Greece Might Have To Sell Ancient Ruins, Islands Under Bailout Deal

 

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dette-Grèce

It’s a horrifying prospect:  Greece may have to sell it’s ancient ruins and sights in Athens and elsewhere, as well as nature preserves, and islands as part of it’s deal under the new bailout agreement.  People are very rattled at the part of the seven-page agreement where the Greek government has agreed to sell off 50 Billion Euro’s worth of “valuable Greek assets”.

According to Time.com [1]:

“It’s an affront,” says Georgios Daremas, a strategist and adviser to the Greek Ministry of Labor, Social Security and Social Solidarity. “It’s basically saying sell the memory of your ancestors, sell your history just so we can get something commercial for it,” he tells TIME on Monday. “This is an idea to humiliate Greeks.”

The idea of locking up Greek assets in a special fund emerged on Saturday from Germany, the biggest and one of the least forgiving of the creditor-nations involved in the talks. In order to guarantee repayment on loans to Greece, the German Finance Ministry even suggested moving the titles to Greek assets to an “external fund” [2] in Luxembourg so that Athens could not renege on their sale. On this point, Greek Prime Minister Alexis Tsipras managed to fight off the Germans on Sunday, though it was one of the very few concessions he managed to get during the marathon talks.

Greece

“The deal is difficult, but we averted the pursuit to move state assets abroad,” [3] Tsipras said in trying to put a positive spin on the bailout, which would see Greece take more than 80 billion euros in additional loans in order to stave off bankruptcy over the next three years.

Greek payments on its two previous bailouts were also meant come in part from the sale of state assets. Under the terms of its first bailout in 2010, Greece agreed to privatize around 50 billion euros in property and infrastructure as a way of raising money for its creditors. But only 3.2 billion euros have come from these sales to date. So Germany and other creditors have good reason to doubt the Greek commitment to privatization.

Going forward, Greece will have to stash its assets in a specially created fund and prepare them for sale “under the supervision of the relevant European Institutions,” according to the text of the bailout agreement published on Monday [4]. Asked what kinds of assets the fund would include, Dutch Finance Minister Jeroen Dijsselbloem, one of the key European negotiators in the bailout talks, said “experts” would be brought in to settle this question. “I won’t give you any examples, because it’s not my specialty,” he told reporters in Brussels on Monday [5].

Most of the examples would have to come from the government’s land and real estate holdings, says Daremas, the government official in Athens. “That may include buildings, possible areas of land, and even islands,” he says. To protect the natural, historical and archaeological value of such real estate, Greece would need to pass laws and empower oversight bodies to make sure that “the new owner does not abuse or damage the property,” says Daremas.

Since Greek islands and plots of land often house ruins from ancient civilizations, some of these may also have to be sold, he added. “Maybe some archeological sites that are not developed,” Daremas says. “But if you have this as a private investment you also have to assume responsibility for developing the site, of course being monitored by [Greek] authorities.”

There are, of course, limits to the privatization of ancient artifacts. The treasures of Greek antiquity, such as the Acropolis in Athens, would never be sold, Daremas says. “That’s impossible. Their value is immeasurable.”

The idea of selling the Acropolis came up early in Greece’s debt crisis. In 2010, two conservative German lawmakers caused a furor [6] in Greece by suggesting that ancient ruins should not be off limits to privatization. “Those in insolvency have to sell everything they have to pay their creditors,” Josef Schlarmann, a member of Chancellor Angela Merkel’s political party, said at the time. Since publishing those remarks, the Bildnewspaper, Germany’s most popular tabloid, has continued to irritate Greeks by asking why the Acropolis cannot be sold to repay debts to Germany [7].

This is black humor,” says Natalia Kosmidou, a tour guide at the Acropolis in Athens. “The Germans must have had too much beer.” Although the last five years of economic turmoil have forced Greece to rely on private donors and foreign foundations to help pay for the maintenance and restoration of the Acropolis, Kosmidou says, “the Greek state will always own these monuments, even as the poorest pauper, even penniless.

Greece has at least been willing to discuss the sale of its islands, however, as many of them are uninhabited and underdeveloped. Joseph Stiglitz, the Nobel-prize winning economist who has spoken out in favor of debt relief for Greece [8], says the sale of islands could be an important part of the broader privatization campaign. “You could sell them,” he says. “But not a fire sale, because that would be like giving away your patrimony for nothing.”

That would mean waiting until the property market in Greece recovers. “Of course real estate prices are depressed right now,” says Daremas. “It’s very important to have time, and to wait for change in the economic climate to be able to sell them at a fair price.” The Greek promise to sell state assets came with no time limit in the text of the agreement published Monday. But in their hunger for guarantees on this latest package of loans to Greece, creditors in Germany will not be happy to wait much longer.

 

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The German Siege Of Greece Begins (No, This Is Not A Repeat From 1941)

 

Global Research, July 07, 2015
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By Michael Snyder

Siege-Public-Domain-460x306-400x266Did you notice that Greece’s creditors are not rushing to offer the Greeks a new deal in the wake of the stunning referendum result on Sunday?  In fact, it is being reported that the initial reaction to the “no” vote from top European politicians was “a thunderous silence“.  Needless to say, the European elite were not pleased by how the Greek people voted, but they still have all of the leverage.  In particular, it is the Germans that are holding all of the cards.  If the Germans want to cave in and give the Greeks the kind of deal that they desire, everyone else would follow suit.  And if the Germans want to maintain a hard line with Greece, they can block any deal from happening all by themselves.  So in the final analysis, this is really an economic test of wills between Germany and Greece, and time is on Germany’s side.  Germany doesn’t have to offer anything new.  The Germans can just sit back and wait for the Greek government to default on their debts, for Greek banks to totally run out of cash and for civil unrest to erupt in Greek cities as the economy grinds to a standstill.

In ancient times, if a conquering army came up against a walled city that was quite formidable, often a decision would be made to conduct a siege.  Instead of attacking a heavily defended city directly and taking heavy casualties, it was often much more cost effective to simply surround the city from a safe distance and starve the inhabitants into submission.

In a sense, that is exactly what the Germans appear to want to do to the Greeks.  Without more cash, the Greek government cannot pay their bills.  Without more cash, Greek banks are going to start collapsing left and right.  Without more cash, the Greek economy is going to completely and utterly collapse.

So yes, the Greeks voted for change, but the Germans still hold the purse strings.

And right now the Germans do not sound like they are in any mood to compromise.  The following comes from a Reuters report that was published on Monday…

German Chancellor Angela Merkel’s deputy said Athens had wrecked any hope of compromise with its euro zone partners by overwhelmingly rejecting further austerity.

Merkel and French President Francois Hollande conferred by telephone and will meet in Paris on Monday afternoon to seek a joint response. Responding to their call, European Council President Donald Tusk announced that euro zone leaders would meet in Brussels on Tuesday evening (1600 GMT).

German Vice-Chancellor Sigmar Gabriel, leader of Merkel’s centre-left Social Democratic junior coalition partner, said it was hard to conceive of fresh negotiations on lending more billions to Athens after Greeks voted against more austerity.

Leftist Prime Minister Alexis Tsipras had “torn down the last bridges on which Greece and Europe could have moved towards a compromise,” Gabriel told the Tagesspiegel daily.

In addition, Angela Merkel’s office released a statement on Monday that placed the onus on making a new proposal to end this crisis on the Greek government

“It is up to Greece to make something of this. We are waiting to see which proposals the Greek government makes to its European partners,” the office of German Chancellor Angela Merkel, Europe’s leading austerity advocate, said in a statement.

Just because the Greek people want the Germans to give them a very favorable deal does not mean that the Germans will be inclined to do so.  The Germans know that whatever they do with the Greeks will set a precedent for the rest of the financially-troubled nations all across Europe.  If Greece gets a free lunch, then Italy, Spain, Portugal, Ireland and France will expect the same kind of treatment

Angelos Chryssogelos, an expert on Greek politics at the London-based think tank Chatham House, said the strength of Sunday’s mandate handed to Tsipras means it will be almost impossible for the prime minister’s leftist Syriza party to make a deal with European creditors.

“The Europeans made it pretty clear where they stand, and they have been consistent,” Chryssogelos said, adding that the creditors also are unlikely to back down. “Right now, voters across the eurozone largely support the tough stance taken by the eurozone.”

Chryssogelos said Greek voters may have underestimated the resolve of the creditors to reach an accord on their terms. “If someone is seen getting preferential treatment, then someone else will want that treatment,” he said, referring to other eurozone debtors such as Ireland and Portugal.

And remember, there is a very important Spanish election coming up in December.

If Syriza comes out as the big winner in this crisis, it will empower similar movements in Spain and all over the rest of the continent.

So look for Greece’s creditors to tighten the screws over the coming days.  In fact, we already saw a bit of screw tightening on Monday when the ECB announced that Greek banks would not be receiving additional emergency assistance

In a move sure to increase pressure on Greece’s flailing banks, the European Central Bank on Monday decided not to expand an emergency assistance program, raising fears that Greece could soon go completely bankrupt.

The move put a swift crimp on Greek leaders’ jubilation after winning a landslide endorsement from their citizens to reject Europe’s austerity demands and seek a new bailout bargain. Now they must seek a bargain before the money runs out within days, which would likely force them off the euro.

Basically we are watching a very high stakes game of chicken play out.  And as the cash dwindles, economic activity in Greece is slowly grinding to a halt.  The following comes from the Washington Post

The dwindling cash is sucking the life out of everything from coffee shops to taxis, as anxious Greeks economize amid fears for the future. Greek leaders also banned transfers of money abroad, meaning that very little can now be imported into the country.

Printing plants are warning that they may run out of paper to print newspapers by the end of the week. Butchers say that stocks of imported meat are dwindling.

Some are even projecting that we could see civil unrest erupt in Greece in about “48 hours” once the ATM machines  run out of cash

Greek Prime Minister Alexis Tsipras probably has 48 hours to resolve a standoff with creditors before civil unrest breaks out and ATMs run out of cash, hedge fund Balyasny Asset Management said.

Yes, the Greek people exhibited great resolve in voting against the demands of the creditors on Sunday.

But how long can they endure this economic siege?

It is inevitable that a breaking point will come.  Either the Greek government will give in, or the Greeks will leave the euro and start to transition back to the drachma.

If we do see a “Grexit”, and many analysts believe that one is coming, it could set off a chain of events that could cause immense financial pain all over the planet.  There are tens of trillions of dollars of derivatives that are tied to European bond yields, European interest rates, etc.  The following is an excerpt from a piece authored by Phoenix Capital Research that explains what kind of jeopardy we could potentially be facing…

The global derivatives market is roughly $700 trillion in size. That’s over TEN TIMES the world’s GDP. And sovereign bonds… including even bonds from bankrupt countries such as Greece… are one of, if not the primary collateral underlying all of these trades.

Greece is not the real issue for Europe. The entire Greek debt market is about €345 billion in size. So we’re not talking about a massive amount of collateral… though the turmoil this country has caused in the last three years gives a sense of the importance of the issue.

Spain, by comparison has over €1.0 trillion in debt outstanding… and Italy has €2.6 trillion. These bonds are backstopping tens of trillions of Euros’ worth of derivatives trades. A haircut on them would trigger systemic failure in Europe.

If Greece gets a “haircut” on their debt, other European nations would want the same and that would cause massive chaos in the derivatives markets.

But if Greece does not get a deal and ends up leaving the eurozone, that will cause bond yields to go crazy all over Europe and that would also cause tremendous chaos in the derivatives markets.

So much depends on keeping this system of legalized gambling that we call “derivatives trading” stable.  We have allowed the global derivatives bubble to become many times larger than the GDP of the entire planet, and in the end we will pay a great price for this foolishness.

Every pyramid scheme eventually collapses, and this one will too.

But the difference with this pyramid scheme is that it is going to take the entire global financial system down with it.

Posted by Ainhoa Aristizabal

Goldman Sachs Doesn’t Have Clean Hands in Greece Crisis

 

 

Tens-of-Thousands-Protest-Against-Austerity-Plan-for-Greece-Evening-of-June-29-2015

Tens of Thousands Protest in Front of the Greek Parliament Against Austerity Plan for Greece, Evening of June 29, 2015

How Goldman Sachs helped mask Greece’s debt (video)

Are Goldman Sachs executives Lloyd Blankfein, Gary Cohn and Addy Loudiadis losing any sleep over elderly pensioners waiting outside shuttered banks in Greece, desperately trying to obtain their pension checks to pay their rent and buy food? Are these Goldman honchos feeling a small pang of conscience over the humiliation by creditors of this once proud country? Perhaps Blankfein, who famously espoused that he’s “doing God’s work” might shed a tear or two for the small child clinging to her elderly Grandmother’s hand as she searches in Athens for an ATM that will give her $66 from her bank account – the maximum allowed per day under the newly imposed capital controls.

According to investigative reports that appeared in Der Spiegel, the New York Times, BBC, and Bloomberg News from 2010 through 2012, Blankfein, now Goldman Sachs CEO, Cohn, now President and COO, and Loudiadis, a Managing Director, all played a role in structuring complex derivative deals with Greece which accomplished two things: they allowed Greece to hide the true extent of its debt and they ended up almost doubling the amount of debt Greece owed under the dubious derivative deals.

A February 2012 BBC documentary on the Goldman Sachs deal provides a layman’s view of the dirty underbelly of the deal, calling it “a toxic import” from America that is “hastening” the downfall of Greece.

On March 5, 2012, Nick Dunbar, who appears in the BBC documentary on the Goldman Sachs deal and author of The Devil’s Derivatives, penned a revealing article for Bloomberg News with Elisa Martinuzzi. The writers describe the Goldman Sachs deal with Greece as follows:

“On the day the 2001 deal was struck, the government owed the bank about 600 million euros ($793 million) more than the 2.8 billion euros it borrowed, said Spyros Papanicolaou, who took over the country’s debt-management agency in 2005. By then, the price of the transaction, a derivative that disguised the loan and that Goldman Sachs persuaded Greece not to test with competitors, had almost doubled to 5.1 billion euros, he said…

“A gain of 600 million euros represents about 12 percent of the $6.35 billion in revenue Goldman Sachs reported for trading and principal investments in 2001, a business segment that includes the bank’s fixed-income, currencies and commodities division, which arranged the trade and posted record sales that year. The unit, then run by Lloyd C. Blankfein, 57, now the New York-based bank’s chairman and chief executive officer, also went on to post record quarterly revenue the following year…

“The revised deal proposed by the bank and executed in 2002, was to base repayments on what was then a new kind of derivative — an inflation swap linked to the euro-area harmonized index of consumer prices…