Last week, the Greek government issued a decree which called for local governments to transfer excess cash to the central bank so that Athens would be able to pay pensions, salaries, and the IMF. The move is expected to raise as much as €2 billion to help keep the country afloat while the country’s “amateurish, time-wasting gambler” of a FinMin feebly attempts to find some kind of middle ground with his EU counterparts and as PM Tsipras pulls out all the stops including the old EU Summit sideline end-around with Merkel and the wild card energy gas pipeline advance from Gazprom (which may portend the dreaded “Russian pivot").
If the “temporary” local government reserve sweep constitutes what we have branded “soft” capital controls, we now have the first evidence that the “hard” variety may have arrived because as Kathimerini reports, Greek debtors are having their deposits seized in lieu of payment. Here’s more:
As the country’s finances reach a critical point, tax authorities have started seizing the deposits of small debtors, Kathimerini understands.
No figures were available regarding the new crackdown but cases of debtors targeted included a citizen with a debt of just 200 euros.
The bank account of the man in question was frozen and then reopened once it was established that he had paid his dues. In several cases, including that of a citizen with a debt of 24,000 euros, bailiffs are said to have used threats to secure the cash. The initiative comes as efforts to crack down on rich Greeks with tax debts make slow progress.
So there it is: the first indication that Greeks may soon be Cyprus’d. As a reminder, Citi now says capital controls will likely play a part in whatever the “resolution” (if you want to call it that) to the Greek situation turns out to be, barring a best case scenario outcome which seems exceedingly unlikely. As a reminder, here's what happens under "Grimbo":
In theory a run on banks could trigger capital controls tomorrow.
The lack of an agreement would also at some point be associated with capital controls and binding limits on ELA access (ZH: the writing is already on the wall for ELA restrictions as well). Compared to the previous scenario, the capital controls (a mix of bank holidays, deposit withdrawal restrictions, restrictions on external transactions) are likely to be more extensive and longer-lived...
Meanwhile, not every local governor is particularly enthusiastic about turning over reserves to the state. Here's Kathimerini again:
But many local authority leaders stood their ground.
The mayor of Aristoteli in Halkidiki, northern Greece, resigned late on Friday, citing personal reasons.
According to the controversial decree, local authority reserves will be used to “cover the state’s urgent needs, amounting to 3 billion euros over the next 15 days.” The motion passed with 156 votes from coalition MPs following a furious session in Parliament on Friday night.
Tsipras is to meet on Tuesday with Attica Governor Rena Dourou, who was on a visit to the US last week.
Last month the Attica Regional Authority donated 80 million euros to the state.
Universities also object to the decree and rectors met on the weekend to discuss their response. Technical college directors are to meet Monday.
If the students become restless, it's truly all over.