At the end of the convoy
The bond-buying plan from the European Central Bank unveiled this week could ease the financial pressure on Spain and Italy — the third- and fourth-largest economies in the euro area. In fact, the ECB master plan could essentially turn out to be the first decisive step in taming the eurozone crisis.
The move — a commitment to buy unlimited amounts of short-term bonds from euro countries that request help — came too late of course, as the eurozone is sliding toward recession — with all the implications that this entails for Europe?s social cohesion — as three European Union nations have already been taken off financial markets, having signed bailout deals to stay afloat.
Greece, in particular, has little to expect from ECB President Mario Draghi?s initiative.
The debt-wracked country is not yet on the path of return to the markets. In fact, no one really believes it will be able to return before the termination of financial aid in 2015.
The ECB has stopped supplying liquidity to Greece and accepting state bonds as collateral since last July.
As a result, it costs a lot more for local lenders to access liquidity from the Bank of Greece. What is more, the ECB once more refused to take a write-down on its Greek bond holdings.
In other words, if Greece is to benefit from the changing mood in the Europe Union it will have to obey to the conditions of the memorandum signed with the EU and the International Monetary Fund. The message is coming from all directions. However, it comes together with a less vocal one: Greece is not going to be cut off from the eurozone.
Hence the question is whether the Greek economy and society can withstand the pressure until the eurozone?s changing policy mix starts to have an effect on the debt-hit nation. Too bad that the recession and unemployment figures are getting worse by the day. Impending cuts will only aggravate the situation without easing the debt load or improving competitiveness.
Plagued by a zombie economy and growing social turmoil, Greece is effectively caught up in a lethal trap — one that could deprive the country of any geopolitical value.
Greece is running the risk of ending up as a boat of castaways at the very end of a slow-moving convoy.
