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This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
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And I'm Robert Siegel. The Greek economy is bleeding. More than $90 billion have been withdrawn from Greek banks since the debt crisis began. At first, it was just big business and the wealthy moving their money abroad in case Greece reverts to its previous currency, the drachma, but now people with smaller portfolios are also starting to take their money back.
Joanna Kakissis reports on this slow bleed and why the country's fragile banks are having a hard time stopping it.
JOANNA KAKISSIS, BYLINE: Early last month, after parliamentary elections left Greece without a government, President Karolos Papoulias told a room of feuding politicians that depositors had withdrawn nearly $900 million from banks in two days. It was supposed to push the politicians to put aside their differences and finally form a government so Greece could stay solvent and in the eurozone. But the politicians couldn't agree and, after the president's revelation, the Greek public got nervous.
GIKAS HARDOUVELIS: It's very understandable for people to be scared when they hear that Greece may get out of the euro area.
KAKISSIS: Economist Gikas Hardouvelis.
HARDOUVELIS: They feel that their deposits may lose value the moment the euro is transformed into drachmas, say.
KAKISSIS: The drachma was the Greek currency before the euro. If Greece doesn't get a stable government two weeks from now, there is fear the country could run out of money as early as the end of next month. If that happens, Greece will likely go into a chaotic default that could eventually force it to leave the eurozone. The drachma would be worth far less than the euro.
A recent Bank of Greece report showed that people's savings and assets would drop in value by more than 60 percent. The fear of drachmageddon is something Kostas Mariolis writes about as a banking reporter at Capital.gr, a financial newspaper in Athens. Mariolis, a former banker himself, says some Greeks are indeed panicking.
KOSTAS MARIOLIS: Now, we can see even depositors with let's say 20,000 or 30,000 euros taking their money out. Sometimes, they find it easier to keep their money below mattresses in their houses.
KAKISSIS: Police say that trend has caused an increase in burglaries. They've urged Greeks to trust the banks and leave their money there. Greek banks were healthy before the crisis. They had no toxic assets and earned money the old-fashioned way, by lending to businesses and people they had scrutinized. But the banks had bought Greek bonds, once the safest investments. Those bonds became toxic after the debt crisis. A bond swap that reduced the country's debt also cost Greek banks nearly $31 billion.
MARIOLIS: If the Greek banking sector slowly goes down the drain, it will carry the country with it. The banking sector is very critical because it touches all types of businesses, households, the public sector. It's the blood of the body. If the economy is the body, the bloodstream is the banking sector.
KAKISSIS: That's why many bankers didn't even want to talk to NPR about what some are calling a bank jog, or the slow withdrawal of deposits. One banker who did talk to us, Michael Moussourakis of Alpha Bank, says that job has slowed down for now.
MICHAEL MOUSSOURAKIS: The only challenge we face is really the fact that business is non-existent, basically, because there is no demand for loans and, at the same time, our deposit base is being eroded, which means increasing reliance on central bank financing.
KAKISSIS: Earlier this week, Alpha and three other major Greek banks received about $22 billion from the European Financial Stability Facility, a eurozone rescue fund. The money helped boost their nearly depleted capital base. That's helped ease fear of bank jogs and drachmageddon for now, but banks, like the rest of Greeks, are hoping the country finally has a government after elections on June 17th.
For NPR News, I'm Joanna Kakissis in Athens.
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