How Do You Spell “PANIC” in Greek?

This Sunday Greek voters will go to the polls to decide the economic and financial future of their country. Or so they think.

Their economic and financial future was already decided for them long ago with misguided, irresponsible fiscal policies which have placed their country upside down and deeply underwater in debt.

That’s why Greece has been the focal point of the ongoing–and still evolving–crisis in Europe for several months now.

There is a real fear that Greece could exit the euro, the common currency of the European Union, and send the region into true economic financial and even political chaos.

In response, should Greece take that step, the European Union is planning on closing its borders, cutting off money flows into Greece and even limiting ATM withdrawals in Europe to prevent a stampede of assets out of European banks.

These types of draconian policies are just the kinds of things that undermine public confidence in banks and other financial institutions–not to mention governments. It’s the stuff crisis is made of.

And we’re seeing a preview of the chaos in a very subtle but important form right now: Greeks are removing a billion dollars per day from banks. In olden days that would be called a “bank run:”

It is naive to believe that this crisis can be limited to Greece, or even contained in Europe. There is too much counterparty risk between banks and other institutions around the world. The Domino Effect is alive and well in the financial markets. Gold is the best protection.


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