The Greek stockmarket, closed when the latest crisis came to a head in late June, re-opened last Monday and promptly plunged. It closed 16% down, its worst performance since the global crash of 1987. The banks, which had been bleeding capital before they were closed for three weeks, fell by 30%, the daily limit, in a few minutes. The Athens General index slipped a little further the next day.
Grim data covering the past few weeks rattled investors too. An index tracking the manufacturing sector showed that activity plummeted to a record low last month. A federation representing small businesses said their average turnover fell by 48% in July.
What the commentators said
That's "quite an achievement", considering the economy is already 30% smaller than it was in 2008, said Louise Cooper in The Times. And it could complicate further discussions over Greece's third bailout package.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
The International Monetary Fund (IMF), one of its creditors, is basing its forecast of Greece's debt sustainability, and the bailout cash it needs, on GDP this year being the same as 2014. That now looks "absurdly and laughably optimistic". The bailout sum under discussion has already jumped from around €30bn in early July to the €86bn being negotiated now.
What's more, said Andrew Lilico in The Daily Telegraph, the IMF may be loath to participate in the bailout. It wants Greek debts written down and the government to demonstrate a strong commitment to structural reform. Yet the Greek government is deeply split and Europe won't countenance another write-down, so neither of its wishes will be fulfilled.
If the IMF pulls out, Europe may have to stump up even more, which could be "the last straw for certain members". With the bailout already looking inadequate and the politics getting more and more complicated, don't rule out a Grexit.
Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.
After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.
His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.
Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.
Who is the richest person in the world?
The top five richest people in the world have a combined net worth of $825 billion. Who takes the crown for the richest person in the world?
By Vaishali Varu Published
Top 10 stocks with highest growth over past decade - from Nvidia, Microsoft to Netflix, which companies made you the most money?
We reveal the 10 global companies with the biggest returns since 2013. One firm has posted an astonishing 9,870% return, meaning a £1,000 investment would now be worth almost £82,000.
By Ruth Emery Published