The EU leaders conference tonight in Brussels to discuss the Greece situation – and Chinese sharemarkets are jumpy. But the most immediate problem is the health of Greece’s banks – it is now clear that Greeks are withdrawing billions of euros because they are scared the political toing and froing will trigger a crisis.
The Financial Times described the banks as a “ticking time bomb” in the Greek crisis, and presented some stark figures which suggest the banks could run out of money this week. They have already received an emergency top up on Friday from the European Central Bank to help them meet the demand for cash from the run.
On what the FT and Reuters have reported, the situation is terrifying:
"Domestic resident deposits have already fallen by roughly a fifth to just over €140bn in the six months to April, according to the latest Bank of Greece data, and analysts warn this trend has accelerated over the past six weeks.
"Deposit outflows hit €1bn on Thursday alone and about €3bn this week, according to two senior Athens-based bankers. As a result, Greek lenders are relying on ECB funding and, in particular, its emergency liquidity assistance scheme, which they have tapped extensively as other sources of cash evaporate.
"Until mid-May, Greece’s four largest banks – National Bank of Greece, Alpha, Piraeus and Eurobank – borrowed more than €110bn from the ECB, including more than €75bn in ELA, according to estimates from KBW Research. The ECB on Wednesday raised its self-imposed limit on ELA by €1.1bn, to €84.1bn, and then approved another modest increase on Friday – although less than the €3bn Athens had requested,” the FT reported.
Reuters reported bankers are saying that the situation later today in Greece will be even graver as the run continues.
There are lines at ATMs, and people are doing it electronically – and moving it offshore to other eurozone countries. Customers are concerned that the government might be forced into introducing capital controls to staunch the outflow of cash – like was done in nearby Cyprus where low daily limits were imposed on ATM withdrawals and capital flows out of the country severely restrained.
The meeting tonight in Brussels won’t tackle this question – it will try and produce an agreement on a broader scale to try and bring Greece and the eurozone closer to some sort of agreement – however tenuous or temporary, to settle nerves.
Apart from these dramas – and the tensions in the Chinese sharemarkets – it looks like a fairly quiet week so far as data is concerned.
The most important will be the series of mid-month ‘flash’ reports on the health of manufacturing across Asia, Europe and the US.
For Australia the update from China tomorrow will be the most important – a small improvement is forecast, but that is likely to be swallowed by concerns about the markets.
In the US existing home sales are out tonight.
Tomorrow sees new home sales data, home prices figures for May, durable goods orders (also for May) and the Markit manufacturing conditions survey (for June) and personal consumption data (all on Thursday).
The third estimate of March quarter GDP growth on Wednesday night is also likely to be revised up to -0.3% annualised from -0.7%, thanks to stronger consumption data since the second estimate a month ago, according to the AMP’s chief economist Dr Shane Oliver.
In Europe the focus will remain on Greece.
But watch for the concerns about Greece to have had an impact on the Markit manufacturing and services conditions survey results tomorrow night and the latest eurozone money supply and bank lending growth.
In Asia, besides the Chinese stockmarket and the flash survey of manufacturing from HSBC/Markit, the usual end of month data slow from Japan emerges late in the week.
First off is the Markit manufacturing conditions survey, then on Friday the usual end of month data releases which will be watched for confirmation that the Japanese economic recovery is on track.
We’ll get data on employment, retail sales, inflation and household spending growth.
In Australia, it’s a quiet week. March quarter home price data is out tomorrow (and will show a rise).
Data for job vacancies and population will also be released this week.
