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What Is Going Through The Heads Of Greek Executives Right Now
With mere hours left until the first Greek exit polls are released, one group of the Greek population, perhaps the most important one if the country of 23% unemployment is to have any hope of not sinking into the Mediterranean, its business executives, has yet to express its opinion on the aftermath of today's election. And while we know that many local businesses have already transferred their money (whether or not taxed is a different question) abroad, it is after all they that will serve as the backbone of any possible future Greek renaissance, whether EUR or XGD denominated. So do they think? Recently Citigroup's European team met with executives from big Greek / Cyprus banks and several officials - independent parties. The key message is that the situation is critical but there is some optimism on the Day after the elections.
From Citi:
The base case scenario for most of the executives we meet seems to be a New Democracy led government. That said most accept that the final election result is unpredictable with official and unofficial opinion polls showing only a 1-2% small ND lead. The people we met are, unsurprisingly, more concerned on the Day after any Syriza win, but also believe that Syriza will not seek a full confrontation with the Troika leading to a Grexit.
There is hope for a more flexible implementation timetable by Troika for the additional €12bn austerity measures that are due by the end of June. Also, there is hope that the second review of the implementation of Program will be completed after the elections if a government is formed, in time to allow the c€31bn funding to be disbursed. Grexit is still not the base case scenario for the executives we met.
In summary:
Key Negatives:
- Critical state of funding: The funding needs for the Greek state in 3Q is at €32bn - of which €31bn should come from the second assessment of the Memorandum. The latter has yet to start and the timetable is very tight for a completion of the assessment by the end of June for a 3Q disbursement. Most expect / hope for some leeway from Troika on this (but see little leeway on the structural reforms).
- There is a wide concern that the rise of radical / anti memorandum parties in opposition could be a disruptive force in any attempt by a centre right government to stick to a Fiscal Consolidation / Reforms Program.
- Greece needs a robust government and there is little belief by the executives that Greece will get one from this round of elections - especially given that the lead of New Democracy over Syriza is within the 1-2% margin of error. The sustainability / longevity of the government after this round of elections could be another issue.
- Little progress has been made on many reforms that would have allowed not a lowering of labour costs but a more flexible pricing regime as well. There was a belief that structural reforms should have taken place ahead of austerity. Less than a third of the laws / reforms voted in 2010 were fully effected in 2011/12.
- On discussing Grexit most agree that the exchange rate as a tool wouldn’t restore Greece's competitiveness but would create high levels of inflation.
- Asset quality continues to deteriorate in Greece among the banks. Also, while the momentum in deposit outflows seems to have stopped accelerating (as it did post May 6 elections) it remains significantly negative.
Key Positives:
- A New Democracy win and them being able to form some type of coalition government is the base case scenario for most. All executives agree that Greece can not afford to go to a third round of elections (a government will be formed one way or another) – a view they believe is shared by the politicians.
- The government can tap the liquidity in the HFSF (around €3bn) subject to an approval by the Troika. It can also issue T-bills (presumably to Greek banks?) - These could provide a buffer before the Second review of Troika and/or negotiations with Troika over the Memorandum are completed.
- Significant progress in pension and most recently (Feb) labour market reforms that should help restore a lot of Greece's lost competitiveness in the last decade. Some cited that private sector wages could even be down up to 30-40% this year. While the recession makes this less visible, the reform is there.
- Most believe that in the event that Syriza wins and / or forms a coalition government it will not seek an immediate full confrontation with the Troika but perhaps seek to renegotiate with them first before nullifying the Memorandum.
- It could be feasible for Troika to offer an extended timetable to Greece for the implementation of the additional €12bn of measures because of a clause in the Memorandum that allows it if Greece is in recession again in 2013.
Sadly, while there is some muted optimism on the ground, Citi is far more pessmistic, regardless of the outcome of today's vote.
Even if ND led coalition government is inaugurated in time and agrees in principle to the conditions, the Troika cannot afford agreeing on a big amendment of the program immediately thereafter in our view. Any stretched timeline of implementation, may be positive, but Greece would still need to fix the deficit from the poor implementation in the last two months, and eventually still find €12bn of measures (at c7% of GDP). In that respect we continue to expect a much higher probability (50% to 75%) of Grexit in the next year or two. If elections result in a Syriza led government, we believe the break is likely to happen sooner.
With the large dependency of the banks in respect to ECB funding, delays in the provision of the required extra capital to the banks probably would lead to limitations of Bank’s access to Eurosystem funding maybe including ELA. Even if Greece stays in the Euro area the non-implemented restructuring of public sector enterprises is likely to create additional short term pressure on the economy, as it is likely to lead to a significant increase of unemployment and we doubt that the recently implemented pension an labour market reform will be able to have a meaningful impact to propel economic growth in the medium term.
Also, remember: anything but a decisive Syriza victory takes the chance of a global central-planner bazooka off the table, at least immediately, perhaps the sole threat that forced a major short squeeze in the last two days of trading in the past week as JPM already pointed out. It also puts the Deutsche Bank "market crash for ECB intervention" scenario in play.
In this Constanza market, will the "conventionally accepted best" outcome once again be the worst one?
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Who are you trying to kid? What's going through greek executive's heads right now is trying to find as many dead people as they can get to cast their vote for the New Democracy party. No way they are letting the past 2+ years go to waste over the true "will of the people".
The ball on the wheel will most likely land on double zero to kick the can all of another week/month.
Greek elite have been allowed all this time to get safe so they can reconstitute the economy at cheaper investment prices.
dead nudies it is! L0L!!!
the men are thinking about sex; why stop now?
and the women execs are onLesbos. with ours!
They're ALL thinking...
"Say, do any of you guys know how to Madison?"
Woo hoo!
"It's just a jump to the left!"
@Jena - yer thinking of the time warp. But it certainly all boils down to a horror show.
As for whats going through the heads of the execs - I'd like to see a little daylight through the heads of all banking execs.
At least we can be confident that our leaders remain highly engaged.
Obama plays 100th round of golf...
@tenpanhandle - Francis_Sawyer's line and the time warp are both from RHPS.
Good idea re: the banking execs.
I don't really care whether they pay back their loan to the greedy bankers or agree to let the bankers screw them again, but I wish they'll stop their whinging so the world can move on to Spain, France, Italy and UK.
And then the Ponzi scheme for the USA will collapse.
Before the bell tolls 12 today, we will know for whom it tolls. It tolls for thee.
The day approaches when fairy dust, good intentions, and fiat all fail as the little Dutch boy with his little wet finger heads for higher ground.
If I was a Greko lucky enough to have been able to have, had some Euros and parked them out of the country, I may well be hopeful of a Drachma retrun. After the Drachma falls and settles down about 50%, I could pull my Euros back and hey presto, doubled my purchassing power! Maybe, the wealthy with cash out of the country are generally rooting for a Drachma return?
Well, that strategy in some form or another has not hurt the Rothschilds or JP Morgans of the world over time. In fact, they'd probably be disappointed if they only doubled their purchasing power.
Except for the slight problem that the Zooro itself will behave like Iridium in Jupiter's gravity.
Why not choose a better store of value? Even a barbarous relic would provide more protection.
When it comes down to the wire I really do not think the Greeks want to go to a currency that will create havoc for decades. Yes they can inflate the drachma and do all the fun things countries do with weak fiat BUT...that was all a long time ago. I believe they will 'fess up to being ...well Greeks...and finally get on the 21st century treadmill of tax paying, bill paying and responsible behavior.... while they may hold a few bankers responsible for the situation they have gotten them selves into they LIKE the Euro and the STABEELEETEE it brings. Ask any citizen of any country with lousy currency what they wouold prefer. It means a lot to have a stable currency.
Going through their heads? Bullets, I hope.
What is the last thing that goes through a moth's mind as it collides into a windshield? It's arse.
"What Is Going Through The Heads Of Greek Executives Right Now"
Where's the ouzo?
Recently Citigroup's European team met with executives from big Greek / Cyprus banks and several officials - independent parties
You can throw this entire article out, it was based upon the opinions of banks and banks are the cause of this disater. They are run by liars and theifs!
That was my thought - bank executives will lead the renaissance, lol. God help Greece.
too much analysis. greece has too much debt and too much denial.
Sure they do but Amerika is doing it better. Ameriak wants ot be numebr 1 in this . Another 5 Trillion will do the trick.
the world is leading us on this, we will default last.
PORN, Drinking and party nothing else matters. Secret Service is jealous.
it's not what's going through their head but what their head is going through, their asses!
Do you know what a Shit Barometer is?
Measures the Shit Pressure in the air. When the Barometer rises, and you'll feel it too, your ears will implode with the Shit Pressure. I tried to warn you. Beware, the Shit Winds are a-comin'
GEEZ, does this mean Fathers Day Celebration is off in Amerika and time to wear the tin foil hat and sing kumbaya? Another round of Golf,another fucking phone, another car and all for the glory of Rome.
maybe Hitler was right after all'- Of course Amerikans are too stupid to understand this .
As long as the government is perceived as working for the benefit of the children, the people will happily endure almost any curtailment of liberty and almost any deprivation.
Mein Kampf, Adolf Hitler
As long as the government is perceived as working for the benefit of the children, the people will happily endure almost any curtailment of liberty and almost any deprivation.
I never read mein kampf. I started but it was like trying to get through barbed wire. But it's certainly hard to believe that the statement came from that source. I thought it was the introduction to the Democrat Party play book.
Seems like it's all just a global strategy of creditors enticing sheep to go into debt deep enough they can't pay and then comes the cyclic harvest of life-long debt slaves, big fish eating little fish.
How could the world be re-feudalized? Maybe this is a way.
Used to be the vanquished were dragged off in chains, now they just slap 'em with debt.
It's easy to forget that Greece is nothing compared to Spain and Italy. Analyzing the effects of a firecracker on an anthill won't prepare anyone for the Hiroshima(s) that are coming elseworld in Euroland.
Ah, relax... They'll just keep voting until there's an outcome the bankers like.
If they're broke, who's paying for all this voting?
IOUs
Escape plans.
Don't they all have seaside villas in Croatia? Or is that only for Joos from AIG?
Maybe not the safest choice...
http://sports.yahoo.com/news/croatia-fans-burn-eu-flag-151758107--sow.html
Off topic but on target question for today:
"Do single mothers on the dole in the USA and their children send Father's Day cards to the FedGov or to the Taxpayer?"
Green Arrow for FedGov
Red Arrow for Taxpayer
Please tell us where they should be sending that card too.
Trick question. The not Federal no Reserve creates the digits out of the air magically to fund them.
So every person who holds a dollar has the value of that dollar magically reduced to pay for them.
So the card should go to every holder of a dollar.
That's really a trick question. You're assuming they know to send cards conveying an air of gratitude to someone/anyone.
FedGov...those unaccountable fathers are not taxpayers ;-)
I know how to solve all of our problems. Lets give private sector, non unionized workers the right to kick public sector workers in the nuts whenever they feel like it. That should do it.
Done and done.
http://www.dailyjobcuts.com/
Citi pessimistic???....why?? They have uncle ben and the ecb to bail out the banks broke asses.....the world is golden when moral hazard rules the day.....
after a few rounds or drachma devaluation, there will be no executives nor middle class left.
I find it so amazing that when there is much of importance to cover, no matter the day, the time or the season.....Zero Hedge is there for us. Can you even put a number on what that is worth for us?
Thank You Zero Hedge!
Greek executives? In a country where th only meaningful industry is corruption it should title "Greek gangsters"
Rally warning continues...
SPX bullish daily chart strengthened further on Friday & more rally expected.
DOW initial target approx 13,170 & more upside after that.
MORE:
http://www.zerohedge.com/news/2012-12-24/market-analysis
It isn't any of my 308 winchester 180 grain soft point.
The Greek people are going to get walked on and walked on and walked on for as long as this thing drags on. Upwardly mobile folks will simply expatriate until all that's left is the dead skeleton of a welfare state - essentially, a dead economy.
FOR THEIR OWN SAKE, I HOPE THE GREEK PEOPLE SET A PRECEDENT BY GETTING THE HECK OUT.
REMEMBER ICELAND!
Regards
A number of good Greek restaurants opening up in South Florida.
Well edited...great comments one and all! There, is that better?
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