In what looks to be a predictable turn of events, Greece have given up on the unlikely prospect of yet another bail out and are considering leaving the Euro. Cause for concern began to grow and large investors have began withdrawing from Greek banks and moving to much more stable banks within the Euro zone, having detrimental effects on Greece. Lack of confidence within the financial stability can cause Greece to have no choice but to live up to predictions, or request another bail out, which seems highly unlikely. Monday saw €800 million pulled from Greek banks Monday — nearly $1 billion in U.S. dollars, and €72 billion pulled from Greek banks since January 2010 alone.
Analysts began to fear that a “bank run” was on the horizon. Bank runs take place when large groups of customers withdraw their holdings from banking institutions, fearing that the bank will soon be insolvent. As more people withdraw from the bank, the likelihood of insolvency increases, further increasing the number of customers who withdraw. Essentially, closure transforms from a possibility to self-fulfilling prophecy.
The saying: “It’s all gone a bit Greek”, which I may or may not have made up, comes to mind. I feel sorry for the Greek people, but not for their poor politicians. This is a quintessential example of PPP.