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Greece Sells Off The Family Silver

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  • 25 May, 2011 GMT

By: Dr. Mike Campbell

As we reported yesterday, concerns that Greece would default on its debts sent markets across Europe lower and led to a 3 cent decline in the value of the Euro against the Dollar from Friday’s close. The markets and the Euro have since rallied, but Greece’s debt burden looks set to remain “the obvious elephant” for some time to come.

The Greek authorities have embarked upon an initiative to move some state controlled assets into the private sector as a mechanism to generate cash and pay down some of the nation’s debts. The Greek Finance Minister, George Papaconstantinou explained the move: "The cabinet decided to proceed immediately with the sale of stakes in OTE, the Postbank, the Athens and Thessaloniki ports and the Thessaloniki water company in order to front-load its ambitious privatisation programme. To accelerate the process, the creation of a sovereign wealth fund composed of privatisation and real-estate assets was also decided." However, no firm timetable was provided for the asset sale and the extent of the funds expected from the sale was not clear either. The minister underlined statements by the Prime Minister that Greece was determined to pay back its debts and would not default.

On Monday, the Greek cabinet agreed further austerity measures designed to save a further €6 billion this year. If achieved, this would reduce the deficit by 7.5% this year. Greece has already seen considerable civil unrest at previous austerity measures since the Greek people feel that they are not responsible for the position the country finds itself in.

The current yield on Greek ten-year bonds is 16.8% - this is very expensive even when compared to the yield demanded from other troubled states: Spain is currently paying 5.5%, for example.

Dr. Mike Campbell

Dr. Mike Campbell is a British scientist and freelance writer. Mike got his doctorate in Ghent, Belgium and has worked in Belgium, France, Monaco and Austria since leaving the UK. As a writer, he specialises in business, science, medicine and environmental subjects.

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