If you knew your money was going to lose 50% of its value by next week if it stays in the bank (and retirement accounts), would you withdraw it?
In the case of retirement accounts: could you withdraw it?
Because that is all that was removed in yesterday's "bank run".
What will 5% look like?
How will Greeks react when their 4000-euro/month salary converts to a 4000-drachmas (Greek currency) salary? When their standard of living that required 4000 euros/month now requires 8000 drachmas/month. Will they be bitter?
If Greece leaves the Euro as it most likely will, all Euros in Greek banks will be converted to drachmas and the expected loss of purchase power is expected at around 50%. Nobody is arguing this!
To put this in proletarian terms:
if this were to happen in the US, our Commie Obama hat
would be selling for $40 instead of the current $19.99.
The hat would likely lose 50% of its fun too...
The stories of well-dressed and well-groomed dumpster-divers in Greece have been around for months. It is only those who rely on the US media who are realizing there is a problem over there. Assuming they aren't stuck on MSNBC or American Idol...
Here are some links from today:
The Economic Collapse (Source of photo above)
Right now, America is going down the same path as Greece, Spain and Italy have gone. Eventually we will hit a wall and our financial system will fall apart.
Zero Hedge: What Happens If Greek Payments Stop: Goldman's Thought Experiment On "The Day After"
Karl at Market-Ticker predicts this will eventually lead to Germany returning to the Mark, as they will realize all of Europe is relying on their economic strength to pull them through.
Also from Market-Ticker, 4 hours ago: FLASH: Greek Banks Cut Off?
Time to critical mass is now measured in days if not hours, and if acceleration occurs the weekend is the perfect time for Greek authorities to drop the hammer in the form of a bank holiday and capital controls as they will have no choice irrespective of the critical damage that will result from them doing so.
Same story with more information from SF Chronicle, <1 hour ago: ECB Stops Lending to Some Greek Banks.
Is the prediction by Market-Ticker correct about this all happening this weekend? Easier to announce that "your money is gone" during off hours...
Let us rephrase that: "Sorry, your money is gone."
Maybe Romney can incorporate this into his campaign. Maybe he can make a convincing argument that spending more than you have leads to problems.
UPDATE 5.31: a commenter says the photo above is of the UK, yet we recall finding it in a Google search: Greece Bank Run". We can't verify its accuracy.