Tuesday, September 23, 2014

Getting Bored With Politics? Let's Have a Bank Run!

Back in 2002, the then CEO of Deutsche Bank, Rolf Breuer, was asked in an interview about the fledgling German media giant Kirch. His subtle answer was: "Everything one can hear and read about this is that the financial sector is no longer prepared to make debt or equity capital available". Kirch collapsed soon thereafter. This has been described as the most expensive sentence in financial history: 12 years later, Deutsche agreed to pay the Kirch heirs about 1 BEUR for damages. Deutsche has announced that they will attempt to recover part of that from Mr. Breuer personally.

PM Samaras is obviously not a banker. Verbal subtleties are not his strength. Instead, he tells the public straightforwardly that if SYRIZA came to power, all Greek banks would be left without money. And to make sure that the message got across, his parliamentary spokesman, Adonis Georgiadis, repeated it the next day.

Wow! Greeks are always good for surprises but the fact that the head of government of a country would publicly announce a bank run must be unique in the world. One wonders who will pay for damages incurred and whether Mr. Samaras will be held personally liable! Sorry, the answer to that question is obvious: the Greek people will pay and Mr. Samaras will claim that he would have saved Greece if only SYRIZA had not come to power. The only thing which is certain is that Mr. Samaras' sentence will replace Mr. Beuer's sentence as the most expensive one in financial history if a bank run does occur. It will cost more than just one billion.

So where do we go from here? Do we expect Mr. Samaras to correct himself and say something like "Sorry, I didn't mean it that way. Of course there won't be a bank run if SYRIZA comes to power. Feel free to vote for SYRIZA!"? Doesn't sound like a good strategy for political survival. Or would it be better if Mr. Tsipras came out to say "Have no fears! There won't be a bank run if we come to power!" That would be like the CEO of Lehman's announcing a few days before bankruptcy that Lehman was solid as a rock. People would wonder why he needs to say that.

Until recently, Greece and its politics had appeared so stable that it got a bit boring. I remember making a statement not too long ago that I thought Mr. Tsipras' heyday was behind him. Since the EU elections, the tables have turned. We are back to the old situation where everybody knows for sure that "the next 3 or 6 months will determine the future of Greece".

Mr. Tsipras goes a step further. Not only the future of Greece will be determined when SYRIZA comes to power but the future of the EU altogether. SYRIZA will show the EU the new path towards prosperity. Well, he doesn't face the risk of being sued for damages for saying that.

Was all of that really necessary? This is the question which Mr. Samaras should ask himself all the time and hopefully he will learn from the answer he gives himself.


  1. Don't worry, the next months will be interesting in greek politics. New Democracy will try up to the last minute, to convince the lesser opposition parties to vote together for the same president of repubblic. If New Democracy + PASOK + Democratic Left + ANEL vote together, then they can elect president and avoid election. And frankly, for ANEL and DIMAR, this wouldn't be something bad, since in polls they appear suffering great losses. When you do bad in polls, you want to postpone elections.

    BUT! ANEL, all these years was making a flag the attack on the current policy. Not easy to support Samaras now.
    DIMAR, if saves Samaras, will take heavy flak from SYRIZA, that they because the "crutch" of Samaras to continue the same policy.
    On the other hand, one can guess, that many parliament members, aren't eager to go to snap elections, knowing that most probably, they won't get elected again. As a New Democracy deputee (sports journalist on state TV) said recently, when attacking Samaras for the property tax "i will remain unemployed and not in position to feed my children". She certainly isn't alone, but she is the only one to openly say this. Because, as the electoral law is now, the 1st party, will automatically get 50 seats bonus. This means, that New Democracy will start with -50 seats no matter how big the margin of defeat. This is 1/3 of the seats that currently New Democracy has. DIMAR, is threatened with electoral annihilation. Polls show her at 1%, means 0 seats. ANEL are in polls at 3-3.1%, thus fighting for survival and if they do manage to get in the parliament, they will lose the majority of their seats.
    It would be much easier for the lesser parties to "help" Samaras, if Samaras was able to demonstrate a relief to the austerity measures. This way they 'd have an excuse. Samaras on the other hand, if he can't avoid elections, he will try to accuse SYRIZA of causing snap elections and that brings instability. If a bank run does occur, Samaras will come out and say "see? i had told you so!".

    1. I must say that this is a most enlightening comment!

  2. To give you more details, so that you can kill the boredom by doing your own scenarios. In order to elect president, someone must find a candidate that must get 180 votes. The situation currently, is:

    - ND: 126
    - SYRIZA: 71
    - PASOK (alias Olive Tree): 28
    - Golden Dawn 16
    - Independent Greeks (ANEL) 13
    - Democratic Left (DIMAR) 10
    - Communist Party (KKE) 12
    - Various independent members: 24 (of which, 4 are ex-ND, 1 ex-SYRIZA, 5 ex-PASOK, 2 ex-Golden Dawn, 6 ex-ANEL, 7 ex-DIMAR).

    Out of this:
    - SYRIZA, of course, will never vote to elect new president, being ahead in polls. In the worst case, even with a victory of 0.1%, SYRIZA will add 50 seats to its current number.
    - ND, wants to avoid elections. Samaras hope is that he can elect president, avoid elections, the economy goes better and so goes to elections with some "good news" to present to the audience. So he will scramble to get others aboard.
    - KKE is as always, in happy isolation. Will not help the right and SYRIZA is "impure". Thus, will remain neutral.
    - DIMAR, would very much like to avoid elections, but her rhetoric makes that problematic. The leader, Kouvelis, said today that he doesn't want cooperation with the goverment, under this policy and said that he would like to cooperate with a more "realistic" SYRIZA. Probably, Kouvelis examines the eventuality of returning to the SYRIZA and avoid electoral extinction...
    - Golden Dawn, probably COULD have helped out Samaras, with the excuse of "stopping SYRIZA from coming to power as a higher noble cause". After all, it has been proven that up to some months ago, ND was in contact with GD, through the general secretary of goverment, Baltakos, who was acting as liaison and in the cell phone of a GD member, were found reports on SMS that ND was sending them to vote together against SYRIZA in laws of "common" interest of the "higher good". But, since ND decided to open war against GD, imprisoning most of the parliament members, now you can't expect GD to vote with ND...
    - ANEL... They appear to be against Samaras, but... it is certain that they don't really want elections, they will lose 1/3 of their power and already an MP has come out and said that they should think of helping Samaras for the "benefit of the stability of the country". But he was put to silence by the leader. This said, ANEL is right wing party and its own leader is ex-ND MP. So, it is not impossible, to vote with Samaras, if Samaras gives them an alibi. Sweatens the deal. Which is why, i suspect, Samaras wants to stop loans with troika and IMF by the end of the year and tries to do some tax reductions. He could possibly give ANEL (and others) the alibi to say "we are entering a new phase, we kicked out the troika, let's not spill the milk we gathered these years".
    - PASOK will of course vote with ND. PASOK through a skilled media propaganda, somehow managed to present its euro-election result, almost as a success, but truth is, it has lost 50% of its power.
    - The indepenent MPs. A few have already said that they will not vote with ND. Others have not said anything yet. These are up for grabs. Both ND and SYRIZA will try to offer them deals. Like "vote/don't vote for/with me and you can come with us and be re-elected with our party". Again, the ex- ND and PASOK, left because of the harsh austerity. So, if possible, Samaras will have to give them an alibi to come back. Sweaten the deal.

    So, Samaras secured 154 votes (ND+PASOK). He needs 26 more.

  3. One major problem for the lesser opposition parties to vote with Samaras, is that automatically, they will get labeled as becoming part of the "camp that brings misery to the people". If ANEL does so, they will be called traitors of their position and well, the whole scope of the party was the "anti-memorandum". Apart this, they never had some serious political design to show. So if they vote with Samaras, they more or less have no reason to exist. They may as well say that they get absorbed by New Democracy.

    DIMAR, has made so many turn arounds, that it would be a headache. Makes more sense for them to be absorbed by SYRIZA (from which they originated anyway), than continuing this "in and out" between goverment and opposition positions.
    The various independent MPs, are the sheep seeking new shepard. So in a way or another, everyone knows that, they will vote according to which party will offer them an "annexation" deal.

    Complicated and this is why you won't get bored in the next months.

  4. Samaras has a way with words and a Greek sense of drama, I'm confident I could beat him in any poker game. If you want more expensive Greek comments, read about tax amnesty in To Vima Sunday 21 September. The author state that the government will grant tax amnesty and hint that debt on real estate will also be forgiven. In a nation with EUR 70 billion of tax arrears and EUR 164 billion of private bad debt (both growing), this is bound to be the most expensive remark of the year. The long tradition of debt forgiveness does not make it better.