If a Grexit is coming, ordinary Greek savers need to “go to the mattresses”

I was talking to a “middle-class” Greek acquaintance, and I don’t envy him the lack of options he has. He didn’t vote for Syriza and is resigned but a little bitter. Tsipras is caught in the double quagmire of trying to end “austerity” without ending it and of leaving the Eurozone without being blamed for it. What he will not tell his supporters is that a “majority vote” does not change reality. The only way left seems to be for a Grexit so that Greece can default, force the write-down of its debts, return to its own drachma, introduce exchange controls, spend as much as it wants to, and where the drachma will take its own value.

But the burning question for all those with their savings in Greek stocks, real estate or as cash in banks is how they can protect the value of what they do have? Their options are limited. Holding on to non-performing, and now almost unsellable real estate in Greece is virtually forced. The value of that real estate will be whatever it will be. Its value as security will be even further impaired in the event of a Grexit. Staying in stocks is now highly risky Even to stay in stocks of companies which are mainly export driven offers no great safety. To convert as much real estate, bonds and stocks to cash (pre-Grexit Euros) as possible and before the real rush starts, is probably the only way forward for the ordinary “middle-class” saver.

Even for funds held at institutions, the window to do anything is very short. There is talk of exchange controls being introduced as early as the coming week-end. Shifting funds to non-Greek banks in the Eurozone is one way but that almost requires that they already have an account they can shift to. Opening a new bank account in say Germany or France will not be managed very quickly. Of course many Greeks (including my acquaintance) already have such accounts and the Greek banks could see (are seeing?) a flight of funds to Euro accounts outside the country. To move to another currency at a “safe” institution abroad (Dollars, Pounds, Kronor or Yen for example) is a lot safer than just staying in the Euro which will surely lose value with a Grexit. But this is not so easy for the ordinary Greek saver. He could convert to gold and maybe even some Bitcoins.

But so far as my acquaintance was concerned, the one thing he did not want to do was to hold “virtual” Euros in a Greek institution. He owed little on his house but he couldn’t sell it. He was quite resigned to the reduced value it has reached and after all, that value did not impact his daily life. He was not, at his age, moving out of Greece. He had sold off all stocks that he had which had increased or had not lost more than 10% of their purchase value. Paradoxically, he felt that companies which had already lost much greater value might come out best from the storm.  He had purchased US Dollars and GB Pounds (as physical banknotes) as much as he could. He was planning to buy some gold but was too wary to risk buying Bitcoins. As much of the rest of his savings as possible would be converted to Euro banknotes before this weekend. But he was worried that the banknotes would run out. He had invested in a very solid safe.

He was  planning, he said to, “go to the mattresses”. Literally.

I can only wish him luck.

 

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