Just in case you forgot Greece is still imposing capital controls and will be hosting another leadership election at the end of this month. Their ongoing daily cash withdrawal limit of €60 has been active for a couple of months now, meaning any committed ATM user could have salvaged almost €4k in cash from their savings in preparation for what might lay ahead. Since Alexis Tsipras resigned, a fortnight ago, Greek creditors have been quietly on edge and markets have had other worries to busy themselves with in Asia and the rest of Europe. But does this mean that long term concerns over Greece have remained as subdued as they were when the deal was initially struck?
Reasons for initial optimism, over the vote winning Syriza a new mandate - revitalising momentum, have tempered fast. First, a left wing revolt dissolved Tsipras’ parliamentary majority and scuppered any plans to secure a stronger following to help legislating incoming creditor demands - these begin biting in October. Second, polls suggest that although Syriza still hold the winning vote it consists of less than a quarter of the ballot with the “New Democracy” party trailing by a couple of points at 22% and a pivotal undecided populous of 15%. Third, the new pro “Grexit” party “Popular Unity”, coxed from Syriza’s unhappy ranks by Panagiotis Lafazanis, continues to snatch MP’s and Syriza committee members. Consider that Syriza failed unitarily to win a majority in the last election, forming a coalition to supplement their 149 seats, their chances of any success this time seem even more unassailable.
The vote is expected on Sunday the 20th or 27th of September. Creditors intend to remain restrained by gradually releasing aid as austerity targets are met. This means that everything is still to play for. The Economist quipped that, “Having invented democracy, Greeks seemingly cannot get enough of voting” this being the sixth time since the global financial crisis. But no one in Greece is enjoying what is going on or what is planned. They are reaching for a leader that can rescue them from a seeming “Catch 22”, but it’s impossible to negotiate the arithmetic of insolvency. We continue to avoid nations with excessive net foreign debts, not only to avoid such catastrophes as Greece but also to shield performance from other still popular net debtors who remain vulnerable to resultant shocks and the ongoing cycle of deleveraging.