The Greek Bank Holiday: This is What an Economic Collapse Looks Like
A “bank holiday” sounds like such an innocuous thing, doesn’t it? Playful, a well-deserved rest, maybe even fun. If you’d like to learn more about the fun of such a holiday, look no further than the streets of Greece, where people have been informed the banks will be closed for the next week.
Because the European Central Bank has stopped sending in the money that was keeping the Greek financial system afloat. Had people been able to go to the bank and withdraw their money, the banks would be unable to function. So, the banks said, “Nope, you can have $60 if you want to wait in line for long enough to get it.”
Yes, you’re understanding this correctly: the banks are keeping afloat using the money from people’s accounts. The Greek stock markets did not reopen today. This is a last-ditch effort from the Greek government to prevent total economic collapse.
The situation there is dire, and much like Venezuela, it’s a case study for anyone who believes that an economic collapse of our own financial system is imminent here in America.
We need to pay attention to what’s going on in Greece. This is what a real economic collapse looks like. It isn’t a Mad Max scenario or a scene from some other post-apocalyptic movie.
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It’s quiet desperation, long lines, and a sick feeling in the pit of your stomach as you wonder how you’ll feed your kids and keep a roof over their heads. It’s the discovery that you thought you had been doing the right thing financially, but you were deceived. It’s the realization that everything you worked for your whole life is gone.
Here’s how it affects the citizens of Greece
First of all, this article isn’t about the poor financial decisions of the Greek government, whether social aid programs should exist, or if a bailout should have occurred in the first place. It’s about the real-life ramifications of an economic collapse on ordinary citizens who depend on fiat currency, consumer goods, and the availability of their wages when they need them.
A decree published by Greek Prime Minister Alex Tsipras cited “the extremely urgent and unforeseen need to protect the Greek financial system and the Greek economy due to the lack of liquidity caused by the Eurogroup’s decision on June 27 to refuse the extension of the loan agreement with Greece.” The following restrictions will be in place:
The following restrictions will be in place:
- All banks are closed until July 6
- ATM withdrawals are limited to 60 Euros per day (the equivalent of about $60 USD)
- People using bank cards from other countries will not be limited to 60 Euros per day (so this won’t affect tourists aside from the long lines.)
- The Athens stock exchange is closed today.
- Pensions and wages will be unaffected – which means they’ll still be electronically deposited into the accounts that no one can access.
- Debit and credit card payments will continue to work.
- Online transactions within the country will continue to work
- Foreign transactions will be prohibited without Ministry of Finance approval
- Urgent expenditures ““necessary to safeguard a public or social interest” must be approved by a banking commission
- Interest surcharges for this week are prohibited
- Banks that break these rules will be charged a fine of 10% of the value of the transaction
The statement issued by the prime minister allows for the bank holiday period to be shortened or extended by his discretion.
Greeks are scrambling to stock up on food and fuel.
Despite the fact that Greece has been clinging to the lifeline cast to them by the European Central Bank for several years now, people are still hit hard by the bank closures. It’s easy to say, “Why on earth do they have money in the bank?”
However, their system is much like ours – it’s nearly impossible to function without a bank account. For example, pension payments and wages are nearly all paid by automatic deposits directly into one’s bank account. If you have a car payment or a mortgage payment, it comes out of your bank account – you don’t go and pay cash for it. The system is designed so that access to your money is not your own.
An article on Zero Hedge featured Tweets with photos of the long lines for grocery stores, ATM machines, and fuel stations as people desperately try to turn their Euros into tangible assets.
This is affecting stock markets everywhere.
This isn’t just a problem that affects Greece. Stock markets across the globe are plummeting in the aftermath of the bank holiday.
In London, the FTSE dropped by 2%. The French and German markets dropped by 4%, and the European banking shares dropped by a hefty 10%. Tokyo lost 3% and Hong Kong dropped by 2.5%. Michael Hewson, chief markets analyst at CMC Markets UK,
Michael Hewson, chief markets analyst at CMC Markets UK, said we can expect the effects to be far-reaching. “The Greek butterfly looks set to cause a tornado in financial markets. In the process we could well also find out if this event turns out to be the equivalent of the butterfly flapping its wings in New Mexico, going on to cause a hurricane in China.” This far-reaching effect is probably because Greece can be expected to default on $1.77 billion dollars in debt to the IMF.
This far-reaching effect is probably because Greece can be expected to default on $1.77 billion dollars in debt to the IMF.
What we can learn from the collapse of the Greek economy
If you’ve been paying attention to the goings-on in Greece, you probably recall the 2010 riots, when a harsh austerity program was introduced as part of the terms of a bailout from the IMF (International Money Fund) the European Commission, and the European Central Bank (ECB).
In actuality, the country has been floundering financially since 2007, when their first recession hit. This most recent crisis has occurred because the bailout money, which was divided into four major payments, may not be continued, which will result in massive debt defaults.
Does any of this seem familiar? Our own government has been working on a deficit for may years, except instead of taking money from
loan sharks entities like the IMF, our government has opted to just print more up and pretend it’s backed by something besides dreams and fairy dust.
If things progress on our current route, what you’re seeing in Greece right now could be our future. And not a distant 20-years-down-the-road future. Our near future.
How do you prepare for something like this? Well, first things first, you don’t leave your money in the bank. It’s perfectly understandable to have your paychecks deposited and your payments withdrawn, but once your bills are paid, the rest of it needs to come out. Then, keep enough on hand to meet your bills for a few months and invest the rest in tangible assets like
I personally don’t keep more than the bare minimum needed for monthly bills in the bank. I have a serious mistrust of these establishments, especially after what we witnessed a couple of years ago in Cyprus when the government there took money directly from people’s accounts, triggering panic and bank runs across Europe.
We aren’t protected here in the United States either – it is blatant that the banking industry is setting us up for the potential of a similar situation. Deposit accounts are no longer legally protected and the Federal Reserve passed a policy that in the event of an economic crisis (think “bank run) that accounts can be frozen to preserve the liquidity of the banks.
All of this seems to point in the direction of what we’re seeing in Greece, doesn’t it? It seems like the game pieces are being moved around the chessboard to be able to legally seize or control whatever you have in the bank.
Most folks who are paying attention to the financial news in our country are not big fans of fiat currency, but at this point in time, it’s a necessary evil. Please don’t clog the comments section raving about the fact that cash is not real money. While I realize it is backed by nothing but happy thoughts, it’s still important to remember that in the world that exists today, government-issued currency is most likely to be the unit of trade needed. Most mortgage companies don’t accept payments in gold ingots, and your mechanic might look at you funny if you present him with a pile of silver coins to pay for a car repair. I recommend that you keep at least one month of expenses physically on hand, in cash. This is instantly available, easily recognizable as money to those who are
I recommend that you keep at least one month of expenses physically on hand, in cash. This is instantly available, easily recognizable as money to those who are uninformed, and simple to trade for goods or services.
What do you need to survive the end of the consumer lifestyle?
Once you have the money set aside to keep you afloat, it’s time to go hard into preps. Think about what you need for self-reliance: what if you could never again just go to the bank, get money, then purchase the things you need? Look no further than
Think about what you need for self-reliance: what if you could never again just go to the bank, get money, then purchase the things you need? Look no further than
Look no further than the collapse of Venezuela to see the items that are extremely scarce there.
“What can you store?” is not the right question to ask.
“What can you make?” – that’s the right question.
Your focus has to be on long-term sustainability, frugality, and self-reliance. Don’t get me wrong – a stockpile is sensible and an essential course of action. It should definitely be part of your preparedness plan.
However, you need to also be ready for the time when the supplies in your well-stocked pantry are no longer available. You need to be able to meet as many of your own needs as possible or you’ll end up being one of those people wearing dirty clothes because you can’t find laundry soap or going hungry because you can’t find any food at the stores – or can’t afford it if you can find it. You need to be ready for the end of a consumer-driven lifestyle, because quite frankly, there may soon come a day when there are no consumer goods to be had. Here are some ways to work on your
Here are some ways to work on your self-reliance:
- Looking for the thrifty answer using things you have on hand, instead of purchasing a solution to every problem
- Fixing things that are broken instead of replacing them
- Eating simple food you prepare from scratch
- Producing as much of your own food as possible
- Learning to forage
- Using “old-fashioned” alternatives for disposable things like diapers, wipes, feminine hygiene supplies, paper towels, and the like
- Learning to make cleaning supplies and soaps, especially from accessible supplies (like vinegar, ash, and foraged natural ingredients)
- Learning to make pantry basics like vinegar, sourdough, and cultured dairy products
- Learning to preserve your harvests to see you through the lean days of winter
- Providing your own services like heat, garbage disposal, and water
- Learning about natural remedies from accessible sources
- Learning to protect your family and property
It’s only by reducing your need for the things sold in stores that you can exempt yourself from the chaos and desperation that will erupt when or if an economic collapse situation occurs here.
Knowledge and skills are among the most important things you can “collect” to prepare for an economic collapse. However, if you haven’t been at it your entire life, it’s difficult to remember everything. Create a library of references to help you in your quest for self-reliance. These are some of my favorites:
These are some of my favorites:
- The Prepper’s Blueprint: The Step-By-Step Guide To Help You Through Any Disaster:This is the be-all and end-all Bible of prepping and self-reliance
- The Pantry Primer: A Prepper’s Guide to Whole Food on a Half-Price Budget: This book is mine, but it’s not just about shopping for your preps. It’s about properly storing your food, learning to preserve it, and actually producing it yourself.
- The Encyclopedia of Country Living, 40th Anniversary Edition: The Original Manual of Living Off the Land & Doing It Yourself: This gives detailed how-tos from pretty much anything involving homesteading, including butchering and preserving meat, building your homestead structures, and growing food
- The Prepper’s Financial Guide: Strategies to Invest, Stockpile and Build Security for Today and the Post-Collapse Marketplace: A rare preparedness book that focuses on the financial aspects of prepping – absolutely vital for an economic crisis
- The Prepper’s Canning Guide: Confession – this book is mine, but it’s a fantastic resource for both beginning and advanced canners
- Prepper’s Natural Medicine: Life-Saving Herbs, Essential Oils and Natural Remedies for When There is No Doctor: This is a pre-order, but Cat Ellis knows her stuff. I don’t have to read it to know that the quality will be as top-notch as her website
- The Survival Medicine Handbook: A Guide for When Help is Not on the Way: This guide is different, as it includes a lot of information about caring for traumatic injuries when there’s no hospital available
- Prepper’s Home Defense: Security Strategies to Protect Your Family by Any Means Necessary: When the economy goes down, the crime rates go up – ’nuff said
- SAS Survival Guide: How to Survive in the Wild, on Land or Sea: This small book goes everywhere with me, and my kids have a copy in their bags as well. It isn’t extremely in-depth but it’s an easily portable comprehensive guide to dealing with most survival situtions
- How to Survive the End of the World as We Know It: Tactics, Techniques, and Technologies for Uncertain Times: This is a classic by James Wesley, Rawles, the founder of SurvivalBlog
- Forgotten Skills of Cooking: The Time-Honored Ways are the Best: This book contains over 700 recipes with detailed instructions – cooking from scratch is something of a lost art, but this book has something for everyone from the complete beginner to the accomplished cook
- The Prepper’s Pocket Guide: 101 Easy Things You Can Do to Ready Your Home for a Disaster: This guide was written by Bernie Carr, The Apartment Prepper. It’s loaded with solid, low-cost ideas that you can implement on nearly any budget
- Sew Everything Workshop: The Complete Step-by-Step Beginner’s Guide: If you don’t know how to sew, this simple guide breaks things down into the easiest possible steps. It’s geared towards using a sewing machine, as opposed to sewing by hand
- The Forager’s Harvest: A Guide to Identifying, Harvesting, and Preparing Edible Wild Plants: This guide is general and will work for most parts of the country, however, you can also look for guides specific to your region
Once you have an amount saved that is greater than your one month of cash, and once you have all the tangible preps you can store, only then should you consider investing in precious metals. Gold and silver retain their value far better than the dollar, and the metals are easily liquidated if an emergency arises and it becomes necessary to change them to fiat currency.
This being said, metals are harder to spend, and it takes a little bit of effort to cash them in, so it can help deter you from spending unwisely if you tend to have difficulty saving money. Reputable companies exist that allow you to do all of your transactions online and have the metals shipped to your home, taking the hassle out of acquiring them if you happen to live in a remote area.
World events are our crystal ball
I’ve been warning specifically about this impending financial doomsday since the beginning of the year. In my New Year’s Day post, I wrote:
Not only would your money be worthless, here a few more ways the current economic trends may still affect you.
Prices will go up. We’ve seen an almost unprecedented increase in the price of food over the past couple of years, even as the quality of the food available plummets. This is due to massive droughts, early freezes, and basic cost-of-living increases.
Unemployment will continue to ripple through the country. Those without jobs now are equal to the number of unemployed during The Great Depression. As the economy plummets, that number will almost certainly exceed the previous highs.
Obamacare mandates will continue to impoverish the middle class. The most ill-conceived policy in history, Obamacare has increased monthly payments while decreasing coverage for nearly every person who is gainfully employed. And, if you refuse to procure coverage through Obamacare, expect attempts to penalize you into compliance. This is adding to the unemployment rate as employers struggle to keep their doors open and drop full time staff to avoid having to pay their portion of the O-care payments.
Rents will increase. If you don’t own your home, prepare to pay higher rent as landlords try to cover their losses of income in other sectors. Foreclosures will be on the rise, which means there will be fewer homes available.
The bottom line is, income will remain the same, decrease, or even disappear entirely for many of us. Meanwhile, the price of darn near everything will go up. Expect to pay more for things like keeping your utilities on, feeding and clothing your family, keeping a roof over your heads. Aside from that, those dollars you are carefully saving? They are only providing you with the illusion of security.
Bloggers like Michael Snyder and Mac Slavo concur that we are right on he edge of a crisis the likes of which our generation has never seen. Pay attention to the breaking news out of Greece. On July 5, the decision will be made whether any further bailouts will be headed their way. If none are forthcoming you can expect the bank holiday to be extended indefinitely.
Also note that:
- The Chinese stockmarket is in a freefall.
- Venezuela is in the midst of an all-out collapse.
- The UK has recently implemented another round of harsh austerity measures.
The events occurring in the European banking systems (Cyprus and Greece in particular) are a glimpse into our future. I can’t ring the warning bell any louder than this.
Our way of life is about to change, and you can prepare for the new reality or be one of those desperate people in long lines, hoping for some mercy from the people who put us in this situation.
About the Author
Please feel free to share any information from this site in part or in full, leaving all links intact, giving credit to the author and including a link to this website and the following bio. Daisy is a coffee-swigging, gun-toting, homeschooling blogger who writes about current events, preparedness, frugality, and the pursuit of liberty on her website, The Organic Prepper. Daisy is the publisher of The Cheapskate's Guide to the Galaxy, a monthly frugality newsletter, and she curates all the most important news links on her aggregate site, PreppersDailyNews.com. She is the best-selling author of 4 books and lives in the mountains of Virginia with her two daughters and an ever-growing menagerie. You can find Daisy on Facebook, Pinterest, and Twitter.