Greek Liquidation Sales Spell More Trouble

Greece needs to sell 6 billion euros of state-controlled assets by 2018 – to fulfill terms of the country’s previous bailout – before securing more cash.

The asset sales are a maneuver to privatize parts of Greece’s infrastructure and to satisfy the ongoing 86 billion-euro bailout with the European Union.

You read that right: 86 billion euros in bailout money.

These asset fire sales include …

  • Lenders demanding a larger stake in Greece’s main electricity utility PPC, the largest producer of coal-fired electricity in the European Union with fixed assets of 17.3 billion euros.
  • Three bids for a majority stake (67%) in the country’s second-largest port.
  • Last year’s sale of a 67% stake in the port of Piraeus – the country’s largest port – to Chinese shipping giant Cosco Holding Co. for 368.5 million euros.
In Greece, a storm of debt threatens to crumble what’s left of the ancient civilization.

And if you think these sales are going to fix things for Greece, think again.

Despite these recent moves, there remain differences among Athens, the EU and the IMF over labor and fiscal issues. All of which stand in the way of a crucial bailout review and delay fresh loans for cash-strapped Greece.

But the bills still need to be paid.

In fact, the Bank of Greece’s governor recently noted that the country’s back was against the wall regarding the second review of Greece’s third bailout program.

To make matters worse, economic data is deteriorating and sentiment remains negative.

Consider …

A recent Hellenic Confederation of Professionals, Craftsmen and Merchants (GSEVEE) survey indicated:

  • That 4-in-10 Greek businesses consider it likely that they’ll close shop in the coming year – that’s a stunning 40%!
  • Credit conditions are tightening up, with 7-out-of-10 businesses noting growing liquidity problems and shortages of capital from the markets.
  • For every two firms hiring, three plan to cut payrolls in the coming six months.

And that’s not all …

Workers’ rights are the latest sticking point in the bailout deal.

The IMF wants more deregulation in Greece’s labor market and it rejects rolling back previous labor reforms as stipulations for more funding.

But the ruling Syriza Party wants to restore union powers to negotiate wages.

In the meantime, the unemployment rate in Greece stands at 23%. Absolutely mind-blowing!

That’s why I’m not one bit surprised that Greeks are taking money out of their banks left and right.

In fact, Greeks withdrew 750 million euros in February, amounting to 2.3 billion in the last three months.

And get this: Central bank figures indicate the trend continuing in March!

Greece’s problems continue to skyrocket. And they’ve yet to learn that you can’t save a nation drowning in debt by throwing more debt at it any more than you can save a drowning man by throwing more water on him.

Good jnvesting,

Mike Burnick

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Comments 20

  1. Michael March 29, 2017

    Great article.

    Kind regards,
    Michael.

    Reply

  2. Christian Kircher March 29, 2017

    well so what do you propose they should do?
    its easy to tell us the facts but this does not resolve the problem. I do know greek people one of them lives in london and is the son of a bankdirector. All the money of his family is in london . and so are many rich greek families who have their bankaccounts in london. You think they will pay the european community or keep their money?
    the greek governement is in a really difficult situation. if they refuse to obey they get no more money and cannot keep on the necessary administration of the country. If they accept the conditions they get in very uncomfortable position towards the greek population. They cheated thats right but they are part of europe. so there is a principal question. is it not necessary to help the poor so that the whole thing survive. Is it not our duty to help when people are starving? We have lots of environmental problems now radioactivity and poison in food and so on. Pollution kills also. So you want to blame greece for the fact they owe some money. america does own even more money than grece per habitant. I think it is three times more and you want to give a lesson to greece people and make them responsible because they also wanted to live as you live and we all. No we are all responsible for what happens.

    Reply

    • David March 30, 2017

      Greek people like many others need to learn that you cannot endlessly live on credit. Countries, like individuals, need to pay their way and not spend more than they earn. As Charles Dickens once wrote “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery”. This is so very true. Bills have to be paid and loans repaid and the sooner people of today learn this hard lesson, the better they all will be.

      Reply

  3. Mike Hunsaker March 29, 2017

    Doing a fire sale of important infrastructure such as power generation just invites the formation of costly monopolies. The EU bureaucrats and elites are bad enough, but monopolists are going to be worse. Giving away vital public jewels for a small breathing space is just laying the groundwork for a later, bigger disaster. The bank outflows will just get worse. Cashless economy is soon to follow with further depredations.

    Reply

  4. f151 March 29, 2017

    This is probably the last gasp for socialist Greece. They are reaching the point where no one will lend to them. Strangely, I was there last year and there were no (readily apparent) big problems. I did not see a lot of homeless people, etc., although such has been reported. I was told that there were a lot of “immigrants” (mostly young males) that have forced their way in and demanding government aid.
    I think it IS a good idea to sell off most of the federal assets. The unions and socialists that have strangled the county will start to lose their grip (especially those that will be working for the Chinese – they face a rude wakeup!). But Greece is facing deflation….and THAT is a tough illness to cure.

    Reply

  5. Anthony March 29, 2017

    Hi Mike,
    Thanks for your insight into the Greek financial issues When the debt crisis eventually hits the U.S., do you think it may playout in a similar way where possibly some our national assests will need to be sold?
    Thanks,

    Reply

  6. ARISTOTLE MICHOPOULOS March 29, 2017

    Your analysis on Greece is shortsighted and biased.
    And probably you don’t know in depth the problems of the country.
    They are more complex.

    Reply

  7. Frederick W. Belland March 29, 2017

    I am still waiting for a formal farewell or memorial for Larry Edelson. Of all the commentators I read I felt he was the most knowledgeable. A few words about his life and work would be appreciated. Thank you so much.

    Reply

  8. David March 30, 2017

    Sad to learn about Larry Edelson’s death. I have really enjoyed reading his predictions and will sadly miss them.

    Reply

  9. WasteLand Warrior March 30, 2017

    but what everyone is missing is that this is exactly the plan!… Lend a country money that they can never pay back until they are up against a wall and then force them to sell national assets and treasures (that belong to the people) to pay off these debts (or sorry: to postpone the day of reckoning, just to be broke anyway in the end, but now without any assets)..and pay the debts to whom?? to the Central bankers who created the money out of nothing in the first place!?… this is the biggest crime and robbery of humankind ever! and they are laughing at us!..Greece (and all other countries) should just stop paying on the same day and all declare bankruptcy…reset the system eliminating all this fake created debt from nothing, that is enslaving the planet….And don’t you doubt it, the same thing will happen here, they will own every asset in America when they come to collect here on 20 Trillion in fake debt.

    Reply

  10. james l fisher March 31, 2017

    And yet here in the United States our politicians “think” that we pay our bills because we raise the debt limit and give ourselves more rope to hang ourselves with! Total debt composed of city, county, state and federal amount to about 1 million dollars per person. Since we do not in general, individually pay enough tax to pay the interest on this debt, we will default, the only question is when we will default and how. When a country has debt they can not pay there are three possible avenues 1. to repudiate the debt- that is I can not pay so I will not, 2. renegotiate- I can only afford to pay 40% of what I owe you- try that with social security! and 3. Inflate the debt away. The worst and most spineless way is 3, to inflate the debt away! You can rest assured that our politicians will choose the cheesiest most spineless way possible to “pay” the debt!

    Reply

  11. Beate March 31, 2017

    Although Larry’s wisdom and steady hand at the helm is sorely missed, you, Mike, have seamlessly stepped into the picture. I continue to follow your updates with interest and appreciation.

    Reply

  12. Brad March 31, 2017

    Will there be mass emigration of Greeks to the other European nations? Will all of this nation’s assets be sold off? Which nation will be next to fall?

    Reply

  13. Anna March 31, 2017

    I suggest all commenters watch, on YouTube, “The Bank That Rules the World: Goldman Sachs”.
    It’s as riveting and suspenseful as any James Bond film and much more pertinent to your life.
    We have shown this film twice at the Center for Global Justice where I live.
    WasteLand Warrior will be particularly gratified to know his discernment is justified by facts and the actual words of Goldman Sachs employees.
    It is very well done.

    Reply

  14. Bradley Lewis April 5, 2017

    The real tragedy here is that the Eurozone has done all this for two reasons: initially to bail out northern Eurozone banks that had high holdings of sovereign debt with high interest rates, including large holdings of Greek debt which at the time made them vulnerable (they now aren’t) and to demonstrate to every country in the Eurozone that they either dance to the tune played by Germany and the Brussels bureaucrats or their economy can and will be destroyed. Grabbing Greek assets as part of the “deal” is designed to remind Greece of what the Eurozone’s rulers would prefer Greece to be: a colony controlled by other powers who believe themselves superior. Any form of popular sovereignty is the enemy.

    Reply

  15. James April 13, 2017

    The Greek debt crisis is like a a Greek tragedy, give the guys a break over there though, in Ireland we have stable government that lasts a full five years, and decent opposition to the government. The politicians over here have been working really hard with the troika. What we really need is more investment in the healthcare and education systems. What they lack in Greece is probably a world class education system? They need more FDI foreign direct investment. They probably need another dose of EU structural funds. What’s there gross national income at market prices like? What’s there net national income at factor cost like? When depreciation is included? How’s this all gonna effect their current account budget deficit where current expenditure exceeds current revenue. How does this all effect their gross domestic product and gross national product? Is it a bit of a mystery.

    Reply