S&P said this money crunch is likely to only be the start of a wider credit crisis as
national austerity programmes and sovereign debt fears combine to put
"refinancing needs in jeopardy". On Thursday, the Dutch central bank said it
thought Europe was on the brink of a "lost decade" of low economic growth as the
region struggles to get its finances in order. Against this backdrop, eurozone
and British companies will have to have to deal with managing the £7.1 trillion
debt pile they have accumulated, equivalent roughly to 80pc of the region's
economy. The vast majority of the debt to which S&P refers is standby lines
of credit to Britain's largest companies. The FTSE is not over-geared, companies
haven't borrowed outside their means and there is no great "wall" coming.
Corporates have been feverishly hoarding cash and de-levering over the last 3
years in full expectation of another recession....Most of the debt facilities
will simply be rolled by existing lenders at or before maturity as they always
do, probably at higher margins. The problem here is that some of the lenders who
are looking to reduce their balance sheets will find it harder to support
smaller businesses (and by that I mean FTSE250 companies, not SMEs) at the
stupidly low margins that they are currently charged. Pricing will therefore go
up in order to compensate for the increased capital requirements which the
regulators have rightly imposed on the banking sector. A few will really
struggle and they might need external support.....A little less headline
grabbing and a few more facts might actually bring some reasoned argument.
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Speaking exclusively to The Sunday Telegraph, Theodoros Pangalos said he was "very much afraid of what is going to happen" after Greek voters rejected the deal in elections last Sunday.
"The majority of the people voted for a very strange mental construction," he said. "We want to be in the EU and the euro, but we don't want to pay anything for the past."
The main beneficiary of the election, the hard-Left Syriza coalition, came a startling second on a promise to tear up the deal, which promises EU loans to keep massively-indebted Greece afloat, but demands crippling spending cuts in return. Germany, the principal lender, has said it will stop payments if Greece breaks its promises on spending.
Mr Pangalos warned: "There is a school of thought that says the Germans are bluffing. They need Greece and will never throw us out of the eurozone. But what will happen, which is almost certain, is they will not give us the money to pay our debts.
On Golden Dawn, there are signs of what might be termed buyers' remorse. The Sunday Telegraph found a number of people who'd voted for them but claimed they now regretted it, and their score in the latest post-election polls is down. Many other residents, however, were genuinely grateful to the fascists.
"Six months ago, no-one could walk here," said Christos Yiannis, drinking coffee in Attiki's main square. "Last summer, we didn't come out like this at all. The police did nothing. Golden Dawn cleaned up the squares and made them human for people to enjoy, because the state is absent. The state has collapsed."
As two little girls rode pink tricycles round our table, and the old men sat reading their newspapers in the sun, it was tempting, so tempting, to believe there are easy answers to tough problems – none tougher than the mess Greece now finds itself in.
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