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Greece to Put State Assets on Sale; Eurozone Watches, Worries

Greece to Put State Assets on Sale; Eurozone Watches, Worries

A few weeks ago, Greece soundly denied reports in the German media that it was considering leaving the Eurozone and using its former currency, the drachma. Those reports surfaced because of concerns that Greece, a year after receiving a 110 billion euro bailout from the International Monetary Fund and the European Union, is still struggling to repay 340 billion euros of debt. In the weeks since, Moody’s Investors Service lowered Greece’s credit rating by three notches and, says the Wall Street Journal, suggested it might cut the rating further and send Greece’s debt into “junk-grade territory.”

The other members of the Eurozone in general and Germany in particular are increasingly worried that, should Greece have to restructure the debt it seems yet unable to address, the credit ratings of other European nations could also sink. Greece’s banks could see their ratings downgraded too, according to the Wall Street Journal. In the case of a Greek default, Portugal and Ireland — two other countries that also had to be bailed out by the IMF earlier this year — could see also their ratings slip towards junk territory, says Reuters.

Fearing such a scenario, European ministers were speaking last week about a so-called “soft restructuring,” but only in the event that Greece completes a “tough overhaul,” something that is still in the works. As the New York Times reports, Prime Minister Jean-Claude Juncker of Luxembourg, who oversees meetings of Eurozone finance and economic ministers, says that Greece may “not meet requirements to receive the next installment of aid from the International Monetary Fund.” Juncker’s comments are being “interpreted as further pressure on Greece to act more boldly”:

“I’m skeptical about Greece,” Otmar Issing, a former member of the European Central Bank’s executive board, said on Thursday, according to Bloomberg News. “Greece is not just illiquid, it’s insolvent.”

Peter Bofinger, an economist who advises the German government, said on Wednesday in Hamburg that Greece’s creditors would need to accept a 40 percent cut in the value of the country’s bonds, and swap them for bonds issued jointly by euro zone members.

Efforts in Greece are underway to pay off the massive debt. The Guardian reports that Greece’s Prime Minister George Papandreou has finally won the approval of the cabinet for proposals to sell 50 billions of state assets, including telecom company OTE, the Post Savings Bank, the State Lottery Tickets and the ports of Thessaloniki and Piraeus, says Reuters.

(If the last sounds vaguely familiar to you, you may be recalling the opening of Plato’s Republic, which starts with Socrates saying “I went down yesterday to the Piraeus with Glaucon the son of Ariston, that I might offer up my prayers to the goddess; and also because I wanted to see in what manner they would celebrate the festival, which was a new thing.”)

As the Guardian points out, there are some problems with the plan to sell these Greek state assets, such as how Papandreou will sell them. Also to be put up for sale are utilities companies, which are heavily unionized; they were “not sold long ago was because of fierce opposition from organised labour and within the governing socialist party.” It’s also not clear that Papandreou can get the support of his cabinet or of the Socialist party to support higher taxes and spending cuts, other measures needed to reduce the country’s massive debt.

As Papendreou met with his cabinet on Thursday, some 12,000 people demonstrated in Syntagma Square outside the Parliament building in the middle of Athens, says the Greek news website In.gr. In Thessaloniki, Greece’s second-largest city, protesters expressed their frustration with a simple, telling gesture: Upon the medieval-era White Tower — a longtime symbol of a city with a history stretching back to the time of Alexander the Great — a banner was hung that said “For Sale.”

 

Related Care2 Coverage

Greece Denies Reports in German Media That It Will Leave Eurozone

The Debt Crisis in Greece: What’s Going On?

 

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Photo of the White Tower in Thessaloniki by the author.

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28 comments

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7:15PM PDT on Aug 4, 2011

Could have been the USA

1:54PM PDT on Jun 15, 2011

There's a law against that sort of lending, just can't remember what it's called. Something about the terms being outrageous at the start so then the debt doesn't have to be legally paid.

3:31AM PDT on May 30, 2011

noted very sad economy is having down word trend due to wrong policies of the Govt

2:50PM PDT on May 29, 2011

Interesting comments on this article. Thanks for your input Care2 members. I always seem to learn something new from all of you.

7:35PM PDT on May 27, 2011

This is the plan you see... 'They' want everyone to Be under their control. Once you can get a country to be in the condition that Greece is in (of course there are a few others) you can control them... The system is created to bring about enslavement and what a perfect way to do it than by forcing a country to run to the IMF and lend money...

Debt = Control, just like 'they' are doing (and have done) to us folks and now 'they' are moving forward and doing it to countries. Africa is great example... You have to ask yourself, there's a few guys on top arranging all of this, controlling the value on currencies world wide, managing a countries worth... By the stoke of pen, the button pushed on a keyboard people's future can be destroyed and that's exactly what 'they' want...

All you savings for your retirement will be worthless which means you have to keep working and working and working, what a perfect plan... While a select few sit back and gloat at the demise of the working man...

4:00PM PDT on May 27, 2011

RICHARD S., YOU ARE SO RIGHT TOO!
MY COUNTRY (PORTUGAL)HAS ALREADY PUT A LEGAL ACTION AGAINST 3 RATING AGENCIES! IT'S JUST NOT DECENT THAT THEY DICIDE TO PUT US DOWN AND AFTER RUIN US CALL US TRASH , PIGS AND LAZY!
I, AND MANY PEOPLE HERE DON'T EVEN CONSIDER RATING AGENCIES LEGAL!

3:45PM PDT on May 27, 2011

CHATERINE BUCHANAN: YOU SAID IT ALL!

2:16PM PDT on May 27, 2011

The banking community successfully trashed the global economy, and now sit round like a flock of vultures, waiting to pick over the corpses of those who fall.
Remember, when "they" drop a country's credit rating, the cost of their borrowing goes up. The worse your debt, the more they turn the screws.
Don't they realise that a successful parasite doesn't kill it's host.

1:20PM PDT on May 27, 2011

Simply an example of a country ran by progressive liberals for a long period of time. Unless Americans make a big change next year we will soon be owing everything to China and other groups.

The only way to get out of dept is to spend less. It won't make any difference how much you make if more is always spent than taken in.

Global governance will not work any better than the EU has so lets put an end to that progressive goal NOW!

11:42AM PDT on May 27, 2011

The problem is the deep rooted corruption throughout the country where bribes, looking the other way and transferring government assets to religious groups like the Vatopaidi monks is par for the course. Tax collectors are routinely on the take, the wealthier you are in Greece, the less likely you will pay taxes...these issues existed prior to Greece joining the EU but they put a spin on it that made it appear as though the country was getting its act together.

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