Markets are trading in another no volume, no action fashion.
We are getting the creepy feeling, like the calm before the storm.
The news ticker is still full of news regarding Berlusconi, Greece, Italy, debt, but nobody really seems to care today.
What are ordinary people doing then?
Pulling cash out of the system.
We know the Greeks have been doing that for quite some time, but what about the Italians? With Italian bond markets in a chaotic status, where the 10 year is continuing it’s parabolic move towards the 7% level, there sure must be people wondering what to do with the money in the banks.
Don’t forget, the Italian bond market is the world’s third largest, and a run on the banks would cause trouble well beyond Italy. As pointed out, it feels very calm….
Der Spiegel reports on the “run for the return of your money”.
“Run for your lives” is the new motto in Europe, and not just among banks and insurance companies, which are selling off southern European bonds as quickly as they can, but also among ordinary holders of savings accounts. Banks and regulatory agencies are noticing that anxious citizens throughout Europe are trying to bring their money to safety. The flight of capital from Italy, Spain and Greece is in full swing.
Since the beginning of the crisis, ordinary Greeks have withdrawn about €50 billion ($69 billion) from their accounts, or a fifth of total deposits. In May, when the first rumours about a possible withdrawal from the euro zone were making the rounds, the Greeks withdrew €1.5 billion from their accounts within 48 hours.
And it is no longer just the rich who are moving their money to a safe place. A Greek nun recently closed her convent’s bank account, telling the bank employee that she needed the €700,000 in the account for renovations. But when pressed by the bank employee, she finally admitted that she was worried about her order’s assets.
….and the Italians are surely getting more nervous.
Figures compiled by the German Bundesbank and the Banca d’Italia, Italy’s central bank, suggest that more than €80 billion in capital was moved out of Italy in August and September by Italians concerned about the growing risk of a government insolvency.
Full must read article here.