The Greek economy was stricken by the downturn later than many of its neighbors, and it appears to be stuck lingering in the recession for longer. Greece continued to experience losses in the third quarter while peers around the globe have begun slowly climbing out.
Wind has been returning to the sails of global banks this quarter but Greek banks are not joining the fleet. Greek financial institutions, which were in the process of expanding to the Balkans pre-crash have suffered severely diminished funds and become increasingly reliant on resources from the European Central Bank which they bought on the cheap using government bonds.
As the nation’s budget deficit continues to rise against European Union regulation, their credit rating is under fresh fire with many questioning whether their bonds will continue to be accepted as collateral by the E.C.B.
Investors are uncomfortable with the notion, cutting prices of bank shares and insisting on higher premiums to hold the nation’s rising debt. Greek bonds have become increasingly unattractive for investors, presenting a significant threat to the nation, who relies on their investments to fund the deficit.
Some analysts argue that reports have been blown out of proportion and that said bonds would have to be downgraded in excess of three notches before encountering serious trouble.
Others have said that the European Central Bank may consider abandoning Greece, though the bank has yet to release a comment outside stressing the importance of banks obeying the framework in place.
Whatever the outcome, Greece will face significant challenges in the depths of a recession much the rest of the world is emerging from.
This week, the Athens Stock Exchange general index has fallen 3.5 percent.
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