Merkel: "Greece is no longer of systemic importance". Translation.

(I receive from Angelantonio Castelli, a reader of my blog, this graph, which I submit to your attention. Any error - including translation errors - is my own responsibility)

Dear Prof. Bagnai,

I am a follower of your blog. Some time ago I had allowed myself to contact you and I appreciated your helpfulness. Using my basic knowledge of economics (most of which obtained reading your blog), I had a glance at the BIS database. 

Puzzled by the recent statement of Frau Merkel about Greece's "loss of systemic importance", and the fact that now the Eurozone could afford Grexit, I wished to check the exposure of the European banks towards Greece.

Assuming I considered the right variables, this is the graph I obtained:

Several things struck me, besides having a factual check of what I had already learned from you.

1) France in this case behaved worse than Germany [Translator's note: of course it did! This is the reason why Mr. Moscovici is so keen to suggest Greek people how to vote, as Jacques Sapir points out so often]

2) Arguments like: "Greek people falsified their accounts" seem ridiculous once checked against the facts. The French banks only had credits up to 20% of Greek GDP, and they kept lending... [Translator's note: yes, we said this in 2011, and Vitor Constancio realized it in 2013: you cannot over-borrow if someone is not over-lending!]

3) It is interesting to remark the different strategy of Swiss banks. They were massively involved. However, since Swiss people were not particularly concerned about the euro, the sell everything within one quarter, while Germany and France must be more cautious, otherwise Greece had collapsed and the Eurozone with it. [Translator's note: well, the reasoning could be more or less correct, but there is a statistical break in the series. Unfortunately, we do not have homogenous data that would allow us to verify this hypothesis]

4) The role of Italy is quite marginal (but we knew that, although our media do not tell us). [Translator's note: indeed, our media actually speak a lot about "contagion". I am not quite sure that epidemiology has something to do with our predicament.]

I would appreciate your comment on this, and especially on the last portion of the graph, where we see that German banks start, very timidly, to lend again to Greece. Where does this come from? Perhaps Berlin knows that it is in complete control of the situation, and that it can resume its game?

Thanks to you I uncovered the pleasure of understanding economic scenarios, and to look at the data, something I usually do for protons' collisions. For this reason, I wished to share this graph with you. It could prove useful for your blog.

Happy New Year,

AngeloAntonio


(it is indeed a useful graph, because it allows us to translate Angela's - or his advisor's - words. When they say: "Greece is no longer of systemic importance", they mean " Greece is no longer dangerous for our banks". Just for you to know how Europe is ruled...)


Addendum: my coauthour Christian Alexander Mongeau Ospina was so kind as to explain us what happened to Switzerland:

La ragione del break la trovi a pag. 20 di:

http://www.bis.org/publ/qtrpdf/r_qt1006.pdf

"... as a result of a restructuring that took place during the fourth quarter of

2009, a Swiss bank was reclassified as a Greek bank. As a consequence, its

claims on Greece were no longer included in the consolidated figures for Swiss

banks. This change in the reporting population of Swiss banks caused most of

the $74.9 billion decline (from $78.6 billion to $3.7 billion) in the claims of

Swiss banks on residents of Greece between the third and the fourth quarter of

2009. If one compared the numbers for these two quarters in BIS Table 9D

disregarding the break in series in the fourth quarter, one would wrongly

conclude that there was a precipitous decline in the foreign claims of Swiss

banks on Greece when, in fact, there was no sizeable change in the stock of

claims held by the bank in question."