OPINION

The storm in the neighborhood

The Greek economy’s difficult battle is not only being waged on the front pages in the Greek and international press nor only at Davos and Brussels, nor will its outcome depend only on European institutions and the wishes of foreign investors. The crisis has hit our neighborhoods, our streets, our villages. Things have changed very quickly, as if we were overcome by a natural disaster and had no time to prepare, to escape. A walk in one of the capital’s relatively well-off residential neighborhoods presents a microcosm of the first effects of the crisis. Money has run out, the habits of a lifetime are changing. On a corner is a hardware store that is closing after being in business for 21 years. «I don’t see any future,» says its owner. He is close to 50 and still full of energy and the will to work. «You have to read the signs,» he says. «These days remind me of the time when the stock exchange was crashing – those who stayed in, believing things would get better, got burnt. Now hardly anyone comes into my shop. The owners also upped the rent – from 800 euros, they now want 1,700. I told them: ‘Go find someone who can pay that much.’ I’ll spend some time thinking about what I’ll do. I might go somewhere as an employee. I might go abroad.» He mentions other shops in the area; he has heard that some haven’t paid their rent for months. «At least I had some good years,» he says. «We’ll see.» Rumor has it that some customers of the local photographer have not come back to pick up photographs of their wedding or their child’s baptism. The owner of a small grocery store says that his turnover has plunged from about 600 euros a day to about 60. «Last Saturday, my earnings were 70 euros,» he says. He’s trying to sell the business. People have changed their habits. They’ve limited their purchases. They go only to the supermarket – and there, too, they try to buy less. «The supermarkets have special offers and they make deals with the banks,» the grocer says. He applied for a government-backed loan from the agency that was set up to help keep small and very small businesses afloat. Now his bank wants to take the loan to pay off a previous business loan that he had. The grocer won’t owe the bank anything but neither will he have the money that the government wanted to see in the market. Like the property owners who more than doubled the hardware store’s rent, the bank is frightened by the lack of liquidity and by the high interest it must pay in order to borrow and so is trying to save itself. It does not have the luxury of supporting the small businessman in the hope that it will have his custom in the future. The pie has shrunk so much that even the most basic principle of capitalism – the balance between supply and demand – has been shaken. The most extreme example of this is the fact that desperate business owners are no longer even turning to moneylenders. The loan sharks have upped their interest rate from 2 percent per month to 3.5 percent. «They lend you 100,000 euros but they hold back the interest payments,» says a lawyer who knows the scene. «So you get 70,000 but have to pay back 100,000. People have turned away. They say: ‘I’m already in trouble. Getting into debt to the moneylender as well won’t make things any better.’» The Greek economy’s lack of credibility cuts like a knife through the country, from its leadership to the citizen. The prime minister and Cabinet ministers are obliged to keep providing explanations to their counterparts and international news media. The interest rates at which the Greek state and banks must borrow keeps rising. Importers don’t have the cash to import goods and exporters have to overcome foreigners’ suspicions (as well as frequent farmers’ blockades on national highways and railway lines). One after the other, shops and other businesses are falling victim to the liquidity crunch, the shrinking of consumer spending, the increased demands being placed by the state and property owners. According to the country’s chambers of commerce, in 2009 more than 10,000 businesses closed down, 23,600 jobs were lost and the number of employers in commerce shrank by 10 percent. «Things are still OK now,» comments another shopkeeper. «People may be more careful about their spending but they still have money. They are dipping into their savings. But what will happen when this money is finished and they have no more hope? There are people who won’t be able to pay their rent, to buy food. What will happen then?»