.

Euro crisis: Run on nationalised Spanish bank sees customers withdraw €1BILLION… as French government slashes its own pay by 30% – “A €1billion run on a recently nationalised Spanish bank has sparked further fears that the 17-nation eurozone is about to implode. European markets fell as fears of a continent-wide contagion from goverment-less Greece’s economic crisis also spread. Shares in Bankia, Spain’s fourth biggest bank formed in 2010 through a merger of seven struggling regional savings institutions, today plummeted by 27 per cent. The pan-European FTSE 300 index was down 0.9 per cent at 984.22 points by 10.26.am, close to a four-and-a-half-month low of 983.95 points reached yesterday. Spain’s benchmark IBEX index fell nearly 2 per cent to its lowest level since mid-2003. It came following a report in El Mundo newspaper that its customers had withdrawn more than €1billion from their accounts over the past week.” Read more.

European Central Bank halts operations with some Greek banks – “BERLIN/FRANKFURT – The European Central Bank has stopped providing liquidity to some Greek banks as they have not been successfully recapitalised, euro zone central bank sources said on Wednesday. The ECB declined to comment on the news, which sent the euro lower against the dollar. Concern is growing in Greece and among investors that the country may have to leave the euro zone.” Read more.