When the Greek government chose two weeks ago to institute a decree calling for all non-working cash to be transferred immediately to the central bank, local municipalities protested and prepared for a confrontation. That rebellion has now come about as on April 27, the Central Union of Municipalities and Communities of Greece (“KEDE”) announced they were unilaterally rejecting the legislature’s decree and refusing to perform any transfer of funds that are rightfully controlled by local authorities and municipalities without ironclad protections in writing under the power of law.
Earlier today, while the European markets were caught in the latest myopic buying frenzy resulting from the hope that an imminent termination of Yanis Varoufakis may mean a Greek debt deal is imminent, the Central Union of Municipalities and Communities of Greece (“KEDE”)held a meeting in which it said that while it “declares it support for the national negotiating effort“, it would not transfer any funds to the Bank of Greece.
As Bloomberg confirms, the union said “they won’t transfer cash reserves to Bank of Greece until PM’s promises to them are passed into law, according to statement today on Athens-based body’s website. Govt must also make clear how the Bank of Greece will manage these funds.” – Zerohedge
Greece for all intents and purposes is insolvent and bankrupt, and is now escalating capital controls to seize any and all funds it can to keep the lights on. In addition to this decree, the Greek government has instituted new bank deposit confiscations on anyone it deems to be delinquent in their tax obligations, and are also asking Russia for a forward payment of $5 billion for pipeline use on Greek soil that will not occur for another few years.
When the newest government took over in late 2014, they won on a promise to the people that they would immediately put an end to austerity, corruption, and even go as far as remove themselves from the Euro and European Union. However, since the Greek debt issue has manifested itself over the past three months, the ruling Syriza party has accomplished little more than make threats to the Troika, gone back and forth between leaving the EU and giving into EU demands, and now they are turning on the people and local governments to fund their empty treasury.
It is unlikely that a good solution can be found for Greece, or that the people will not have to go through another few years of economic hardship no matter the outcome. But as we have seen in the nation of Iceland, who chose to default on their bad debt and jail the bankers who indebted them, a clean start with a 1-2 year recession mixed in to dissolve the toxic debt is the only sure way Greece will survive their tribulation, and have any hope to start anew in or out of the Eurozone.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.