Thursday, July 2, 2015

Cash Crunch Hits Everyday Life in Greece

At the Wall Street Journal, "Shutdown of Greece’s banking system cripples businesses, makes it hard for people to pay bills; just €1 billion in cash left":
ATHENS—At an automated teller machine underneath the Acropolis, Angeliki Andreaki clutched her debit card with both hands. She pays her bills in cash, and €330 in rent and €39 in telephone bills were due Wednesday.

“Tsipras has turned this country into North Korea,” the 83-year-old Ms. Andreaki said Tuesday, shaking her head about Greece’s prime minister, Alexis Tsipras. “I can’t believe at this age I have to line up to get rationed cash.”

She withdrew as much as she could—just €60 ($66)—and went straight to pay her phone bill. She said she would have to come back for five more days to get enough cash for the rent.

This is everyday life in Greece since it shut down its banking system and imposed controls to prevent money from flooding out of the country.

Greece’s ruling party continued to say it was offering new compromises to its creditors and urged a “no” vote in Sunday’s referendum. European leaders dismissed the overtures as insufficient and said they would hold off on further negotiations until the vote.

The first opinion surveys in Greece since Mr. Tsipras called for the referendum show conflicting results but suggest the outcome could be close.

The freezing of Greece’s banking system is the most dramatic moment of the country’s five-year debt crisis—and perhaps its most pivotal. Since Monday, Greeks can get only €60 a day at cash machines and can’t transfer money abroad.

How long the remaining cash lasts and how unsettled Greeks become will be big factors in Sunday’s referendum on creditors’ demands for more austerity in exchange for more bailout funds. The tighter the squeeze, the more Greeks might vote “yes” to reconcile with creditors, analysts say.

As of Wednesday, Greece’s banking system had about €1 billion in cash left, according to a person familiar with the situation. Even with the €60-a-day limit on ATM withdrawals from Greek’s closed banks, “it’s a matter of a few days” until the money runs out, this person said.

By Wednesday, many ATMs in central Athens had constant lines of people waiting to withdraw their daily limit. The crunch has suffused the economy. Merchants report lower spending. Wholesalers can’t pay for supplies. Importers’ foreign counterparts won’t trade.

Airline Ryanair Holdings PLC, which flies to Athens, Thessaloniki and other Greek cities said Tuesday it would accept cash for tickets at airports because Greek customers have had trouble paying with debit cards. Ryanair is based in Ireland, and electronic payments abroad are prohibited.

The worst nightmare as far as the business community is concerned has come true,” said Constantine Michalos, the president of the Athens Chamber of Commerce and Industry.

Mr. Michalos also has a food wholesaling business, and 65% of his product line is imported. As of this week, his foreign suppliers aren’t sending any more, leaving him with about 20 days of remaining inventory. “I have the ability and necessary funds in my bank account to import,” he said. “I am not allowed to make an electronic transfer.”

Greece’s cash crunch hit small merchants first. They are less able to get credit from their suppliers, especially those dealing in perishable products that are continually imported. Christos Georgiopoulos owns a gourmet supermarket in Plaka, a picturesque Athens neighborhood frequented by tourists. He sells Champagne and Russian crab legs.

Nobody is buying. “I haven’t had a single customer in two days,” he said Wednesday. He is shutting down his shop and says he doesn’t know when he will reopen. He gave some crab legs to his workers and is taking some home. “I haven’t paid my staff and don’t know if and when I will,” he added.

Marie Palandjian-Raxevsky, marketing director at Mini Raxevksy, a Greek children’s clothing brand, depends on Google Inc. advertisements to generate sales from consumers in Greece and elsewhere.

Late Tuesday night, she got an email saying her Greek corporate credit card, which pays for the ads, was declined. “Now our campaign has completely disappeared,” she said.

Who has cash and who doesn’t is often arbitrary. Aspasia Kourana, an 80-year-old retiree, was shopping Tuesday at one of Athens’s many open-air fruit and vegetable markets, a staple in neighborhood life here known as laiki.

She got her monthly pension of €600 last Thursday. Her daughter withdrew it all the next day.

By Monday, Ms. Kourana’s daughter and son-in-law couldn’t get more than €60 of their respective salaries out of the bank. “We’ll use my €600 pension for the next few days,” Ms. Kourana said. “I might even get some cherries for my grandson. He loves them.”...
Still more.