After a lot of digging, I stumbled upon some historical data about Greek depository institutions. In a recent post I had rambled about how the Greek General Government crowded out the Greek private sector.
The limited data that I had in my disposal back then ran from 1998 up to today. They showed that this was happening from 1998 up to Greece's EMU accession. After the Greek EMU accession things changed since capital was more readily available from international sources both for the banking sector and the government.
I had said back then that I can’t think of many reasons to make me believe that this wasn’t happening in the past few years too. Well, reality outshines fiction in our case and here is proof of just that.
|source: United Nations, IMF, own calculations|
As you can see depository institutions’ net claims on General Government when that trend peaked accounted for 2,5 times the claims on other resident sectors, meaning the private sector in general.
Does it come as a surprise that gross fixed capital formation for the whole period shown in the chart was anaemic ?
I’ll refrain from making any other comments and stick to the proverb that claims that a picture is worth a 1000 words…
P.S. Notice that the chart shows the ratio of net claims on General government vs. claims on other resdient sectors. If the data were for net claims on other resident sectors maybe the picture painted would be even worse...