The European Central Bank has stopped providing liquidity to some Greek banks as they have not been successfully recapitalized, the ECB said on Wednesday, confirming news earlier reported exclusively by Reuters.
The news sent the euro lower against the dollar, fanning concerns among investors and in Greece that the country may have to leave the euro zone.
The development highlights the weak state of the banking sector in Greece, where Greeks are pulling euros out of the banks in fear that their country may exit the European single currency despite the declared determination of EU powers Germany and France to keep Athens in the monetary union.
From Brandon Smith at Alt-Market:
If you thought the Greek rollercoaster was a pain in the neck for investment markets, just wait until the whole of the EU is in a shambles!
Spain is next in line, with a 25% official unemployment rate and a massive black market economy forming. As I have been saying for years now, when governments disrupt the financial survival of the people, they WILL form their own alternatives, including black markets and barter markets. It is about survival. The Spanish government does not care much for these alternatives, though, and has now banned cash transactions over 2500 euros in a futile attempt to squeeze taxes out of the populace through digitally tracked payment methods:
[expect this coming soon to your neighborhood-HM]
...Financial disasters have always been a convenient catalyst for a host of even more frightening obstacles, including civil unrest, and blatant totalitarianism. This is the cusp. It is one of those moments that people of later generations read about in awe, and sometimes horror. The “doom” is not in the event, but in the response. What we make of the days approaching determines the darkness that they cast upon the future. It is a test. It is not something to be dreaded. It is something to be seized upon, and dealt with, as great men and women before us have done.