Tuesday, May 4, 2010

135 Billion Euro

The problem in Greece that temporarily culminated in a joint EU and IMF rescue package of a bailout of 135 billion Euros, has a long history. It did not just happen overnight or in 1 year. It started in 1998, 12 years ago, when the EU Commission rejected including Greece in the start of the Euro currency countries. The Greek story read like a thriller and includes chapters of fraudulent manipulation of its balance sheets with the help of Goldman Sachs (as reported by the New York Times).

With the injection of 135 billion Euros, is the problem resolved? No. According to a report from financial advisor Bert Flossbach who went to Greece for onsite interviews, a large portion of the aid goes directly into the hands of rich Greece banks that speculated with the aid, and indirectly into the pockets of Greece's richest businessmen and foreign investors. In short, the aid will not reach the Greece economy, certainly not the average employee. Secondly, the dept is so high that in the documents that outline how Greece is going to achieve 30 billion Euro expense cuts about 10 billion (30%) is listed as "miscellaneous", i.e. it is unknown. In the radio interview Flossbach used the term "Greece will have to produce this junk of 30% like a magician by pulling a rabbit out of a hat". As a result of the massive dept, the inability of the EU to face the inevitable facts, and the unwillingness of the Greek politicians to take fair, but drastic measures, Greece will be in the very same situation the very same day in 3 years when the EU and IMF aid package runs out. History will repeat itself. In 2013, just like last month, Greece will again face bankruptcy.

Who is to gain, who is to lose? As always when the IMF intervenes, it is a redistribution from the borrower to the lender. In short, the US - principal owner of the IMF - will be richer and the Greek population will be poorer.

1 comment:

  1. I have heard from Daniel, that the whole greek government would consist (recruite) only of 2 families. Franz