Only Greece Can End Its 'Groundhog Day' Misery
In the film "Groundhog Day," Bill Murray is condemned to relive the same 24 hours on an endless loop. The happy ending (he gets the girl) only comes when he changes his destiny by becoming a nicer person. If Greek officials want their own happy ending (they get the money and the country doesn't go bankrupt), they must change their behavior. The universe isn't poised to intervene favorably on Greece's behalf.
Instead of behavioral change, Greece just pretends it's on the verge of a solution when that doesn't seem to be true. On Wednesday, Greek Prime Minister Alexis Tsipras said that the country was close to a deal with its creditors and was about to start drafting an accord. That came as a surprise to German Finance Minister Wolfgang Schaeuble: "Negotiations between the three institutions and the Greek government still haven’t come very far," he said later that day, adding that he's “always a bit surprised” when Greece says an agreement is imminent.
Moreover, the newspaper Ekathimerini reported that the Tsipras statement was a premeditated effort to stop yet more cash from fleeing the country. Piraeus Bank said Wednesday its deposits had shrunk to 44.6 billion euros as of mid-May, with outflows of 15 percent in the first quarter extended by a further 4 percent since then. If those withdrawals are mirrored across the banking sector, that would suggest there's about 133 billion euros left in Greece's banks, down from 138.6 billion euros at the end of March and 160 billion euros at the end of last year, according to central bank figures. Trying to spoof depositors who are already terrified about capital controls seems like an incredibly risky strategy.
On Thursday, chief government spokesman Gabriel Sakellaridis said a May 31 deal was on the cards. But that same day, with a June 5 payment of 300 million euros to the International Monetary Fund looming, Managing Director Christine Lagarde warned that "we’re working very hard, but it takes two to tango. Everybody has to be realistic and be focused on not playing a game." She doesn't sound at all convinced that Greece is facing up to the fact that, without at least some additional aid from its lenders, it won't have the 1.6 billion euros it needs to pay all of its IMF bills next month.
More than four months after Tsipras took power, Greece is deeper in the hole than ever. It can't even pay for medicines; it owes international drugmakers more than 1.1 billion euros and hasn't paid some members of the European Federation of Pharmaceutical Industries and Associations since December, according to a Reuters report citing Richard Bergstrom, the group’s general director.
The Greek government's coffers were down to less than 800 million euros at the end of March, with a run rate that saw 70 percent of its cash spent in the first three months of the year.
Greece must be running out of sofas to raid for forgotten coins (although admittedly, no one knows for sure how many couches it has). Economist Nouriel Roubini said Thursday he expects "pots of money" to materialize to avoid a Greek default. He didn't specify from where those pots might be unearthed. If he's wrong, June might finally be the month when the Greek film ends badly -- with capital controls, default and sovereign bankruptcy.
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