The Guardian reports that private investors have pulled a staggering €8-10 billion from Greece since the economic crisis commenced last November in the country. If this is true, and if Germans insist on not bailing out struggling debtor countries, then the region’s economic crisis is not only turning even more dangerous, but it could prove fatal for the entire eurozone.
From Guardian: “In the last four to six weeks a lot of money has been moved [out of Greece]; I’ve heard extraordinary figures,” analyst, Kostas Panagopoulos said.
“People are moving funds either because they don’t trust our banking system, want to avoid what they fear will be taxes on deposits or are simply anxious about the future of our economy.
While a fifth of the population lives beneath the poverty line, some 20% of Greeks are believed to earn more than €100,000 annually – even if, according to income tax records, 90% declare salaries of less than €30,000 a year.
“Greece has a lot of rich people who are not being taxed properly because there is so much tax evasion,” finance minister Giorgos Papaconstantinou, told the Observer. “If you look at the actual numbers, you will see that the number of people declaring over €100,000 a year is roughly 15,000,” he said. “I don’t think that there is anyone in this country who believes there are only 15,000 Greeks earning more than €100,000 a year.”
Worth pointing out is that as the growing flight of funds from Greece intensifies, another negative and crucial aspect in the country’s economy is that Greece has been financing current account deficits through its banks, which have built up a massive of €110 billion foreign liabilities (keep in mind this is Greece, not USA, and €110 billion is still an astronomical number). If foreign creditors decide to ask for their money back, defaults and even macroeconomic catastrophe — as in the economic system’s inability to keep supplementing savings, foreign exchange and government revenue, thus no longer contributing to growth — are inevitable.