Less than three weeks ago, the people of Greece willingly voted to keep the Syriza party in power, despite the fact they had to know that this would mean further austerity measures already crushing the economy after five years of such measures. But for those who chose to take one taskmaster (austerity) in exchange for another (default), the consequences of this choice is now beginning to emerge.
Civil servants, or those working for the government, along with retirees receiving pensions will now experience a program of capital controls which will limit their ability to withdrawal large amounts of cash from banks or ATMS. In fact, this new policy will only affect public workers and retirees as regular citizens will be able to withdrawal greater amounts than what is being proscribed to civil servants.
A shock-measure: civil servants and pensioners will be subject to stricter capital controls than the rest of the Greeks. They will be able to withdraw only €150 per week – with the cash withdrawal cap being €420 per week – that is a total of €600 per month. The rest of their wage or pension they will have to spend by using debit or credit card.
The news fell like a bombshell on Saturday evening and spoiled the weekend of millions of Greeks. It will probably spoil the rest of their lives too.
According to the Finance Ministry plan, civil servants and pensioners will be able to withdraw in cash only part of their wages and pensions and the rest will have to remain in their bank deposit account. This remaining amount they will have to spend only through the compulsory use of debit or credit card. – Keep Talking Greece
The Greek government is in part trying to stem the outflow of capital that has been occurring for several months leading up to their capitulating to the Troika, and to new austerity measures. Billions of Euros were taken out of banks leading up to, and shortly after a bank holiday that was used to protect many domestic banks from insolvency, and the government now is fearing a continuation of this movement after the central bank gets more funding. However, a more sinister purpose behind these new capital controls may be in effect, as the growing movement towards ending or banishing cash is also front and center right now in the nation of Greece.
Capital controls in any form are more detrimental to an economy, and to the people in greater measures than they are for any benefit they might provide to a government or financial system. And as the smarter individuals divested themselves of bank deposits months ago in preparation for what is now occurring, the rest now have to suffer because of their lack of hindsight, and will become guinea pigs in the newest program of financial restrictions.
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.