and try to lower the Greek government’s aspira-
tions of honouring these promises.
The message is clear: “It may sound harsh, but
there is no way that nobody will lose their homes
or their businesses” as a result of the implemen-
tation of the measures provided for by a new
financing agreement for Greece.
It is estimated that, as Mr. Draghi stresses that
“the ECB is the central bank of Greece, but it’s
also the central bank of all the other countries”
and that it “is a rule-based institution. It’s not a
political institution”, he will also make it clear —
when necessary— that Greek borrowers are no
different than borrowers in Ireland, Portugal or
Spain, who lost their homes or their businesses
as a result of over-indebtedness and the crisis.
What is the meaning of these comments?
That, until a final and definite agreement is reached
(or for such an agreement to be reached), the gov-
ernment will find itself in a very difficult position,
since it will have to back out on its promises
regarding non-performing loans and foreclosures
— mainly to households, but also to the banks.
Because banks will have to —without necessarily
aiming or wishing to do so— put the brakes on
successive loan restructuring deals, pull the car-
pet under the feet of businesses that have been
struggling for years, and decide to write-off
household loans that will never be repaid.
How, and from where, will Greek banks get the
money to cover their new funding requirements
for this year?
The answer is —once again— given by “Super
Mario”:
“The recapitalisation fund ... [is] readily available
to face any sudden negative contingency that
might materialise”, he said.
And quite correctly.
With one difference, though:
That now €10.9 billion is available —both in theo-
ry, and in practice— in the EFSF. This means that,
in order for these funds to be disbursed, the
Greek government will have to do a lot, and agree
to even more that neither is expected, nor —and
this is even more important— it wishes to do.
Trade with Greece
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