Greece continues to stand on a knife’s edge. The newly elected government is scrambling to finance its expenses. Day to day cash is scarce, especially in the face of a collapsing tax base and revenues.
In every sense, Greece is bankrupt and being kept afloat by shady accounting at best. Its days are numbered. The question that remains is whether or not the EU or rather Germany will keep the Ponzi scheme going? In all likelihood it will continue, at least for the short term.
Greece has but a few short weeks left remaining in cash reserves. It has been shut out of the debt markets, which is understandable given the horrible mess it is in. Banks are fearful to issue loans or buy debt, at least until a more solid deal can be reached with the IMF and EU in securing additional financing.
The future is bleak. This month alone, the government of Greece must find a way to meet its current obligations to the IMF of $1.5 billion euros, on top of refinancing its short term debt of $3.2 billion euros!
In the short-term, the shady accounting practices may help keep them running. The Hellenic Financial Stability Fund, which was the bank rescue vehicle used in 2012, can be used. Greece plans on withdrawing $555 million euros, which will help, but not for long.
Of much greater concern to the citizens of Greece is the government’s intentions to tap into government pension funds and other state entities that are sitting on cash. This money, which has been set aside, could be used in the “short” term to help finance the daily operation of the government.
This should not be taken lightly by the citizens of Greece, if the banking sector won’t loan money to the government, then you know for a fact that there is a good chance funds withdrawn from pension plans will never be repaid. Essentially robbing its citizens of their future.
It appears that Greece is ready to begin cannibalizing upon itself. Unless a deal can be reached with the EU to extend bailout terms and reduce obligations, then we are looking at a massive collapse in Greece’s short term future.
The question is, what will be the ramifications of such a collapse? Will Greece be forced to default and be removed from the EU? Will a return to the Drachma be ushered in? The future is uncertain, but one thing is for sure; more debt, is not the solution. Greece needs to swallow its medicine and face the music. The sooner the better.
