Knowl­edge Greeks can take to the bank

Jan­uary scare aside, course of pri­vate sec­tor de­posits has been track­ing peo­ple’s hopes and fears dur­ing cri­sis

Kathimerini English - - Focus - BY NICK MALKOUTZIS

ANAL­Y­SIS There was a slightly sur­real mo­ment in Greek Par­lia­ment re­cently when New Democ­racy deputy Nikos Den­dias quoted from Bob Dy­lan’s song “All Along the Watch­tower.” He did so to re­spond to Fi­nance Min­is­ter Eu­clid Tsakalo­tos, who had ear­lier used a quo­ta­tion at­trib­uted to Mark Twain (“The re­ports of my death have been greatly ex­ag­ger­ated”) to dis­miss spec­u­la­tion about his lack of public ap­pear­ances im­me­di­ately af­ter the Fe­bru­ary 20 Eurogroup.

“There are many here among us / Who feel that life is but a joke / But you and I, we’ve been through that / And this is not our fate / So let us not talk falsely, now / The hour is get­ting late,” Den­dias told Tsakalo­tos, whom the New Democ­racy MP ac­cused of hold­ing back on the true im­pli­ca­tions of what was agreed be­tween the Greek gov­ern­ment and its cred­i­tors at the meet­ing of eu­ro­zone fi­nance min­is­ters last month.

If we can set aside the strange­ness of two Greek MPs trad­ing quotes drawn from Amer­i­can cul­ture, there is a se­ri­ous theme that un­der­lies their ex­change: the truth, or false talk as Dy­lan put it.

Foggy ter­rain

Truth­ful­ness and ac­cu­racy have of­ten been vic­tims in the Greek cri­sis. Po­lit­i­cal po­lar­iza­tion, ide­o­log­i­cal dog­ma­tism, com­plex is­sues, mul­ti­ple play­ers and a tor­rent of num­bers have con­trib­uted to a con­fused and con­tra­dic­tory pic­ture of­ten emerg­ing.

Un­sur­pris­ingly, politi­cians love op­er­at­ing on this foggy ter­rain be­cause they feel they can take ad­van­tage of peo­ple’s ap­pre­hen­sion or lack of com­pre­hen­sion and con- vince them to fol­low their path out of the mist.

Judg­ment tools

That makes it even more im­por­tant that those cov­er­ing or an­a­lyz­ing events give cit­i­zens the best pos­si­ble tools with which to work out how to leave be­hind the gloomi­ness and make their own judg­ments. When the in­for­ma­tion they re­ceive is in­com­plete, mis­lead­ing or just plain wrong, the av­er­age voter is left in the lurch and vul­ner­a­ble to politi­cians’ whims.

One such ex­am­ple last week was the con­fu­sion cre­ated by the fig­ures for Greek bank de­posits pub­lished by the Bank of Greece. No­table in­ter­na­tional me­dia out­lets, as well as lo­cal re­ports, sug­gested the data, which showed to­tal de­posits at 119.75 bil­lion eu­ros at the coun­try’s com­mer­cial lenders, meant that Greek pri­vate sec­tor de­posits fell to their low­est level since Novem­ber 2001.

Al­though that as­sess­ment is fac­tu­ally cor­rect, there is an im­por­tant piece of con­text that some re­ports did not in­clude. Since De­cem­ber, the Bank of Greece has stopped count­ing 4.2 bil­lion eu­ros held in the Loans and Con­sign­ment Fund and another 2.1 bil­lion eu­ros in the De­posit Guar­an­tee Fund as pri­vate sec­tor de­posits.

Sec­ond high­est since May

This re­clas­si­fi­ca­tion sub­stan­tially changes the pic­ture re­gard­ing bank de­posits. For in­stance, if the 6.3 bil­lion eu­ros in de­posits men­tioned above is added to the Jan­uary fig­ure, the to­tal is ac­tu­ally the sec­ond-high­est it has been since last May.

That is not to say Jan­uary did not pro­duce any wor­ry­ing num­bers: There was a de­posit out­flow of 1.53 bil­lion eu­ros in the first month of the year. Again, though, this has to be put into con­text. Jan­uary has tra­di­tion­ally seen out­flows, al­though this year’s were big­ger than in 2015 by around 400 mil­lion eu­ros.

When all this data is viewed to­gether, the big pic­ture it pro­vides is that there was an uptick in de­posit out­flows, likely caused by con­cerns about the fail­ure of the Greek gov­ern­ment and its lenders to con­clude the sec­ond re­view, which prompted re­newed spec­u­la­tion about po­lit­i­cal de­vel­op­ments and even Greece’s fu­ture in the eu­ro­zone.

This is no 2015

What it does not show is a mas­sive drop in de­posits to record low lev­els in the man­ner the coun­try ex­pe­ri­enced in the first half of 2015. Af­ter all, that is what the cap­i­tal con­trols adopted that sum­mer are still there for, even if the re­stric­tive mea­sures have been re­laxed since last year for money be­ing brought back into the bank­ing system.

This clarification about what Jan­uary’s de­posit data tell is im­por­tant be­cause it is very easy to cause con­fu­sion and panic among a pop­u­la­tion that has been re­peat­edly bat­tered by the long Greek cri­sis.

Any­where in the world, a bank run can de­velop a mo­men­tum of its own that is not nec­es­sar­ily linked to a real threat, let alone in Greece where so many peo­ple have been left dis­ori­ented and not know­ing who to be­lieve.

In fact, trac­ing the in­flows and out­flows at banks through the cri­sis gives a very clear pic­ture of Greeks’ hopes and fears since 2010, when to­tal pri­vate sec­tor de- posits stood at nearly 240 bil­lion eu­ros, or roughly dou­ble their cur­rent to­tal.

Hope springs eter­nal

The thirst that Greeks have for pos­i­tive news and their need to be­lieve in the pos­si­bil­ity of re­cov­ery was high­lighted in the fig­ures con­tained within the Bank of Greece’s an­nual re­port pub­lished on Fe­bru­ary 24. It in­di­cated that since the im­po­si­tion of cap­i­tal con­trols at the end of June 2015, the net in­flow of cash reached 7.7 bil­lion eu­ros, 3.1 bil­lion eu­ros in­vested in for­eign se­cu­ri­ties was repa­tri­ated and 4.8 bil­lion eu­ros in de­posits re­turned to the system. This only went a small way to heal­ing the deep wounds caused by the flight of de­posits in pre­vi­ous years but was a re­minder that a sta­ble, hope­ful en­vi­ron­ment can in­still con­fi­dence in peo­ple.

Hav­ing now seen both sides of the story – how ban­ish­ing un­cer­tainty can ben­e­fit the coun­try’s econ­omy and how fear can un­der­mine it – Greece should not be in any doubt about how this process works.

Al­though Jan­uary’s de­posit fig­ures were not as dra­matic as they seemed at first sight, they were still a strong warn­ing that if the cur­rent ef­forts to con­clude the sec­ond re­view go awry, con­fi­dence will be se­verely dam­aged and the hopes for an eco­nomic re­cov­ery this year will be oblit­er­ated.

Twain’s ob­ser­va­tion that “the se­cret to get­ting ahead is get­ting started” seems to be suitable in Greece’s cur­rent sit­u­a­tion. Per­haps Dy­lan’s line from “Subter­ranean Home­sick Blues” might be even more ap­pro­pri­ate: “Keep a clean nose / Wash the plain clothes / You don’t need a weather man / To know which way the wind blows.”

Trac­ing the in­flows and out­flows at com­mer­cial banks through the eco­nomic cri­sis gives a very clear pic­ture of Greeks’ hopes and fears since 2010.

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