Everything goes! Greek government mortgages the country's airports, banks and infrastructure to EU debt collectors
by: J. D. Heyes
Some last-minute deal-making to ensure that Greece's bailout debt is fully repaid is not likely to sit well with the Greek electorate.
A week ago, voters in Greece overwhelmingly rejected a deal, rebuffing European leaders who were demanding new austerity measures and a piece of Greece's soul.
In the end, it looks as though that's what EU creditors are going to get anyway.
As reported by Zero Hedge, a new deal negotiated by the Greek government of Alexis Tsipras will only further enrage Greeks who were already decrying the loss of the country's sovereignty to creditors who are simply trying to get their money back.
Hand over the keys to the banks
A central part of the deal requires that some 50 billion euros in Greek assets be escrowed in a liquidation fund:
Granted said fund will not be domiciled in Luxembourg as was originally envisioned, but Europe will still have control and first refusal rights over what are technically Greek properties, in the process Athens handing over about 25% of Greek GDP (and sovereignty) over the Brussels.
What are these assets? For the answer we go to the horse's mouth, Jeroen Dijsselbloem, who laid out the holdings of the proposed Greek privatization that would be sold off as follows: "it still is going to be an independent fund, valued at €50 billion which can be airplanes, airports, infrastructure and most certainly banks."
In other words, Zero Hedge's Tyler Durden notes, the country is going to be sold off piecemeal in order to satisfy its debt and its creditors. Further, none of the proceeds from the piecemeal sales will ever go to the Greek people; they will all go to Greece's creditors.
"That is good for Greece, but also good for us. We are in the end the ones from whom the money is borrowed," Dijsselbloem noted.
It wasn't clear how this deal is going to be good for Greece, but then again, the money is owed.
Will this finally stave off a collapse of Greece's financial and societal sectors? Many observers think this is unlikely. The country will most probably default again, and even so, the deal still has to be approved by a skeptical Greek Parliament.
Some of the liquidation funds will also go to recapitalize Greece's insolvent banks. This is also causing consternation and angst among the populace because, as Zero Hedge noted in a separate post, the country's banks are sure to rob depositors as a way of staying afloat.
"Haircuts" of depositor accounts coming
Reuters reported on another, little-known part of the bailout deal:
One of the preconditions imposed on Greece for a deal is that it signs into law European rules that would put euro zone authorities at the ECB and in Brussels, rather than Athens, in charge of identifying and closing or breaking up sick banks.
This in turn could lead to a shake-up of the sector that could see some banks close, with losses pushed onto bondholders and possibly even large depositors. In such circumstances, there would be little that Athens could do to prevent this.
As Durden notes, since the Greek banks are already severely undercapitalized, "haircuts" of depositors' accounts will be necessary to make up for the difference in liquidation funding and banks' cash on hand.
Worse, if Greece inks this deal with the European Central Bank, it -- and not Athens -- will control the keys to the country's financial institutions; these are banks that may or may not survive even with additional help. All of this will go down while capital controls prevent ordinary Greeks from fully accessing their money.
It's about to get very ugly in a country whose citizens are itching for a fight with the EU, hell bent on not handing over any more of the country's sovereignty, and convinced that big Euro banks (and not the Greek government's socialistic economic model) is to blame for the financial crisis.
Learn more: http://www.naturalnews.com/050438_Greek_Bailout_EU_debt_greece_economy.html#ixzz3gBB6q3qb