When I solicited for input somebody mentioned doing scenario type posts. I thought Greece today (well more this general period not the specific day) would be a good one.
So what is the scenario. The Greece economy is a mess with high unemployment and a boat anchor of debt. It is clear in my mind Greece will never be able to pay their debts off. Whether they are written off by choice or when Greece simply does not pay is a separate discussion and not really relevant to this post.
Greece recently elected an anti austerity government. This government has the unenviable job of trying to placate their creditors/ neighbors and delivery some sort of a win to their people to get the economy moving.
This is significantly complicated because Greece is part of a common currency, the Euro. The good is that they have been able to exploit being linked to much stronger neighbors. The flip side of the coin this is bad (for the government) is they can not simply inflate the currency; lowering its value and making their goods/ services cheaper giving the country more competitive and giving it an economic boost.
Even more troubling the country is in what I call the 'IMF Death Spiral'.
My current working definition of the IMF Death Spiral is "The situation where a country is deeply in debt and continues to receive loans on the conditions that it will follow certain conditions set forth by the IMF or other national/ international organizations. The conditions of the loans typically include cutting government spending, laying off government employees, raising taxes across the board and various social policies that suit their agenda. The stated goal of these reforms is to improve the economy of the country. However at least in the short term it has exactly the opposite effect. High unemployment inevitably follows and the increase in taxation crushes what is left of the economy."
Now one could argue once countries reach the point of the IMF Death Spiral they are a lost cause anyway. On the other hand we could look at results and say the IMF intervention certainly does not help matters any. One could argue the IMF, etc all's goal in lending out huge sums to countries that cannot possibly pay it back is about extracting a profit, offloading the losses to the citizens of first world countries and having a measure of control over the debtor nations. The little I have read on the IMF was pretty eye opening.
I confess to be almost hopelessly stalled halfway through but this book is a good place to look at the business of big banking.
Anyway back to Greece.
There is a distinct possibility that Greece will A) default on it's debts by failing to make their payments. This would be bad. Another possibility is A) and B) Exit the Eurozone AKA Grexit. This would lead to Greece moving back to their own currency which would be valued on the merits of their economy AKA not worth very much.
Basics-
Of course the basic preparedness stuff of long term shelf stable food, water filtration like a good Berkey, first aid gear, alternate cooking like a Coleman stove, etc apply.
Greece gun laws are fairly European (stupid and strict) so legal modern defensive weapons are out but shotguns are allowed for hunting. A double barreled shotgun and a case of buckshot or large game type shot that is legal and stored in your home would be darn handy if/ when things go sideways. Now on the less legal side I am sure there are plenty of AK's floating in from the Balkans and Romania. If a person had the connections, could afford and didn't care about the laws a concealable pistol and a AK with a dozen mags and a couple cases of 7.62x39 ($220 for 1k of Tula 122 gr FMJ at Lucky Gunner) in some hidey hole sure would be darn nice if things went worse than expected. However I would still want that legal shotgun. It will probably be sufficient and a self defense option on the right side of the law is a good thing to have.
I would look to stock up on normal easy to cook shelf stable foods my family ate. Pasta, canned soup, rice, crackers, PB&J, etc. If/ when the Grexit happens inflation and short term shortages would almost surely follow. About 3 months of normal food your family ate and some long term emergency type food/ big buckets of bulk staples would be a good place to be.
Also the possibility of a job being lost now, and especially if/ when things get worse is higher.
Money-
I would seek to get as much of my money out of the banks as possible. Might leave enough in the bank for convenience to pay a couple small bills with a card or order a thing from amazon, etc. Max $500.
Money in banks would almost surely be converted to Drachma at the official conversion rate which is laughably unrealistic. So hypothetically Greece moves to the Drachma with an official exchange rate of 1 Euro to 2 Drachma. A Greek persons 20,000 Euro's would turn into 40,000 Drachma. The problem is things that used to cost a Euro actually cost 4 Drachma which is functionally a 50% loss in purchasing power overnight. The Greek Government would take all the Euro's it stole and use them to buy things they need or to pay enough to their creditors to get a little but of breathing room.
So Joe Greek goes to the bank and pulls out all his Euro's. What to do with this money?
The basis that we mentioned earlier come to mind. As does the shelf stable food. If those bases are not already covered I would put some money towards them. However for the sake of discussion lets say those issues were already addressed.
If I had between one Euro and 20,000 Euro's (the exchange rate right now is 1 dollar to .91 Euro so for normal people amounts we can speak of them as about the same value) I would find a good place in my home, bolt down a compact but quality safe and put my money in it.
If I had more than 20,000E I would take the first 20k and put in a good safe in my residence. This would be my money to buy food, fuel, etc in the short term if/when things go downhill. I figure for most people 20k E is at least 3-4 months cash expenses (food, fuel, etc not rent/ mortgage, eating out, cable/ internet, car insurance, health insurance, taxes, etc) to ride through a rough time. If your family/ lifestyle is such that 20k E is not sufficient for 3-4 months cash expenses adjust the amount upwards accordingly. Maybe a multi millionaire with 7 kids would need 50 or 100K to ride out a few rough months.
For money beyond that 20k/ 3-4 month cash expense level up to say 200k. I would go to a different country for a long weekend of sight seeing and visit a bank. To the best of my knowledge a country defaulting has not been able to confiscate foreign held bank accounts in different (than the defaulting countries) currencies. I would probably go to Switzerland but Cyprus, England and Luxembourg might be good candidates also. Since I have never had enough money to need to look into it I can not say specifically which countries have the strongest protections of bank accounts for in Europe. If a person could get some interest then a savings account is worth thinking about. Then again if a bank in a stable country is going to pay less than 1% and I did not foresee needing the money soon (Say I have an income and am not retired relying on this money to pay my bills.) I might just toss it in a safe deposit box in a stable country like Switzerland.
Of course if I could swing stashing a bunch of alternate passports and a handgun in that safe deposit box that would be cool. The Jason Borne safe deposit box is to safe deposit boxes what the Sara Conner connex is to caches.
A safety deposit box to envy. Only way it would have been any cooler would be some sort of an SBR like an MP-5K and a black velvet bag full of diamonds.
Don't see any food but the Sara Conner Terminator Cache has guns and ammo covered.
As to cash beyond 200k. Honestly a person with over 200k in liquid assets is not going to be looking at some yahoo on the interwebz for advice on financial stuff. At this point you talk to an accountant and a lawyer then posture your financial situation accordingly. Best do it now as big moves take time and there might not be much time left.
Debt-
-If I were Greek my biggest concern would be Euro denominated debt. If we look at different economic collapses the trend is that the government screws the people and the banks help, if just to come out OK. So it is government before banks and banks before the people. A scenario that has plaid out more than once is suddenly all accounts are in the new, less valuable currency at an artificially high exchange rate (say the official rate is 1 Euro to 3 new Drachma but the street price is 1 to 6) but euro denominated debt might still be in Euro's.
Honestly we have not seen this play out with a common currency. The best I can do for actual facts is to look at Argentina's collapse and the recent mess in Russia as their currency has gone down like a desperate aspiring actress on a casting couch with a big name producer. Loans in dollars (in Argentina) and Euro's (in Russia) were fine and dandy till the exchange rate went crazy. Put it like this. Say Joe Greek makes 90k a year and has a 3 year car loan for 30k. Not the way my family handles money but still pretty reasonable. Lets say the Grexit happens. Now overnight Joe's $30k car loan in Euro's might functionally turn into 60 or 90k value since he is suddenly paid in Drachma which are significantly less valuable than Euro's, far beyond the official exchange rate. Joe's reasonable car is now eating up a quarter or more of his income.
-Of course interest rates in Greece would go through the roof if any of this happened. I would run, not walk, away from any variable interest debt that you did not have the resources to pay off at any time.
Contingency Plans
-If I lived in Athens, and in particular it's downtown/ historic and or financial districts, I would find a friend or family member who lived elsewhere to stay with for a few days if things got weird. I would look to position some food, clothes, etc there. You probably would not need to leave forever but a place to lay low for a couple weeks could come in handy.
For the sake of full disclosure I have lived in Europe but never been in Greece, somewhat ironically because they started having all the money problems and riots. My general sense is that things could get pretty ugly in Athens but a person who lives in a medium sized town or little village is unlikely to have any contact with riots and such. I believe the general security situation would deteriorate if things went downhill but mostly the bad stuff would play out in larger cities. A village of 300 or town of 3,000 is going to fair better than a big city, let alone an urban center.
-I would look hard at what my financial situation would be after a significant loss in purchasing power, say two semi arbitrary numbers 30% and 50% respectively. Could I pay my bills? Would it be prudent to sell the fancy car (with a loan to match) and downsize to a more modest but decent paid off car now, before other people are trying to do the same thing?
-What is my plan if I (or we in a dual income household) lose my job in an environment where there is very high (say over 30%) unemployment and many well qualified people are out of work? Do I have an in demand or easy to get into (family business, etc) back up gig? Maybe you are in sales but were the best bartender in town and still have a bunch of contacts that would give you a job tomorrow? Sure welding in one's parents or Uncle's shop is not what a mechanical engineer wants to do but if it pays the bills till a better job can be found it is what people do. A union plumber probably does not want to fix clogged toilets for $100 but that is a constantly in demand job. Point made.
-Presuming Joe Greek, like most people including yours truly, does not own his residence free and clear. Since t is very realistic that he could be unemployed for a long time Joe should be working hard on a back up plan. Say Joe loses his job and is unemployed for a year (not unrealistic, Greek youth [which might be a pretty wide group I can not recall actual ages to go with the stats.] unemployment is about 50%.) and thus are not going to be able to pay the mortgage/ rent. If Joe has some money a modest little cottage or just a piece of land would be great. Depending on where Joe is located camping after the collapse might be an option. However a much better option would be to stay with your parents or relatives in their paid off modest, avoiding high property taxes, home.
For this problem let us look at a variety of options for different financial situations:
'I have resources'-A little cottage on the coast in a small village/ town with enough room to put in a garden and host a few relatives or friends would be awesome. You could enjoy it for vacations during good times and be ready if bad times come.
'I have some money'- A piece of land that is paid for free and clear where you could put a travel trailer or at least set up some sort of decent camp would not be a bad setup at all. Things would be kind of rough but at least you could pre position supplies and nobody could hassle you for living there on your own land.
'I can scrap up a few bucks' - A travel trailer you could park at a relatives or move from place to place as needed. Living at a relatives is going to be a lot more palatable for everybody if you all have a self contained space to live, or at least sleep in.
'Resources are very limited'- A good 3 season tent with a tarp big enough to cover it, a Coleman stove, some sleeping bags and good sleeping pads. Maybe you can live or at least camp at a relative or friends place.
'Broke as a joke'- A cheap tent and a tarp.
I feel the need to reiterate these are worst case back up plans. Obviously Joe Greek, and more importantly the Mrs Hellena Greek, would prefer to stay in their normal residence but having a plan in case that is not an option is prudent.
Well I hope this gives some insight on how I would handle the localized but really bad situation that might unfold in Greece.
As always I am eager to read your comments.