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Page added on July 4, 2015
Greek bank closures may deplete supermarket shelves
A halt to international payments from Greek bank accounts is hurting Greek businesses and their foreign partners and threatening supplies of vital goods like food and clothing into the debt-crippled country.
With banks closed, people limited to withdrawing 60 euros ($66.62) per day and Greece’s future in the euro possibly hinging on a referendum on Sunday, Greek shoppers have been stocking up on essentials like sugar, flour, pasta, rice, beans, canned and paper goods.
Shelves remain full for now as retailers have inventories in storage. But capital controls put in place after Greece defaulted on a loan to international creditors have essentially frozen companies’ cash flows and credit.
This has severely hampered production and shipping, meaning that goods are in finite supply. With this week’s rush to supermarkets, shortages could be around the corner although budget limits are providing some cushion.
“At this stage there is no problem of shortages. There is sufficient stock in our warehouses and we renew it frequently,” said Melina Varoutsikou, spokeswoman for Sklavenitis, one of Greece’s largest supermarket chains.
“However, nobody knows how much these can last. It all depends on which product we are talking about.”
With no international bank transfers, imports and exports have been clobbered, according to SEV-Hellenic Federation of Enterprises, meaning there are fewer raw materials, even for local production, and less petrol available for deliveries.
The Greek finance ministry said on Friday that companies wishing to process bank transfers abroad to pay suppliers must submit a request to the Committee of Approval of Bank Transfers through their commercial bank.
The ministry said companies can get further information by going to their home branch or calling their bank’s central number. But for quicker processing, the ministry recommended faxing the requests. It made no mention of e-mail, the medium often used for international business.
Meanwhile, sellers of perishable items like fresh fruit and vegetables stand to realize losses as shipments are stalled.
“The food and beverage industry suffers heavily,” said George Xirogiannis, director of industrial and sectoral policies for SEV, a trade group involved in lobbying the government to reconsider its position on cross-border transactions.
“Cash flow problems are spread throughout the economy, regardless of the size of the enterprise.”
Large multinationals such as Nestle, Procter & Gamble, L’Oreal and Coca-Cola operate in Greece and could see a sales hit, since wholesalers that lack online banking facilities or international accounts have been unable to execute any payments abroad.
“Payment transactions have been severely affected,” said an official from an international consumer goods company who spoke on condition of anonymity.
DISCRETIONARY GOODS DECLINE
Over the past five years the retail market in Greece has shrunk by nearly a quarter to about $29.7 billion this year, according to estimates from market research firm Euromonitor International, as its austerity-hit population of 11 million has cut back on everything from groceries to clothes to appliances. The less essential the product, the deeper the drop.
“Unnecessary items saw a dramatic decline already. With what’s happening now we expect the decline to be even deeper,” said Euromonitor analyst Dimitrios Dimakakos, based in London.
He noted however that retailers in Greece were reporting sharp increases in sales, versus a year ago, of staple items in the days since Prime Minister Alexis Tsipras announced a referendum on the country’s bailout.
With Tsipras’s leftist Syriza party having come to power in January, multinational companies have had months to plan for various scenarios and to consider options such as sending Greek profits to neighbouring countries to ease payments to suppliers, or by raising money from physical assets in Greece.
“They have done all the scenarios. They are ready to face the crisis,” said Spyros Christodoulatos, managing partner of consulting firm CS Compass, adding that the Greek business community remained on edge ahead of Sunday’s referendum.
Yet Yannis Perrotis, managing director of Atria Property Services, a Greek affiliate of CBRE Group that offers real estate consulting services to investors and developers, said some Greek subsidiaries of international companies had stopped getting supplies from parent companies.
“It’s a really peculiar situation, like a patient whose oxygen level is going down by the day and the heart will stop at some point as the systems stop functioning,” Perrotis said.
The head of one of Greece’s largest wholesale clothing importers said that since the capital controls were announced, the market has been frozen, with suppliers demanding different forms of security on orders, probably cash.
Credit insurers are reconsidering offering coverage to companies carrying out trade with Greece, according to the executive, who declined to be identified by name.
“Last season, when things started looking up for the first time since 2009, they were willing to provide Greek companies in our sector with a certain credit limit. They are now having second thoughts,” he said.
“The good scenario is that there is going to be a drop in consumption in our markets, so we try to be proactive and bring less goods inside the country.” ($1 = 0.9007 euros)
27 Comments on "Greek bank closures may deplete supermarket shelves"
Plantagenet on Sat, 4th Jul 2015 9:07 pm
The leftist Greek government closed the banks, and now Greek citizens can’t get their money out.
Obviously PM Tsipras has done this on purpose to create a crisis within Greece. Perhaps he thinks it will enhance his “negotiating position” with the EU.
Apneaman on Sat, 4th Jul 2015 9:11 pm
Plant, maybe you guys could lend them Sarah Palin to get er done.
Plantagenet on Sat, 4th Jul 2015 9:28 pm
Apeman
Your Sarah Paliln fantasies are even dumber then your fantasies about Obama’s secret meetings with the NG industry execs.
Is there some point at which your worldview intersects with reality?
Apneaman on Sat, 4th Jul 2015 9:54 pm
Well golly gee wilikers, Planty you done got me real good with that one.
ghung on Sat, 4th Jul 2015 9:56 pm
“… shoppers have been stocking up on essentials like sugar, flour, pasta, rice, beans, canned and paper goods…”
Sounds about right; your basic prepper shit. When your supply chains are long, complicated, and essentially global, basics rule.
Got butt-wipe?
Makati1 on Sat, 4th Jul 2015 10:08 pm
“Greek bank closures may deplete supermarket shelves” Duhhh! Who would’a thunk?
ghung, we stock at least 3 months worth, thanks. But it is NOT a necessity here, if you live in the out-back. ^_^ As I keep saying, only the spoiled will notice the crash and loss of the system.
Makati1 on Sat, 4th Jul 2015 10:13 pm
BTW: For the educationally challenged…
“Modern commercial toilet paper originated in the 19th century, with a patent for roll-based dispensers being made in 1883.”
Amazing that we made it to the 1800s without that “necessity”. I think we are going to learn how to do without again in the near future. Sorry, no Sears catalog pages to fall back on and they don’t flush very well anyway. Outhouses returning?
Apneaman on Sat, 4th Jul 2015 10:30 pm
Having a big stash of ass wipe could be very valuable after collapse. Good for trade or selling on the brown market.
Plantagenet on Sat, 4th Jul 2015 11:26 pm
You guys should travel more. You’ll find that huge numbers of people in Asia and other parts of the world do without toilet today.
Even in so-called developed countries like Russia, its wise to always bring a roll or two when you travel there.
Cheers!
apneaman on Sun, 5th Jul 2015 1:06 am
How Europe Played Greece
Do these things, they said, for all our sakes and you will return to prosperity with our help. They lied.
“They have decided to strangle us, whether we say yes or no”, said a Greek woman to me yesterday. “The only choice we have is to make it quick or slow. I will vote “oxi” (no). We are economically dead anyway. I might as well have my conscience clear and my pride intact.”
“Many people within Greece have the same reaction. “[Tsipras] is an idealist”, a friend wrote, “but I don’t know whether idealism has the power to change reality. Life has shown me the opposite to be true. I will vote “yes”, with tears in my eyes. I will be another Brutus.”
https://www.byline.com/column/11/article/135
Boat on Sun, 5th Jul 2015 2:16 am
When you borrow money you are expected to pay it back. I have no sorrow for Greece.
Makati1 on Sun, 5th Jul 2015 2:46 am
Boat, you need to read the IMF’s own latest report. They took Greece into the shitter on purpose. Just as the Federal Reserve is taking the US there as we type.
Davy on Sun, 5th Jul 2015 2:51 am
Boat, please get a little more sophistication. The Greek debacle is much more than debt and paying money back. This is what the economic hit men want people to think. That is sheeple thinking. You cannot take an individual reality and stretch it to the level of global financial realities. If we use your thinking then an investor or a bank should realize bad debt IOW creditor haircuts are in order. At the individual level bad debt write-offs are a reality. Further Boat, the Greek creditors should be taken to court for financial malpractice and corruption. Now, Boat, you get the picture.
Davy on Sun, 5th Jul 2015 3:06 am
This Greek Tragedy is going to be very good real life education of how a developed economy goes through a collapsing economic event. As a doomer and a student of systematic collapse I am very curious how the Greek population responds to food shortages. I am equally interested in how the Greek government and the EU react. When you get down to the level of a population’s food supply we enter a critical area. I feel we are nearer than we think to just such a situation.
If you take an advanced economy and you restrict finance or fuel you will have food insecurity. Food insecurity is ultimately what destroys social fabric. Food insecurity is Liebigs minimum. I have seen little analysis and study on the effects of any kind of descent dynamics on the economy or a population. Our economic gods are only interested in growth.
David Korowicz says it so well in “How to be Trapped” http://www.davidkorowicz.com/ “In fact we know very little about how a society might practically and dynamically furnish large and bewildered populations with the basics of food, healthcare, critical services, security and governance in the context of a complex society falling apart.”
Boat on Sun, 5th Jul 2015 5:27 am
Davy…Further Boat, the Greek creditors should be taken to court for financial malpractice and corruption…..Good idea Davy
If we use your thinking then an investor or a bank should realize bad debt IOW creditor haircuts are in order. …. yes Davy
Don’t forget to sell off any assets the Greek government might have and shut down their military.
You know Greece has more military spending than Iran. Over 6 billion. Where do they buy most of their weapons? Germany.
As for the impact…who cares…Greece as a country is about double the size of Detroit in population.
Boat on Sun, 5th Jul 2015 5:55 am
Mak, I will agree that the US needs to change course on military, healthcare and other spending programs. We have averaged spending over 400 billion per year just on interest to service the debt for two decades. Over 200 billion in interest per year as far back as 1988. That is not sustainable.
Kenz300 on Sun, 5th Jul 2015 7:55 am
The Greek people made a game of avoiding their taxes. The wealthy with big homes, yachts and swimming pools declared incomes of taxi drivers and got away with it. The tax collectors just looked the other way and let it go. Paying taxes in Greece was considered a joke. The tax collection system did not function properly with little or no enforcement.
The free ride is over…. you can only live on credit for so long. Eventually you have to learn to live within your income. Everyone in Greece, even the corporations and the wealthy need to contribute to society. They can not all be takers… The tax cheaters need need to pay their fair share.
Westexasfanclub on Sun, 5th Jul 2015 8:11 am
Everybody in Europe knew how things were working in Greece when the country was admitted to join the Euro. So now in a sudden it’s all their fault? And the hard working little people with no money to cheat the tax system are condemned to pay the bill with eternal debt slavery? Doesn’t seem right to me. They better crash that house of cards now while they still might find a way out.
Davy on Sun, 5th Jul 2015 8:39 am
Kenny300 said regarding Greece “The free ride is over…. you can only live on credit for so long. ”
Kenny, this is not just a Greek issues it is a global issue of living beyond our means. It is not just a rich or poor issue because all people live like kings now compared to pre-industrial man. With the global population so large we cannot maintain consumption at even lower levels considered poor. The rich nations today got rich and maintain their riches by as much positioning as productivity of a people. To point fingers at Greece and not look in the mirror is truly a deception of the mind and a distortion of the truth. Wake up Kenny.
Davy on Sun, 5th Jul 2015 9:50 am
Looks like someone else will need a bailout. Mak, I highlighted bellow the last part of the linked ZH article that is especially poignant for a Asia loving person like yourself. Mak, your pretty Asian picture is looking pretty ugly these days.
http://www.zerohedge.com/news/2015-07-05/panic-china-central-bank-steps-bailout-stocks
We’ll close with our (slightly modified) warning from Saturday which seems particularly relevant now:
“Because the reckless margin buying in China is concentrated in small caps trading at nosebleed multiples, the central bank will be funding the purchase of umbrella manufacturers, real estate developers-turned P2P lenders, and ponzi schemes unlike the BoJ’s equity book which (at least as far as we know), is comprised mostly of ETFs.”
“Leverage your dream”, now sponsored by the PBoC.
apneaman on Sun, 5th Jul 2015 10:15 am
Sounds like China has now copied everything we do – never ending bail outs and subsidies for banking and industry at tax payer expense. End it in just one sector and watch the domino’s fall.
apneaman on Sun, 5th Jul 2015 10:17 am
Is The Free Market a Hoax?
“This got me thinking about the issue of subsidies in general. See, I happen to know that it’s not only the Concorde–the entire commercial airline industry has been unprofitable. When you average out all the ups-and-downs of the commercial air travel industry and subtract the bailouts and giveaways, air travel itself has never made a profit in the entire history of the industry! It turns out that in the 30 years since the airline industry was deregulated in 1978, it has lost nearly $60 billion on U.S. operations. Domestic passenger airline operations lost $10 billion from 1979 to 1989, made profits of $5 billion in the 1990s and lost $54 billion from 2000 to 2009. A similar case is true for just about any means of commercial passenger transportation (bus, rail, etc.)
This caused me to wonder if this were really true. Will any nonsubsidized entity cease to exist beyond subsidies? If so, we’re in a heap of trouble because, try as I might, I could not think of a single major industry that was not subsidized!
In a widely-reported story that came out in May, the International Monetary Fund, hardly an institution hostile to capitalism, looked at the amount of subsidies the fossil fuel industry received globally and concluded they were a whopping 5.3 trillion dollars a year! That’s 10 million dollars a minute every single minute of every day throughout the year, year in and year out for the fossil fuel industry. That is greater than the total health spending of all the world’s governments combined.”
http://hipcrime.blogspot.ca/2015/07/is-free-market-hoax.html
Brent on Sun, 5th Jul 2015 12:10 pm
It looks like we are going to have all sorts of money to invest in the oil industry for the future….. Cough cough.
BobInget on Sun, 5th Jul 2015 12:59 pm
NO vote pulling ahead.
At least Greeks can now bargain.
Davy on Sun, 5th Jul 2015 1:39 pm
http://www.zerohedge.com/news/2015-07-05/greek-pm-calls-emergency-meeting-bank-liquidity-mni
Get ready friends looks like Monday is going to be exciting. This is a surprise to the markets who felt they had this black swan slayed. Between the China market crash and the Grexit who knows what kind of mayhem is awaiting us next week? I have watched this market since 08 shrug off countless issues but these two together at this point in the economic cycle certainly cannot be a good omen.
Brent on Sun, 5th Jul 2015 2:27 pm
Also don’t forget about what is happening with Iran.
Makati1 on Sun, 5th Jul 2015 8:32 pm
Russia and China are waiting in the wings to come to Greece’ aid. The Greek meetings with their leaders was not about tourism.