“We are in an extremely dangerous situation. Greek companies have been excluded from the electronic transfers of Europe’s Target2 system. The entire Greek business community is unable to import anything, and without raw materials they can’t produce anything,” he said.
It’s not just the cash is it? Bank closures really do mean bank closures, don’t they?
You don’t need many days of this to kill off swathes of an economy.
It’s not quite that absolutely nothing will be happening in that economy. But imagine that economic activity halves for a week….just the the one week that the banks are closed for (some hope it’s only a week, eh?). That’s 1% off annual GDP just there. Meaning that there’s absolutely no hope of any form of budget surplus this year, is there?
Further, say a deal is done. Greece falls into line. Banks reopen: everyone, but everyone, will drain every penny from those banks. ELA will rise from he current 90 billion to what, 130, 180 billion? And the ECB’s not going to finance that, is it?
I don’t see how they come out of this without the banks bust: meaning a recapitalisation and that means the new drachma.
What am I missing?