Crunching Greece

From the G & M:
"Effects of cash crunch spread as Greeks worry about basics"

Emerging from the Carrefour supermarket in the smart Kolonaki neighbourhood in central Athens, Georges Trianzafyllou and his mother were laden with white plastic bags full of spaghetti, milk, bread, sugar and coffee as they walked home. “We’re buying more food than usual,” said Mr. Trianzafyllou, 30, who works at a local pastry shop. “Maybe the supermarkets will close next week.”

 He and other shoppers have two fears. The first is that the ATMs in Greece will run out of cash in a few days. The banks did not open on Monday and daily ATM withdrawals have been limited to €60 ($83). Rumours are rife that the limit will be reduced to €40 or even €20 within a few days. The second fear is that, some time soon, the supermarkets will not be able to replenish their shelves as the domino effect does its damage. The food suppliers and importers will stop selling to the wholesalers, because the wholesalers have no cash; the wholesalers will have no food to sell to the supermarkets.

“If there is a No vote, there will be no money for sure,” Mr. Trianzafyllou said, referring to Sunday’s national referendum. If it goes ahead – there is some chance the country’s Supreme Administrative Court will declare it illegal – a No vote, that is, rejection of the last bailout terms offered by Greece’s creditors, would probably keep the banks shut. A Yes vote would encourage the European Central Bank to boost the emergency loans it makes to the banks, allowing them to reopen fairly quickly. Last Sunday, the ECB capped the loans and triggered the Greek government’s decision to close the banks to prevent a deposit run from bleeding them dry. The ECB’s emergency loans have kept the banks alive, if only barely, since late January, when Syriza, the radical left, anti-austerity party led by Prime Minister Alexis Tsipras, swept into power. The effects of the cash crunch are being felt everywhere. At travel shops, customers are scarce to the point of non-existence. Entirely alone in his shop, All Travel Services, not far from the parliament buildings, was managing director Socrates Anastasiou. “This week, we do not have any bookings – none – from foreign tourists,” he said. “The tourists here now are from past bookings. And the tourists who have booked and who are not here are holding off before they are confirming.” Mr. Anastasiou said foreign tourists are being scared off by the endless reports of the cash-withdrawal limits (which do not apply the tourists, so far) and images of protests. He said that even the Greeks themselves are not travelling. Ferry bookings to the islands, where many Greeks own holiday villas, are falling rapidly. The Association of Hellenic Tourism Enterprises says the crisis has pushed down hotel bookings by 50,000 a day, according to a Thursday report in the English-language edition of the Greek newspaper Kathimerini. The same report said that data released Wednesday by Travelplanet 24 and Airtickets websites showed that airline bookings by Greek travellers for the July to September period were down by 50 per cent. On Monday, the cancellation rate for air travel by Greeks reached 22 per cent. Another Kathimerini report said the Panhellenic Exporters Association estimated that Greek exporters will lose up to €80-million a week because of the bank controls. At the same time, the association said imports could fall by €600-million a week. Greece’s production and manufacturing capacity is tiny. It relies on imports for everything from food and fuel to cars and medicines. A banker at one of Greece’s four commercial banks, who did not want to be identified because he is not authorized to speak publically, said a No vote in the referendum would be disastrous for the banks and the economy. “We’re talking doomsday,” he said. A Yes vote, he said, would no doubt reopen negotiations immediately on a new bailout package for Greece, which is insolvent and defaulted on a €1.6-billion loan payment to the International Monetary Fund earlier this week. Greece’s creditors – the IMF, the ECB and the European Union – said on Wednesday there would be no negotiations ahead of the referendum. They have been urging a Yes vote. Highlighting the dire shape of the Greek economy and its finances, the IMF on Thursday said Greece will need €50-billion in loans over the next three years and as well as large-scale debt relief to create “breathing space” and stabilize the economy. Referendum polls three days ahead of the vote were all over the map. One poll produced by a government-supported newspaper said the No side was nine percentage points ahead of Yes side. Another poll, conducted by GPO for the French bank BNP Paribas, was considered more reliable. It put the Yes vote ahead, at 47 per vent to 43 per cent for the No vote. The Syriza government has been campaigning for a No vote, angering the creditors.

 

 

^ It seems that  the EU and the IMF are tired of carrying Greece and all of its economic woes for too long while the Greek Government (past and present) did nothing to stop the crisis  - they just kept on spending and spending. The EU should have known about Greece's economic problems before they let Greece become a member country. Now it looks like Greece will soon leave the Eurozone and the main people who are suffering are the Greeks themselves. ^

 

 

http://www.theglobeandmail.com/report-on-business/international-business/european-business/effects-of-cash-crunch-spread-as-greeks-worry-about-basics/article25236903/