During the last two days, I was asked several questions by a Chinese and a Swedish press agency over email. Below I list the questions and my answers to them, hoping they might be useful.
It seems to be obvious that Greeks are using the elections to reflect their frustrations on the Euro Zone’s fiscal contract. What might be the likely scenario after the second round election in early June?
It is not just frustration. It is more like depression. Depression caused by hopelessness. You see, when the Bailout-Austerity package was passed in May 2010, even though most Greeks did not like it, they wanted to believe that it would work like bitter medicine: that it would cure the country from its disease and, even though it was painful and bitter, it would in bring long term benefits. Tragically, that was not the case. Rather than bitter medicine, it proved to be poison. In the last elections they just voted against poison. It is that simple. This means that in the next election, that will most likely follow the inconclusive last one, they will vote in a similar way. If so, Greece and Northern Europe are set for a collision, a clash the result of which is, at the moment, utterly unclear.
Do you see the chance of Greece’s leaving the Euro Zone?
I see that Europe is using this prospect as a threat by which to coy the Greek electorate into voting in favour of pro-Bailout-Austerity parties. In my estimation, this is an empty threat for the simple reason that Germany and France have more to lose from a Greek exit than Greece does. And they know it, I think.
More and more politicians have pushed for a growth stimulation program. For Greece’s case, is there any space for a growth program? or this shouldn’t be an option.
It is the only option consistent with the preservation of the Eurozone. Not only for Greece, of course. The problem, however is, that the countries that need to stimulate investment the most are the ones least capable of doing it by themselves (Greece being a good example). So, it has to be done at a European level. Which means it has to be implemented by means of a collaborative Investment-led Recovery Program involving the European Investment Bank and the European Central Bank. Technically, it is simple to implement. The problem is, as always, that Europe’s politics are so toxic they get in the way of such a simple solution.
Decision on elections 17 June decided, signs of bankrun are there already, fear of IOUs from Greek gov instead of euro, with Grexit around the corner. Could you help TT, the largest Swedish news agency serving all major media outlets in Scandinavia with a brief interview.
a) Do you see any chance for a new Greek government to re-negotiate bail out terms?
Yes, but only as long as the Greek government is prepared to turn down the next installment of bailout loans, preferring to live within its tax collected means for a year or so (with whatever top down reductions in state salaries and pensions that entails) while declaring a debt repayments’ lull.
(b) Do you think Greek politicians like Tsipras will end up betraying his voters and settle for minor adjustments in the agreement with EU and IMF?
My estimation is that Tsipras will avoid this. But it may well be the case that the smaller Democratic Left party, under Mr Kouvelis, will make up the numbers in some coalition with the ND conservative party and PASOK which will dress up its acquiescence to the EU-IMF-ECB in anti-austerity rhetoric.
(c) At what point do we get a proper bankrun in Greece? Has it already started?
Some time ago. But as long as the ECB is keeping liquidity flowing, it will not come to riots outside bank branches.
(d) At what point does ECB stop providing euro liquidity to Greek banks?
At the point when they get the green light to push Greece out of the euro. There are no other criteria. Had the ECB stayed loyal to its own rules, it would have cut off liquidity for most eurozone banks!
(e) When will ATM machines be empty in Greece?
When the ECB is given the green light that I mentioned above.
(f) Would you feel safe about a vacation in Greece this summer?
Absolutely. Greece is and will remain a civilised country. We may protest a great deal, especially at one another, but it will always be safe for foreign tourists. To put it differently, you should feel much safer in a boisterous Greece than in your own cities, especially at the time when pubs and bars are closing down!
(g) Do we face a Grexit?
Yes. But note that a Grexit will be followed in short order by a Gerxit – a German exit from the euro, as Germany will simply refuse to put at stake the solvency of the German state in order to shore up the remaining eurozone (following the cascade of insolvencies that will results from a Grexit)