Greece in Panic … um, Wait!

“If Greece doesn’t get its next loan installment, the Eurozone will collapse the following day,” scowled Alexis Tsipras, leader of the left-wing SYRIZA, on Thursday morning. By threatening the entire Eurozone with its demise, he ratcheted up the bailout extortion racket a few more notches.

Yet, he and his party, if they were to win the June 17 election, promised to do precisely what would cause the bailout Troika to withhold payment: they’d repudiate the memorandum that the prior government had agreed to in order to get the second bailout. The “worthless piece of paper,” as he described it, spelled out structural reforms, privatizations, budget cuts, minimum wage cuts, etc. that would make the Greek economy competitive again through internal devaluation.

And it has been happening: draconian cuts in pay, benefits, and pensions; tax hikes, layoffs, spiking bankruptcies of small businesses; record unemployment; failing hospitals; pharmacies that refuse to sell medication to insured patients because they haven’t been paid by the out-of-money state insurer. The middle-class standard of living—it had defied gravity ever since Greece joined the Eurozone—has been crushed.

Tsipras wants to reverse all this. He wants to hire civil servants, nationalize companies, raise the minimum wage to where it was before, and throw borrowed euros in every direction—but he’s prepared to dialogue with the Troika. And… “If they say ‘no’ to everything, it means they want the end of the Greek people and the euro.”

But patience is running thin in the Eurozone. Politicians are on edge. Spain needs a bailout for its banks. And then for itself. And Italy is hobbling towards a bailout though it’s too big to get bailed out.

“If the Greeks don’t meet the commitments they have made,” Slovak Prime Minister Robert Fico told parliament on Thursday, “if they don’t honor their financial commitments and don’t repay their loans, Slovakia will demand that Greece leave the Eurozone.”

French President and socialist François Hollande had set the tone during an interview on Greek TV on Wednesday. “But I have to warn them because I am a friend of Greece,” he said, setting himself apart from German Chancellor Angela Merkel, who’d been depicted as Nazi occupier. “If the impression is given that Greece wants to distance itself from its commitments and abandon all prospect of recovery, there will be countries in the Eurozone that will prefer to finish with the presence of Greece in the Eurozone.”

And so the run on the banks has turned into panic—for fear of a forced conversion of all bank accounts into drachmas, followed by devaluation. And the numbers have been oozing to the surface on a daily basis. A total of €1.2 billion were yanked out of Greek banks in the chaotic week after the May 6 election. Every working day since, another €100 to €500 million were yanked out, with peaks on Fridays; a drachma conversion would occur over a weekend. This week, it jumped to €500 to €800 million per day. Cash withdrawals at the counter, bank transfers to foreign accounts, by individuals, by businesses. What keeps banks from toppling is the €18 billion they’d received from the Troika last week and the Emergency Liquidity Assistance from the ECB via the Bank of Greece.

But, but, wait…. the Athens stock exchange index, the ATHEX,  jumped 10.1% on Thursday though it seemed for the longest time that it would head towards zero. The bank index skyrocket 23.4%. Over the last seven days, it was up 43.7%. Alpha Bank was the blue-chip star: up 29.7% in a single day. Yes, the very banks that are hearing the giant sucking sound of money leaving through a million holes are rallying in a death-defying manner.

And construction company Ellaktor was the second-best performing blue chip with a 27.5% gain. Perhaps speculators were counting on big fat German-funded construction boondoggles. It was a glorious day of euphoria, stirred up by … rumors.

Rumors that the conservative New Democracy would win enough votes to form a coalition government and make peace with the Troika to keep the euro. Rumors that the Troika would relax its requirements and give Greece some leeway. Unnamed “EU officials” were talking to Reuters. “The headline targets cannot be changed,” one of them said. “But there could be some tweaks to the path to get there.” And an unnamed “German EU official” said that there would be “a very clear 100-day plan for a new government.” But—stock market speculators must have missed that one: “If it’s not implemented in full, then the game is over.”

And retail is suddenly booming; people are stocking up on supplies and food, preparing for upheaval and shortages, should the euro be ditched. So, on June 17, Greeks will decide their country’s fate—or not. One thing is for sure: whoever wins will push for more bailout billions, but forget the conditions, the structural reforms, and austerity. Just the money.

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  2 comments for “Greece in Panic … um, Wait!

  1. Alec Mally says:

    Wolf who is feeding you the daily news from Greece? Internet service is good, but a lot of the news is not translated and if it is it comes in late.

    You are getting only part of the perspective so your choice of sources comes across a bit distorted. Still, fun reading. Cheers from Athens!

  2. Athan Gadanidis says:

    The problem for Greece is not high wages; the problem is the "rich" meaning the vast majority of self employed or "connected" are not paying tax. There are 35,000 declared income earners of above 50,000 euros a year. A taxi driver makes more than 50,000, but why should he pay when the rest are not? The wage earners are the only ones paying taxes.. the ones whose wages and pensions they are cutting are the only ones that pay taxes in their lifetime…. that is why they have a pension… too bad all the economic brains cannot grasp the simple truths of a situation and instead make it into a discussion of slogans… Crony capitalists have taken over the western democracies and are leading us into the arms of the left wing… I suppose they see some extra profits there… The curious thing for me is that the left is rising not because of their ideology but their promise to punish the guilty… Europe should fear because Greeks have lost theirs… I do not believe Tsipras will win but it will be close and it will not be over… this whole debate over the Euro and the Drachma is silly… Greece can use any currency they choose… going back to the drachma is not a serious proposition… Drachma is being used to scare the Greeks into voting for the same corrupt parties.. not working so far… Europe will have to sweeten the pot for Greece if they wish to keep things from spiraling out of control… The New Democratic party will probably win but if they are not given massive infusion of cash and if they do not go after their friends and allies for back taxes and inspect their international banking accounts there will be chaos… Greece is on the brink of social collapse…

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