> | | | | > Greek banks are proven to be near death. Greek people will follow this pattern closely.

Greek banks are proven to be near death. Greek people will follow this pattern closely.

Posted on Δευτέρα, 27 Οκτωβρίου 2014 | No Comments

by S. Katsoulis* (Greek version of this article is here)

I'm sure you know by now. The hard working people at the ECB led by it's VP Vítor Constâncio, kept themselves busy throughout the weekend  of 25-26 October (hopefully they did charge the appropriate overtime) in order to complete the much needed stress tests for the Greek banks and also the rest of the E.U.'s banks.


First impressions

The first obvious observation that someone could make is the fantastic technical expertise that was used to cook up the numbers in the 172 page document [1]. The second thing that can be observed is the top positions that 2 of our indigenous banks have acquired, given that they are sitting at the first and third positions in the list of mentioned banks. A little lower, at position 14 we can spot the third Greek bank, which means that 3 our of four Greek banks are having some issues... 

It would also be impossible not to be amazed by the "high marks" that our fellow Cypriot banks got, in addition to quite a few other monetary institutions around the E.U. Finally, one could not be oblivious to the frantically happy announcements of the Greek governmental regime that the stress tests have concluded that we have a complete and utter success. At the same time however, there is not a single human being in Greece that has not thought about the possibility that something is amiss here. And they are right...

A quick and deeper analysis

One thing that the unsuspecting reader of this report must keep in mind, is that the subject matter here is bank stress testing. And therefore, if a banking institution is mentioned in this document, there must be a very good reason for it. The next thing one must consider seriously, is why exactly these institutions are mentioned. If we have a look at the table that is present in page 10 of the document, we will see the column titled "Capital shortfall". Upon addition of the numbers for the Greek banks, we see that the shortfall for these banks is 8.72 billion and that the total shortfall reaches 24,62 billion euros. This means that about 35,4% of the total European banking system's shortfall, belongs to the Greek banks.
One thing must already have become apparent. One could not claim that this 35,4% deficit as compared to all other EU institutions, creates a positive picture. But unfortunately for us, there are more issues to be found in the report. Take for example the total absence of any mention of the deflation rates that are present in 8 of the Eurozone member states [Fig 1], which, if nothing else, should be a major and heavy parameter in any model that attempts to predict the financial future in any of these 8 countries. 

Fig 1 [2]

This absence of any mention to deflation is a very serious matter, not only because taking such a serious parameter out of your models can lead to grossly wrong results. But because this presence of deflation, makes it clear that the deficits should be even larger than reported, simply because deflation is an expression of the markets low activity.

This leads naturally to a first analysis of the expectations that are presented in the report: In another column of the same report we see the title "Net eligible capital raised", which essentially expresses some forecasts on how much of the shortfalls which were mentioned above, will somehow be replenished. To total of this "net capital" which "will be raised" for the Greek banks, is 6,36 billion and based on this number, we see that there will still be a deficit of about 2,36 billion for the Greek banks and 6,03 billion respectively for the whole EU banking system, keeping in mind that this is always based on the models employed by the ECB for this specific test run. But once one realizes that the economic reality (such as the deflation values) of these economies are essentially ignored, then the positive interpretations of this report can only be seen as a fraud of unprecedented proportions...  


These results are leading inevitably to more mandatory "corrections"...

So there we have it. The real data as presented by the ECB stress test farce, show the indisputable negative condition of Greece's banking system, but also in the European South. What is truly impressive, is not the way the Greek regime tries to show and unreal positiveness and this audacious reversing of reality. It is more than clear that the whole banking system is drowning in huge, bad debt. But still, no one in Greece, with the exception of the United Popular Front (E.PA.M.), will dare to ask the glaringly obvious questions: HOW did these shortfalls come to being, and WHO managed these institutions while these deficits were piling up? Will anyone ever pay for this massive squandering of peoples savings?

But it seems that these kind of questions are irrelevant to the Greek regime and it's Mainstream Media outlets, who are seemingly doing everything they can to avoiding asking these questions. Instead, they are already promoting the idea and are priming the Greek population to the idea that these so called "shortfalls" will have to be paid. After all, what is a measly 2,36 billion to an already debt ridden and dying nation? Nothing much, apparently, even though this means that more more blood sucking will ensue.
These deficits will need to be corrected we are told, because it is a well known fact that our regimes here in Greece have a standing policy: Bow down to the demands of whomever supports the salvation of the banksters. And what are the methods by which Greece's undemocratic powers save the banksters? The answer is well known and one does not need to look very far or be too creative. Bail ins, taxing to death and the general looting of everything. That was to be expected, some will say. But it was not expected, to some at least, that even the political opposition would rise as yet another defender of the poor banks, leaving the Greek people completely undefended in the political arena. And what was even more unexpected, is the fact that the majority of Greeks let this whole thing become so unbelievably nasty and are still expecting some third party to offer them salvation.



[1] AGGREGATE REPORT ON THE COMPREHENSIVE ASSESSMENT, October 2014 - https://www.ecb.europa.eu/pub/pdf/other/aggregatereportonthecomprehensiveassessment201410.en.pdf

[2] For Fig 1: http://www.zerohedge.com/news/2014-10-26/chart-crushes-all-credibility-ecbs-latest-stress-test

* S Katsoulis is a member of the P.S. of the United Popular Front Greek political party

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