Tag Archives: European Central Bank

The ties we don’t see but can’t ignore

President Karolos Papoulias was correct to stress to party leaders the unusually large amount of savings being withdrawn from Greek banks over the past few days but this also caused some unnecessary arm-flapping, a practice which always obscures people’s view of what is important.

Papoulias told party leaders on Monday that 700 million euros had been withdrawn from Greek banks on Monday. Banking sources told the Financial Times that about 5 billion euros had been withdrawn since the end of April. Savings disappearing from Greek banks is nothing new. Deposits have fallen from about 240 billion euros in 2009 to some 170 billion now. However, the rate at which money is being withdrawn at the moment is a cause for concern.

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ELA: Easy as ABC?

There was an unusual sense of calm among eurozone leaders at last week’s summit in Brussels. The pain from the constant headache of the debt crisis seemed to have been dulled by a 1-trillion-euro aspirin. The European Central Bank’s decision last week to launch a second round of longer-term refinancing operations (LTRO), with eurozone banks borrowing more than 500 billion euros to top up their liquidity, appears to have calmed the markets and politicians. So much so that French President Nicolas Sarkozy essentially declared the crisis to be over.

Putting aside the questionable enthusiasm of a president seeking a second term in upcoming elections, the December LTRO, when the ECB also lent more than 500 billion euros, and last week’s liquidity operation have at the very worst bought the eurozone some time. Some of the LTRO money was spent by the banks on snapping up their government’s bonds, which has led to yields dropping for countries like Italy and Spain, which were facing unsustainable borrowing costs.

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Choose any color you want

There are many reasons why you might not want to be George Papandreou, Antonis Samaras or Giorgos Karatzaferis, but this weekend in particular the leaders of three parties in Greece’s coalition government find themselves in the most unenviable of positions.

They are due to hold talks with Prime Minister Lucas Papademos on the measures that Greece will have to implement to receive further loans from the eurozone and the International Monetary Fund. But the leaders of PASOK, New Democracy and the Popular Orthodox Rally (LAOS) are walking into a lose-lose situation.

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Ghost dog

Illustration by Manos Symeonakis

We all needed a moment or two to recover from Development Minister Michalis Chrysochoidis’s “the dog ate my memorandum” moment this week, but now the dust has settled it’s clear that regardless of whether it was a monumental gaffe or a misguided tactical move, the PASOK official’s plea of ignorance encapsulated the dilemma that’s been plaguing Greece throughout this crisis.

Hovering between confusion and collapse, Greece is suffering from the most extreme state of schizophrenia as it flits from all-out opposition to hands-down acceptance of the terms being attached to the emergency funding being provided by the European Union and International Monetary Fund.

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Crisis, occupy protests and Newt Gingrich

In conversation with Jeff Santos of AM 1510 Revolution Boston:

http://revolutionboston.com/podcast/2011-11/3313