“If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem” the famous quotation from JP Getty neatly sums up the dilemma faced by the international community in dealing with the Greek debt problem.
Following Sunday’s election in Greece the stock market in Athens has suffered a fall of10%.The biggest losers were bank shares with Piraeus Bank down more than 20%.
In the two sessions following the election, banks have seen 23% of their
value wiped off, with investors fretting that the possibility of Greece leaving
the euro would see bank accounts converted back into a new Greek national
currency.
The sharp movements came after new Greek Prime Minister Alexis Tsipras
said in his first cabinet meeting that he planned to negotiate with creditors
over the €240bn (£179bn; $270bn) bailout.
In spite of the hard line talk it will be no surprise to see realpolitik coming into play and a fresh compromise being offered to the Greeks, in effect kicking the problem further down the road.
The fact is the international community will have to learn to accommodate the spectre of countries failing to grapple effectively with their debt burdens. In turn this will inhibit growth and impact upon the speed and strength of global economic recovery.
It will be an uncertain time but one undisputable outcome of the above will be the hard ball attitude of banks towards companies seeking funding.
It will become ever more necessary to demonstrate effective control over all areas of cost and exposure as the banks will undoubtedly remain cautious providers of finance.
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