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Saturday, April 18, 2015

Does Greece Have A Huge Stock Of Financial Assets?

This Bruegel article by Zolt Darvas addresses the issue of the Greek government's financial assets which it claims are huge. A couple of interesting points are made in the article:

* at the end of September 2014, the government's financial assets were 87 BEUR.
* while that was almost 40 BEUR less than at the peak before the crisis hit, it is still significantly higher than the 30 BEUR at year-end 1997.
* as a percentage of GDP, the Greek government's financial assets rank 7th in all 28 EU countries.

I am not sure how to interpret this but it certainly is interesting information.


  1. That would explain a lot. This + the upcoming pipeline deal with Russia = no grexit May 9.

  2. Greek government guarantees to banks

  3. This is nothing but a term. The governments "financial assets" are all the gurantees issued to banks, something close to 60billion, its direct bank capital contributions and various other guarantees. Nothing is "marketable" or viable for liquidity.

  4. It might be interesting information, but imho has no value regarding to lack of liquidity in very near future.


  5. @AnonymousApril 18, 2015 at 9:46 AM:
    Imho May 9 or 16!

    "Wolfgang Schäuble dashes hope of Greek bailout deal"

    "Christine Lagarde dashes Greek hopes on loan respite"

    "Greece Creditors Grim on Prospects of Deal"


    1. A Grexit is not possible without default. Default is possible without Grexit. Default does not occur on the day a payment is not made (in the case of the IMF, I believe there is a 6-week period before default becomes official, and triggers cross-default).

      So if your secenario were to unfold, I would expect Greece to first announce a non-payment (or a delayed payment) and then wait and see what happens. Then I would expect Greece to take all possible measures to avoid official default, possibly by limiting wage/pension payments. And, finally, I would expect them to delay any official Grexit as long as possible.

      I think the first thing that will happen is a deposit freeze and capital controls. If Greece doesn't implement them, I understand the ECB can do that on its own. I would be surprised if this would not happen before the end of April.

      I would like to remind that SYRIZA representatives, even before the election, said that they did not expect an agreement before the end of June ("possibly only in early July", they said). At that time, I thought they would never make it this far. I am beginning to believe that they have a plan to really draw out this thing until the end of June or early July.

      Finally, the issue of Greece being out of cash is not fully convincing to me. They have had an unexpectedly high primary surplus in Jan-Mar (due to one-off effects but still) and they will soon be able to get their hands on everybody else's cash in the public sector. It may be unlikely but I think it's possible that they are just staging this "we are out of cash" narrative to make others more nervous than they are.