Crisis knocking on our door
When small investors and depositors read the screaming headlines about the fall of banking colossi such as Lehman Brothers or Merrill Lynch, and hear that their shares in Goldman Sachs and Morgan Stanley have taken a dive, or assurances from the Swiss Finance Ministry that the world’s leading bank, UBS, is not threatened with bankruptcy, what are they to believe about their own meager savings entrusted to small (by international standards) Greek banks? The Greek Economy Ministry and the Bank of Greece should take into serious consideration the existence of a certain panic on the market. They have a duty to inform people what this unprecedented fiscal crisis means for Greece. Of course, it is true that Greek banks have not exposed themselves to the subprime market, either due to the wisdom of their governors or the the supervision of the central bank or Capital Market Commission. They have not issued housing loans to those clearly unable to pay them back; nor have they invested in risky American bank bonds or hedge funds. On the other hand, the changes this crisis has brought about in the international fiscal environment affect Greek banks in many ways, as well as the country’s real economy, first of all by raising interbank interest rates. These increases have already affected businesses, housing and consumer loans, raising their costs and curbing investments and consumer spending. The second major threat to our economy is the possibility that this interest rate hike could bankrupt businesses that have already borrowed to the limit. Of the 218 billion euros lent by Greek banks, 120 billion are business loans; 10-20 percent of these are already overstretched and are begging to renegotiate their terms. Telecom supplier Altec is no exception. Thirdly, many investors have seen their holdings reduced as a result of the drop in the value of bank shares – of up to 50 percent since last year. This means investors stop expanding or cut expenditures drastically.
