Credit crisis puzzles bankers

Domestic bankers are now trying to work out the direction in which money markets are likely to be heading, admitting – perhaps for the first time – that their information about the extent of the US housing crisis is rather limited. As a result, their appraisal of current market conditions is dogged by uncertainties. «The special element of this crisis is vagueness,» EFG Eurobank Assistant Chief Executive Officer Nikos Karamouzis told Kathimerini. «Even so long after the crisis erupted, there is no comprehensive information about the magnitude of the problem; however, the reaction of markets shows that the problem is more severe than what was widely believed at first.» For Karamouzis, a crucial point from now on will be whether and when the US economy will enter into recession, and if this happens, when such a recession would make its way to Europe. In the meantime, the crisis has already started affecting other credit and financing areas beyond subprime loans. «What we have been witnessing in recent days is a spreading of side effects to consumer credit,» warned Attica Bank CEO Tryphon Kollintzas. As far as the real extent of the crisis is concerned, that’s not at all a pleasant discovery, as it epitomizes a standing fear of all parties associated with the global financial system, either directly or indirectly. Optimism Angelos Philippidis, Postal Savings Bank CEO, believes that, «in terms of duration, the cycle of such crises has actually shortened.» Going a step forward, Philippidis predicted that the current situation may not end till after six months, while bringing one more parameter to the table of discussion: «A violent market drop may be followed by a violent rise.» Even though many would prefer to see this become reality, no one can be certain it will. Nevertheless, there are some optimistic voices out there maintaining that the credit crisis will soon end. For instance, Piraeus Bank Vice President and CEO Giorgos Provopoulos told Kathimerini, «I am not completely pessimistic.» Making an interesting prediction regarding a de-escalation of the crisis, Provopoulos said that «the first quarter of 2008 will be a tough one, as may be concluded by the signs we have had so far. However, we may witness a moderate rebound in the second quarter of the year.» Overall, the view that things will start improving as of Q2 2008 is shared by many bankers. But this, of course, remains to be seen in practice.