In France, President Emmanuel Macron accuses Lepen and the right or other far-right that if he comes to power – which is a given, based on the opinion polls so far it reaches 35% – that chaos will be caused in the French debt. They said the same about Italy but they say nothing about Greece where the debt cannot be reduced and continues to have the second worst performance in the entire eurozone. While in terms of Taregt 2 Greece is in a consistently gloomy situation.
Obviously, this is an attempt to mislead the voters due to the tough pre-election campaign in France. Also in osmosis with Brussels and the ECB they are trying to create fears in the markets that the speculators will attack and thus convince the societies that the right of Le Pen is dangerous.
Let’s take a look at the data
- German 10-year bond yield 2.40%
- Italian 10-year bond yield 3.91%
- Greek 10th bond yield 3.62%
- Portuguese 10-year bond yield 3.12%
- French 10-year bond yield of 3.16% was at these levels in November 2023
CDS Credit Default Swaps the premium against country risk, the bond derivative on a 5-year basis
- Germany 0.10%,
- Greece 0.75%,
- France 0.37%,
- Italy 0.74% and
- Portugal 0.39%.
CDS shows no concern from the markets.
Target 2 proves a lot
Greece in the Target 2 system continues to deteriorate reaching a deficit of 111.6 billion euros, when Germany has a surplus of 1.04 trillion. euros and France has a deficit of 135 billion euros.
Greece’s Target 2 deficit at an all-time high of 111.6 billion euros
- A very interesting element has been observed in the ECB’s Target 2 which is the system of gross settlement of transactions of all kinds in real time.
- Central banks and commercial banks can submit payment orders in euros to Target 2, where they are processed and settled in central bank money, i.e. money held in an account at a central bank.
- Target 2 settles payments related to Eurosystem monetary policy operations, as well as bank-to-bank transactions.
- Every five days, Target 2 processes prices close to the entire GDP of the euro area, which makes it one of the largest payment systems in the world.
- More than 1,000 banks use Target 2 to initiate transactions in euros, either on their own behalf or on behalf of their clients.
Why -111.6 billion deficit higher than 2015 when it was -94 billion in Target 2?
A very interesting fact is that Greece in the Target 2 system shows a deficit of 111.6 billion when Germany shows a surplus of 1.04 trillion. euro; The ECB also appears with a deficit of -374 billion euros. More than 14 countries show a surplus, Cyprus has a surplus of 13.6 billion euros, but Italy a deficit of -437 billion, Portugal -49 billion euros (see the table below).
Why -111.6 billion deficit higher than 2015 when it was -94 billion in Target 2?
A very interesting fact is that Greece in the Target 2 system shows a deficit of 111.6 billion when Germany shows a surplus of 1.04 trillion. euro; The ECB also appears with a deficit of -374 billion euros. More than 14 countries show a surplus, Cyprus has a surplus of 13.6 billion euros, but Italy a deficit of -437 billion, Portugal -49 billion euros (see the Table below).
What exactly is going on?
The reasonable answer that can be given is that in 2015 in the dark period when Grexit was lurking, the Greek banks had turned to ELA in the emergency funding from the BoE and the ECB and thus this deficit against the Eurosystem was created. However, since 2008, Greece has been running a deficit, demonstrating the pathologies and weaknesses of the economy.
In the current period, the banks have received liquidity support through the monetary policy programs of the ECB – TLTROs etc. – amounting to 16 billion – it was 45 billion – while the ECB has also bought 40 billion euros of Greek bonds on the secondary market. Together with some other transactions they form the sum of the deficit of -111.6 billion in Greece… in Target 2 for April 2024.
Why does Greece have a deficit of 111.6 billion and Cyprus a surplus?
An equally basic question is why Greece is permanently in deficit and Cyprus from 2014 onwards is permanently in surplus with 13 billion?
This has to do with the serious pathologies and weaknesses of the Greek economy, it needs funds and liquidity from the Eurosystem to support the banks and not only and thus Greece maintains deficits in Target 2. Target 2 is unfortunately an indicator of euphoria and surplus or liquidity deficit.
It is also important to emphasize that assets are transferred to the Eurosystem which, due to manipulation, appear embellished. There are still serious risks hidden in Greece, obviously not of the 2015 type, but there are risks that simply do not emerge due to the general economic relaxation.
So in practice what needs to be said is that Target 2 proves which countries are in practice strong and which are weak.
The new toxic Greek normality in numbers:
- Public Debt at historical highs of 405 billion euros,
- 780,000 non-lending companies,
- standing loans.
In more detail:
- Greek debt of 405 billion euros
We have often referred to the fact that there is an apparent inability to reduce the Greek public debt in absolute numbers. It reached an all-time high of 406 billion and fell to 405 billion. Obviously, we include intra-government borrowing with repos since they have reached 52 billion euros. Greece continues to have the worst debt-to-GDP ratio in the entire eurozone.
- Greek stock market at 1,420 units
The Greek stock market proves that Greece is profitable, not strategically investable. It remains a speculative market. The Greek stock market from 900 units to 1,500 units – recently 1,420 units – gave big profits but few enjoyed them. In Greece these minimums do not exceed 60,000 citizens out of a total of 10,000,000. We will remind you that the Greek banks were privatized with a loss for the Greek public of 42 billion euros. The Greek banks were sold with the aim of profiting the foreign investors, not mitigating the damage to the Greek government.
- 780,000 companies out of a total of 840,000 companies are not eligible for loans
When 2,000,000 Greeks cannot borrow because they are in Teiresias and when 780,000 companies out of a total of 840,000 companies are not eligible for loans. This cannot be called normality but a paraplegic snail.
- Deposits 190 billion euros and private deposits 144 billion euros – The shadow economy 44 billion euros
When the current conservative government came to power in 2019, it received private deposits of approximately 139 to 140 billion and within 5 years they increased to 190 billion, an increase of 50 billion euros. This is a significant increase, but a significant part of it should be attributed to the shadow economy, which is estimated at 44 billion. That is, the Greek economy endures because of the shadow economy.
- Standing bank loans
The proof that the Greek economy is not investable is the behavior of loans. An investable economy means that all forces in the country from businesses to households can participate in growth. Unfortunately, however, an indicator comes to shake the narrative. Bank loans have been stagnant for 3 years at 117 billion euros. Banks say there is no demand for loans, this is half the truth, because the other half is that 2,000,000 households are on the Tiresias (Black List of Banks) and 780,000 companies are not eligible for loans.
- Ηow abnormal is Greece’s new normality?
It is obvious that with 405 billion euros in debt, NPEs that continue to trouble society, over 50 billion euros in tax liabilities and 148 billion debt towards social security funds… the new normality in Greece is so toxic and weak that it is simply not normal.
