A few weeks ago I wrote about my conversation with a friend in Athens (Link). At the time, he believed that the June 17 election would bring a different result than the May 6 election disaster – the catalyst for change being the fear of leaving the Euro. So far he has been proven right. So I called to get an update.
BK – It seems you might be right. The polls from Greece this weekend have given the European markets a lift today. Do you still believe that the centrist parties will win sufficient votes to form a coalition government and avoid a catastrophe?
Athens – Only a fucking idiot would invest money based on these polls.
BK – Are the polls not correct?
Athens – The European leaders have scared the Greeks with their talk about throwing Greece to the wolves. So yes, I think that the fringe on the extreme left and right will not get as many votes as they did on May 6. But Syriza (anti-bailout) has gained votes. The election is a complete crapshoot.
It may not matter. It’s not certain that Greece can make it to June 17 without a crisis.
BK – Explain that.
Athens – There is no money left in Greece. In the first two weeks of June, the government and the banks will face a huge cash squeeze. Everyday more money leaves as depositors withdraw cash and transfer money out of the country.
It’s clear to everyone who lives here. Greeks are not stupid. Either exchange controls happen before the election, or they happen immediately after. The election will not change that either way.
BK – What do you mean by “exchange controls?”
Athens – A ban on money transfers out of the country. Limits on the amount of cash that can be withdrawn from a bank or ATM.
BK – What are the odds that this happens before June 17?
Athens – The election is now twenty days away. For Greece that is a very long time. If the Europeans wanted to send a message to Greece, they would stop the emergency lending. So I would say it’s 50-50 that we see some measures before the election .