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From Greek Tragedy To Travesty: Troika Selling Off The Cradle Of Democracy

Politics / Eurozone Debt Crisis Sep 24, 2013 - 11:07 AM GMT

By: Raul_I_Meijer


Is it merely a coincidence that the troika rode its Trojan horse into Athens again on the very day Angela Merkel went awfully close to an absolute majority in German elections? I'm sure it is. But it's still very bad news for the Greeks, who now have their perhaps last chance to throw out the international financial system and decide their own fate, before most of their valuables have been sold off to foreign interests. Greece is where democracy started, and the way things are going, it may be where it will end as well.

The troika starts the new round of talks right off the bat with more pressure on selling off more of the goodies, even as up to now they've not sold for anything near targets, at absolute bottom prices, if at all. The Greek population, if it doesn't call a halt to these negotiations, will end up not owning a single brick in their own country anymore, and still be heavily indebted to foreign banks and investors. And largely unemployed. Their own government, which consists mainly of bankers too, warns of domestic radical elements, but what other choice but radicalization do they leave the people? From Greek news service Ekathimerini:

Troika puts pressure on sell-offs

Creditors insist on acceleration of privatizations projects for the shortfall in revenues to be covered in 2014

The troika of Greece’s creditors on Monday exercised strong pressure on the state privatization fund (TAIPED) to speed up the country’s sell-off projects.

During a meeting at TAIPED’s headquarters, the mission chiefs of the European Central Bank, the European Commission and the International Monetary Fund called for more action so that this year’s revenue shortfall, amounting to €1 billion, can be covered in 2014.

At the troika’s focus were the privatizations of ports, water and sewage companies, and Hellenic Post. According to plans drawn up in January, these sell-off projects should have started in the second quarter of the year, while the aim now is for them to get started in the last quarter, given that the third will be over in a week’s time.

The troika was also updated about delays in the utilization of real estate, and mainly that in the development of Athens old international airport at Elliniko, which is the biggest project in the privatizations package.

The Greek side again cited problems related to the nature of the properties for sale, saying they require a kind of "maturing" before they begin to attract investor interest. TAIPED officials also cited the differing views among the various authorities, with ports being the best such example as their privatization should have started in July.

The fund’s management also presented a list of more than 25 pending legislative and regulatory issues that must be settled before the privatization procedures can begin.

One of these issues was settled just hours before the troika’s arrival in Athens, as the Infrastructure Ministry repaid the debts of the Greek state to Athens water company EYDAP. Last Friday Minister Michalis Chrysochoidis had tabled an amendment in Parliament allowing for the payment of the approximately €600 million owed to EYDAP by the state.

PM Samaras and his crew consistently rely on unrealistic assumptions, not so much to appease the troika, who know the books, but to fool the people, who don't. And then afterwards, they can claim unforeseeable circumstances led to even worse numbers, and more budget cuts and tax hikes will be needed. And lest we forget: another 25,000 government workers are set to be fired. The pattern is so obvious and so predictable it's definitely not funny. Ekathimerini again:

Troika skeptical on primary surplus

The troika has doubts about Greek projections for a primary surplus this year and next and has begun the process of discussing with Athens the contents of the 2014 budget, which Greece’s lenders believe contains several areas that need closer inspection.

High-ranking Finance Ministry sources said that while the representatives of the European Commission, European Central Bank and International Monetary Fund agree that Greece will produce a primary surplus at the end of the year, they think it will be minimal. The troika is also skeptical about Greek projections for a primary surplus of 1.5% of GDP at the end of next year.

It is thought that one of the reasons Greece’s lenders are downplaying the possibility of Athens producing a sizable surplus is that they are alarmed by the debate in Greece about how this amount will be allocated and whether social spending could be increased.

With regard to the 2014 budget, the troika still has doubts about the effectiveness, in terms of revenue raising, of the unified property tax. Next year will be the first time the levy, which combines several property taxes into one, is applied.

Troika officials are paying particular attention to the state of Greece’s tax administration, which will be key to whether the government can hit its revenue targets. Any lack of convergence with the revenue goals agreed with the troika would make further fiscal measures necessary.

Greece’s Finance Ministry also informed the troika that the government would not meet its target of paying off this year all of the €8 billion in arrears that it had amassed.

And, yeah, so more bailouts will be necessary, and though they’ll be much smaller than the €240 billion previous ones, the price that will be paid for them is going to be much higher. Bailout weary Merkel voters will see to that, apparently. Or so is the official line. The underlying mechanism is that any excuse will be used by the troika members to grab as much as they can. From the Wall Street Journal:

Greece, Creditors Begin Talks on New Bailout

Athens Officials Say Nation's Economy Has Turned a Corner

Greece began talks with international inspectors on Sunday that will set the stage for a third multibillion-euro bailout of the country, even as senior officials in Athens pointed to signs of a recovery after years of deep recession. The discussions come amid heightened political tensions in Athens that could test the country's fragile two-party coalition government.

After a meeting lasting almost four hours with senior officials from the European Commission, the International Monetary Fund and the European Central Bank known locally as the troika and Greek Finance Minister Yannis Stournaras, a senior Finance Ministry official said initial discussions focused on a broad range of issues including the execution of the 2013 budget.

While the negotiations represent the latest round in the regular quarterly inspection visits that have accompanied Greece's almost four-year-long debt crisis and will decide on whether to unlock the country's next aid tranche of €1 billion ($1.35 billion) new budget and growth data also show Greece may be turning a corner.

Senior officials in Athens have spoken of gradually exiting the draconian austerity program tied to the bailouts, but they also warn that the turnaround has yet to be felt by the average Greek, and that extremism in the country is rising.

At issue is whether Greece will have to take additional budget cuts to close a possible €2 billion-€4 billion budget hole next year according to unofficial estimates and a forecast €2.5 billion-€4 billion fiscal gap in 2015-16.

The size of that gap will also determine the size of a third Greek bailout to help cover Greece's debt payments and other financing shortfalls between July 2014 when European loans to the country run out and mid-2016, when the IMF's contribution to the bailout winds up.

The size of that third package is much smaller than the €240 billion of rescue loans already pledged to Athens. while the reasons for it were somewhat unexpected. The IMF says Greece faces an additional financing shortfall of about €11 billion by 2016,half of that total because euro-zone central banks went back on a previous deal to roll over Greek government bonds. Another chunk relates to an unexpected bond buyback Greece undertook this year to reduce its debt burden. [..]


One of the troika's major demands concerns a moratorium on foreclosures. The international community wants to be able to throw Greeks out of their homes, and makes it a condition for further bailouts. All in the name of making Greek banks profitable. Which is of course just a veiled way of saying international banks want to be able to squeeze more money out of their bad and failed Greek investments.

The idea is summarized perfectly in this comment about the Greek banks: "... anything that helps them return to profitability is good...". They mean that word for word. If it means throwing grandma out onto the street, so what? She's not your yaya, is she (yaya is Greek for grandma)? Bloomberg:

Greeks Needing Credit Ethos Weigh Home Repossessions

Panagiota Kalapotharakou says she’s never seen such distress in her 25 years as a lawyer at the consumer-advocacy organization she helped to set up in Athens.

"If you look outside, the people are in despair," Kalapotharakou said of the line of visitors outside her office in the rundown neighborhood of Exarchia, where most of her time is spent helping people with debts they can’t pay from Greece’s boom years. "They can’t survive. What they can pay is much smaller than what the banks are asking for."

While the country’s lenders are on firmer footing after getting capital from euro-area and International Monetary Fund bailout funds, they still need to reduce the non-performing loans that have tripled to 29% of the total in three years and threaten their new-found solvency.

One obstacle is a five-year ban on foreclosures that prevented thousands of Greeks from losing their homes after the economy went into free-fall. The government is now considering a plan to ease the restrictions by the end of this year to satisfy its creditors’ demands. Finance Minister Yannis Stournaras said last month that banks face serious problems if they’re not allowed to repossess and auction homes of people who don’t pay their mortgages.

"At the moment, even people who can afford to pay the mortgages do not," National Bank of Greece SA Deputy Chief Executive Petros Christodoulou said in a Bloomberg Television interview on Sept. 6. "When the new law is passed and officially foreclosures are allowed over a certain benchmark, we will see that the credit ethos will return."

Mission heads of Greece’s troika of creditors -- the European Commission, European Central Bank and IMF -- are back in Athens today to review the country’s progress in satisfying conditions for the release of the latest installment of its bailout loans.

The troika wants to throw Greeks out of their homes so their banks can return to profitability. I'd say that's pretty much our ethical quandary in a nutshell: banks are more important than people. Maybe it's a good thing they say it out loud from time to time. We don't want to fall asleep, do we?

Greece doesn't have a functioning housing market with 28% of the population, and close to 70% of young people, unemployed. Which means the homes that are supposed to be foreclosed on can't sell for anything close to the value of the bad loans that would seem to justify the foreclosures.

In other words: substantial amounts of the loans will need to be written off, whichever way you choose to go about it. So why not write off a substantial part of what people owe, restructure the loans so they are in line with present day home values, and allow for people to stay in their homes? If you throw them out, who's going to buy the homes? A bunch of rich Greeks, or foreigners? Where's the ethos in that?

Oh, wait, that's already taken care of, reports Ekathimerini:

Twenty foreign investors already granted residence permits

Some 20 residence permits have already been granted to foreign investors who have purchased Greek real estate following the implementation of a law aimed at attracting investments to Greece. Foreign Ministry data show that in addition to these five-year permits given to non-European Union citizens for investing at least 250,000 euros in property in Greece, many more applications and hundreds of questions remain outstanding, showing that there is major interest in the benefits of the incentive.

Angelos Syrigos, the ministry’s general secretary for population and social cohesion, told an event organized by Invest in Greece on Monday in Athens that most of the permits have been granted to Russian and Ukrainian nationals. Other recipients include citizens of Canada and the US, as well as one from China, though most of the outstanding applications are from Chinese nationals. Some of the applications have come from people who had held considerable real estate holdings in Greece even before the paw was passed.

Invest in Greece chief executive Stefanos Isaias noted that since mid-April, when Law 4146 was passed, the agency’s information bureau has been inundated with over 300 queries regarding this very issue, while in the whole of 2012 all of the questions posed about investments in general numbered 850. About 60% of those queries originated from within Greece – mostly from local estate agencies representing mainly Russian foreign investors – with the rest coming from countries such as China, India, Egypt and Lebanon.

Deputy Development Minister Notis Mitarakis told the same event that among the benefits of the law on residence permits are an incentive for new construction work in the holiday accommodation sector and the creation of more tourism infrastructure.

He went on to announce that regulations concerning residence permits and citizenship would be subject to change in the coming months, as the government is hoping to resolve problems that have cropped up relating to the application of legislation on residence permits to foreign investors.

Is this how we see justice? That because the Greek population did the same thing as everyone else, namely buy homes on overleveraged credit, we should have the right to sell their treasures and leave them desolate debtors in their own land? We all owe our democratic rights to the ancient Greeks, who defined said rights. If we allow for them to be sold off in Greece, what exactly should we expect for ourselves? What rights can we still claim if we let that happen?

One last thing, for entertainment purposes:

Greece to Take on EU Presidency with Smaller Budget

Greece will spend no more than 50 million euros to host the six-month rotating European Union presidency, which it will assume in January, Parliament was told. Deputy Foreign Minister Dimitris Kourkoulos told the House’s European affairs committee that the government would devote fewer resources to the EU presidency than other countries had done recently.

He said that in contrast to recent presidencies that required 60 to 75 million euros and up to 250 staff, Greece would spend less and use no more than 150 personnel. Unlike their Athens-based parliamentary colleagues, Greek MEPs from five parties put their political differences aside to submit together a question in the European Parliament regarding the effects of austerity and the rise of right-wing extremism in Greece and other parts of Europe.

The MEPs asked the European Commission and Council to explain what measures they are prepared to take to address this situation.

That’s right, Greece will chair the EU in a few months time. They can then negotiate with themselves. Get a better price for the Acropolis. Do we want this to be the future of democracy?

By Raul Ilargi Meijer
Website: (provides unique analysis of economics, finance, politics and social dynamics in the context of Complexity Theory)

© 2013 Copyright Raul I Meijer - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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