Companies clear cash from eurozone as Greece’s March 20 D-day nears
THE big crunch day on this Greek thing is March 20. That’s the day that they’ve got to pay back squiddely billions (erm, about £12 billion or so) of money they borrowed years ago.
Normally, governments don’t ever in fact pay back such money: what they do is issue new bonds to that amount, collect the money, then give it to the people with the old bonds. But there’s no one sane out there willing to buy more new Greek bonds, quite understandably, so they can’t do that.
So, they’ve got to agree a deal then borrow the money off the IMF and the EU so that they can pay these bonds back. Or, if they don’t make the deal, they can’t pay the bonds back and they’re in default. At which point half the European banking system starts looking very dodgy indeed and we get perhaps a replay of 2007/2008 all over again.
Just to give you an example of the sort of planning that’s going on at present:
GlaxoSmithKline is clearing cash out of eurozone countries on a daily basis to protect itself against a potential banking and liquidity crisis in the region.
At the end of every day, a company the size of Glaxo, is making sure that it cleans out all of its European bank accounts and puts that money safely in accounts in London.
It doesn’t mean that Greece won’t reach a deal, it doesn’t mean that there will be a default: but it does show you how nervous everyone is getting.
Image: Consumers have a look at a carpet shop’s window as the signs read ”Sell out due crisis” in Athens, Thursday, Jan. 26, 2011. Greece’s prime minister will hold new talks with representatives of the country’s private sector creditors on a crucial euro100 billion ($129 billion) debt writedown. (AP Photo/Thanassis Stavrakis)
Posted: 8th, February 2012 | In: Money Comment | TrackBack | Permalink
