The Greek government is putting itself in an unnecessarily difficult position. For example, it is wrong to present the recent Eurozone bank stress test results as a victory for Greek banks.
The truth is, there is no victory. Only one out of four – Alpha Bank – passed the tests. The other three, Eurobank, Piraeus, and the National Bank of Greece, all failed. (Unfortunately, the same thing happened in Cyprus, where three banks there did not meet the difficult criteria of the auditors given its economic crisis – more on that, below.)
These realities were also manifest in the best indicators regarding these issues: the Stock Exchange. The General Index of the Athens Exchange closed at 958.69 points – down 3.29 percent. The banking index fell 3.77 percent. At one point it was down 6 percent.
So, why not tell the truth? Can’t the people understand, or handle the truth? Why shouldn’t the truth be spoken? And if the Greek media is hiding the truth, will the people not learn it by osmosis from outside the country, especially with today’s Internet and the editions of foreign newspapers?
So, the issue is not that most banks failed the stress tests. That was relatively well-known. The question is how realistic are the plans the banks will submit in two weeks to strengthen their capital base so they can finally get out of this situation?
What the government actually achieved by misrepresenting the facts was that it damaged or called into question its credibility, faith in the banks, and the reliability of the media. This is not how to change the psychological climate of a country. On the contrary, it is how to make it worse.
The Greek banks are relatively small and as such, they do not gain the attention of the international media, which were focused on Italy – a nation in worse shape than Greece. Eleven Italian banks failed – a much larger and therefore greater threat to Europe’s banking system.
But even relatively small banks cannot hide. Consider the situation of misinformation that prevails in Cyprus, a situation much worse than has been presented. But at least they put Christodoulos Christodoulou, former Governor of the Central Bank of Cyprus, in prison. That sends a powerful message. We wish something similar would happen in Athens.
Rather, as Tony Barber wrote this week in the Financial Times, “it cannot be denied that corruption and favoritism continue to exist. In the private sector, meanwhile, rich Greeks made no sacrifices to help their nation in its moment of need, ensuring the crisis hammered the middle classes and poor instead.”
That is a great shame, and a topic in much need of discussion.