Friday, October 14, 2011

Maybe it just collapsed on its own?

Imagine if every bank in the US was guaranteed by the local/state government. I certainly wouldn't have my money in any bank from Illinois or California. Thankfully we don't have to worry about where our bank is located, our dollars are equally safe (or unsafe) anywhere. Europe isn't so lucky, a euro in a Greek bank is much less secure than a euro in a German bank. So of course people have been moving their euros out of Greek banks (among others) and into German banks. This forces Greek banks to liquidate assets and transfer the euros to German banks. So the big question on everyone's mind is do the Greek banks have enough in assets to cover all the deposits in their bank? At the rate they're are losing deposits we'll find out very soon just how big the holes in their balance sheet are.

h.t. MR

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