May Greek Really Be Forced Out Of The Euro

Greeks pulled their cash out of the banks and stocked up with food ahead of a cliffhanger

election on Sunday that many citizens fear will result in the country being forced out of the euro.

Bankers said up to 800 million euros were leaving major banks daily and retailers said some of the money was being used to buy pasta and canned goods in case of shortages, as fears of returning to the drachma were fanned by rumors that a radical leftist leader may win the election.

The last published opinion polls showed the conservative New Democracy party, which backs the 130-billion-euro bailout that is keeping Greece afloat, running neck-and-neck with the leftist SYRIZA party, which wants to cancel the rescue deal.

The European Union and International Monetary Fund have warned that Greece, which has only enough cash to last for a few weeks, must stick to the conditions of the bailout deal or risk seeing funds cut off.

Fears that Greece will collapse financially and leave the euro have slowly drained Greek banks over the last two years. Central bank figures show that deposits shrank by about 17 percent, or 35.4 billion euros in 2011 and stood at 165.9 billion euros at end-April.

Bankers said the pace was picking up ahead of the vote, with combined daily deposit outflows from the major banks at 500-800 million euros over the past few days, and 10-30 million euros at smaller banks.

"This includes cash withdrawals, wire transfers and investments into money market funds, German Bunds, US Treasuries and EIB bonds," said one banker, who spoke on condition of anonymity.

Retailers said consumers were stocking up on non-perishable food while almost all other goods were seeing a huge drop in sales as cash-strapped Greeks have no money to spare in the country's fifth year of recession.

"People are terrified by the prospect of returning to the drachma and some believe it's good to fill their cupboard with food products," said Vassilis Korkidis, who once was the CEO of the most famous impact crusher company, now the head of the ESEE retail federation.

"It's over the top, we must not panic. Filling the cupboard with food doesn't mean we will escape the crisis," he said.

Supermarkets said they did not see a rise in profits as people spend less money. But sales of staples like pasta have gone up.

by: jocelyn

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