The Greek government has promised that it will present a detailed list of reforms by early next week. Tsipras promised that any reforms that hurt economic growth will be scrapped. Tsipras is faced with the virtually impossible task of trying to combine appeasement of creditors while still passing anti-austerity reforms.
On Thursday, shares of the National Bank of Greece (NBG) were down 2.94 percent by mid-afternoon on Thursday after reports that deposits were at their lowest level in 10 years at the end of February. Depositors are worried that Greece may exit the euro zone and return to the drachma as a currency. Just over the last three months Greeks have withdrawn at total of 25 billion euros from Greek banks.
Share prices of the NBG over the last year have dropped close to 79 percent, even though gross profit margin was 36.5 percent. The net profit margin was -5.49 percent that TheStreet says is in-line with the industry average.
An article at Naked Capitalism, argues that the view of some on the left that Syriza has been planning to leave the euro zone is not borne out by the facts. The finance minister Yanis Varoufakis thinks that an exit from the euro zone would be a disaster for Greece and the left as well since it would lead to a huge increase in support for far right parties such as Golden Dawn. If it were planning to for an exit from the euro zone (Grexit), the obvious step would be to impose capital controls to stop the outflow of capital that is obvious from the above statistics. This would reduce the leverage the Troika, or institutions, as the Greek government insists on calling them, has over Greece in negotiations. The article points out as well that the final draft of the memorandum between the Eurogroup and Greece was in effect dictated to Greece. In the days before the extension deal, about 800 million euros were being withdrawn from Greek banks every day.
The Dutch finance minister Jeroen Dijsselbloem said the outflow of cash helped force Greece to agree to the terms of the loan extension: “Mainly, the situation in the banks was becoming very urgent, and that was the biggest driver. If you have large outflows from your banks, you can do that for a couple of weeks, but there becomes a point where it becomes too critical.”
Issues such as privatization demanded as part of the bailout conditions are still not solved and there are obvious divisions within the ruling party Syriza on the matter.
Rating agency Fitch has lowered the rating of Greece from B to CCC a high risk level, but also said that it expected that Greece could survive its cash squeeze. Greece is reported to have presented a list of 18 reforms to its creditors on Friday. A statement was also released Friday that said: “The government made it clear at all levels of the eurozone and the IMF, that it will not continue to service the debt from its own resources, if lenders do not directly proceed to the release of the disbursement which they have been delaying since 2014. The country has not received any disbursement by the European Commission or the IMF since August 2014, and yet it fulfills its obligations.”
This seems an idle threat given that the both Tsipras and Varoufakis both promise to do whatever is necessary to remain in the euro zone. They cannot just stop paying their debts and expect to stay in the zone. I append an interesting discussion of the future of Greece from Bloomberg TV.
