About two years the international bond market was dead. Nobody was buying, or even consider any state bond, particularly European ones. And we’re talking about just the depreciated Greek bonds, but for the Italian, Spanish and even German bonds being unable to attract investors with the usual ease.
Two years later though and the investors are convinced that the debt crisis is under control and they are frantically buying up Italian bonds, despite the Italian debt breaking one record after the other each month.
The biggest surprise though is that there are many willing buyers for Greek bonds, as evident by the recent five-year bond issue, where there were offers of 21 billion euros for bonds worth 3 billion euros.
More importantly, the international investors are not hesitating to invest about 8 billion euros in the formerly doubtful Greek banks.
There is an explanation for everything. A lot has happened in the world and even more in Greece over the past two years.
The USA’s policy of quantitative ease, the great fiscal consolidation in Europe and the complete restructure in Greece have mitigated many of the bad impressions of the debt crisis.
At the same time a lot of money has accumulated internationally over these two years, the markets were literally flooded, however the formerly profitable markets in Russia, Turkey, Asia and Brazil became risky, the investment opportunities were limited and money started flowing back to the safer Europe.
At present, the financial circumstances are unique for the Europe of low growth and high unemployment.
It is no coincidence that the president of the European Central Bank, encouraged by the financial conditions and fearful of he consequences of the enduring unemployment, announced initiatives to support cash flow, by alluding to the bond markets – state or corporate – or other measures to secure the necessary long-term cash flow for Banks in order to facilitate all economies, even the Greek one.
In other words there has never been a better time in recent years to support the growth effort.
Greece has every reason to support these perspectives, to the best of the abilities, and to apply the greater possible pressure in order to convince the European Central Bank to act as soon as possible, even before the European elections.
The conditions allow Europe to lax its monetary policy and to release critical funding resources, particularly for countries such as ours, which has been experiencing a credit drought for years.
If Mr. Draghi were to make such a move, the Greece would catch a breath and be in the position to finally leave behind the long-term recession.
After everything though, Greece deserves the opportunity of a financial spring.
Antonis Karakousis
