UPDATE ON THE GREEK ECONOMY FOLLOWING THE ELECTION OF ALEXIS TSIPRAS
On Jan 25, 2015, Greece had a general election to elect a new parliament and a new prime minister, after the gamble of former PM Samaras, did not work. The leftist SYRIZA party got the most votes and together with another anti-EU party, the 'Independent Greeks', took over the new government.
After one week of touring European capitals and meeting key people, both the PM Tsipras and the new finance minister, Yanis Varoufakis, came back with 'almost' empty hands.
Just a day ago, the European Central Bank (ECB) stated that Greek banks cannot borrow from them using debt. Until now, the could get loans from ECB against bonds or government-guaranteed assets, held by the banks. But, as the Greek government's debt, as well the Greek banks own debt was rated a 'junk', falling bellow the ECB's minimum standards. The banks now would have to borrow only from the Emergency Liquidity Assistance (ELA) through the Greek Central Bank. Already, more than Euro 2 billion was tapped early February '15, from three major Greek banks, under this scheme. This, of course, led to the collapse of Greek bank shares.
Greek banks are very nervous because many well-to-do Greeks started again moving their money overseas. In December, the banks saw a Euro 4 billion drop in deposits, and the estimate for Jan. '15 could be close to 12 billion Euro flying out of Greece.
The Greek minister of finance Mr.Varoufakis has said that he would not accept the last trench of around E 7 billion still due - from the last commitment of EU/IMF, under the current terms.
The governing party would either let the country default on its obligations - with very drastic consequences, because they have no other funds to pay the bond holders by the end of this month, or accept short-term loans from its Eurozone partners, which is big question if they are willing to do so. Already several Eurozone governments declare their opposition to any changes of the agreed terms
Greece must either accept the terms of the bailout or risk going bust. Mr Tsipras, the PM and the finance minister, Mr. Varoufakis, keep hoping that the European partners would change their mind and reconsider how could they help Greece at this very difficult and urgent situation!
On Jan 25, 2015, Greece had a general election to elect a new parliament and a new prime minister, after the gamble of former PM Samaras, did not work. The leftist SYRIZA party got the most votes and together with another anti-EU party, the 'Independent Greeks', took over the new government.
After one week of touring European capitals and meeting key people, both the PM Tsipras and the new finance minister, Yanis Varoufakis, came back with 'almost' empty hands.
Just a day ago, the European Central Bank (ECB) stated that Greek banks cannot borrow from them using debt. Until now, the could get loans from ECB against bonds or government-guaranteed assets, held by the banks. But, as the Greek government's debt, as well the Greek banks own debt was rated a 'junk', falling bellow the ECB's minimum standards. The banks now would have to borrow only from the Emergency Liquidity Assistance (ELA) through the Greek Central Bank. Already, more than Euro 2 billion was tapped early February '15, from three major Greek banks, under this scheme. This, of course, led to the collapse of Greek bank shares.
Greek banks are very nervous because many well-to-do Greeks started again moving their money overseas. In December, the banks saw a Euro 4 billion drop in deposits, and the estimate for Jan. '15 could be close to 12 billion Euro flying out of Greece.
The Greek minister of finance Mr.Varoufakis has said that he would not accept the last trench of around E 7 billion still due - from the last commitment of EU/IMF, under the current terms.
The governing party would either let the country default on its obligations - with very drastic consequences, because they have no other funds to pay the bond holders by the end of this month, or accept short-term loans from its Eurozone partners, which is big question if they are willing to do so. Already several Eurozone governments declare their opposition to any changes of the agreed terms
Greece must either accept the terms of the bailout or risk going bust. Mr Tsipras, the PM and the finance minister, Mr. Varoufakis, keep hoping that the European partners would change their mind and reconsider how could they help Greece at this very difficult and urgent situation!
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