The signs were there

Last week we described the economy as Greek society’s «big patient» and argued that broader economic developments will essentially determine citizens’ living standards and, effectively, their voting behavior. Back then, we were still unaware of Alpha Bank’s decision to raise lending rates. Nevertheless, the woes of the real economy were there for anyone to see, even though they were not reflected in official figures. The economic slowdown could be seen in the behavior of households, in their attempts to cut their spending and recoup their losses from the Athens bourse and negligible bank interest, and from banks’ failure to forge measures that would rationalize the business sector and consolidate their own position. Alpha Bank’s move was not a bolt from the blue. It was not a surprise to those who keep a close eye on the economy and who are not misled by the shortsighted approach of the National Statistics Service. Alpha Bank ignored the pretexts, saw economic conditions for what they were and made the necessary moves (as it saw them), regardless of the public’s perception. Moreover, it marked a new period of more restrictive economic policy to redress the fallout of the previous period of excess. Citizens should not take comfort in the fact that other banks have not imitated the move so far. Their hesitancy is temporary and most of them will most probably readjust their interest rates soon. Many banks face serious financial obligations which they won’t be able to meet without shifting some of the cost over to the public. In other words, because our system prohibits mass layoffs and radical intervention in the entrepreneurial sector, the cost of adaptation will be shifted onto the shoulders of the broader public – with uncertain fallout for both the public and politics.