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We need to talk about Greece

Tuesday, 20 January, 2015

The latest poll before Sunday’s election in Greece show the anti-bailout party Syriza getting 33.5 percent of the vote. Should this translate into a majority for the left-wing agitator Alexis Tsipras, the cat will be truly among the euro doves and hawks next week. Note: Syriza has promised to enact a law preventing banks from seizing the homes of people who have fallen behind on mortgages on primary residences valued at less than €300,000.

Greek euro On Friday, the Wall Street Journal reported: “Adding to the air of trepidation ahead of the vote, Eurobank and another lender, Alpha Bank SA, have requested access to an emergency cash facility run by the central bank. Both said the moves were only a precaution and that neither faced an immediate funding crunch.” The report’s next sentence is a classic: “People familiar with the matter said the banks are seeking a few billion euros between them.” Just like that: “a few billion euros between them.” Not hundreds, not thousands, not millions; just a few billion.

The Journal article moved Bloomberg View columnist Megan McArdle to write a piece headlined “It Might Be Time to Panic About Greece.” Money quote: “I rush to note that we are hardly in the end days yet; bank officials told the Wall Street Journal that this was only a precautionary move, and they were not facing an immediate cash crunch. One is always pleased to hear that bankers are being cautious. But the Journal also reports that $3 billion has fled Greek banks over the last two months, and there are rumors that other European banks are reining in their lending to their Hellenic counterparts. Which means that, unfortunately, their caution seems more than warranted.”

Wait until Monday. Meanwhile…


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