Europe looks set for a relatively combined open on Tuesday as concerns of a Greek default continue to weigh on sentiment, following the government’s decision on Monday to call in all public sector cash reserves.
The move by the government to effectively confiscate cash reserves from public sector purses throughout Greece is very worrying for two reasons; it reeks of desperation, and it gives the impression that they are not optimistic of a deal being reached on reforms. It’s believed that this extraordinary measure will raise just over €2 billion, which will buy the government a little more time, but I don’t know what it hopes to achieve.
It appears they are running out of ideas and starting to panic. It’s about time that they accept that they are not going to get their own way on this matter. They do not hold the winning hand, and their poker face is becoming horribly transparent. You just worry about how much damage they are doing in the meantime, and exactly how far back they are setting the country in the process.
The odds of a deal being reached at the Eurogroup meeting on Friday were already very slim, but this desperate move by the government suggests there’s now no chance. This is looking like a kamikaze mission from Alexis Tsipras’ government, and I am beginning to worry that by the time they accept defeat, it will be too late. At the very least, Greece will have sustained a significant amount of damage.
In a way, Syriza’s stance throughout this process is admirable, and probably reflects the views of many in Greece that enough is enough. The Greeks wanted a party that would stand up to the Troika and no longer bow to their every request, and that’s what they are doing. Unfortunately, that may not be in the best interest of the country in the longer term, and Tsipras is fast running out of options.
It’s now only a matter of time until we see capital controls being installed in Greece, as there can’t be much confidence left in the banks. Once the European Central Bank pulls the plug on emergency liquidity assistance (ELA) for Greece, it’s game over. We can’t be too far away from that now.