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National Bank of Greece S.A. Message Board

  • jpomper jpomper Sep 29, 2011 9:07 AM Flag

    New EU plan for Greece: Eureca package: a 125B Euro Holding 1.

    The Roland Berger strategy consulting firm - according to the news media on behalf of the German government - has a new plan for the Greek debt crisis, which is one-sided instead of lending, a little more creative, and assume a more active European involvement. The Greek government organize its assets in a holding company, and then sells to the EU, for 125 billion euros. The purchase price is used to pay down the debt, says the Daily Online.

    The Greek debt crisis - plus several speculative attacks against the euro-area Member States - placed under enormous pressure the European fiscal and monetary policy. The euro zone can not protect the integrity constraints (a major spending cuts in the countries concerned), Solidarity (the willingness to share the burden) and creativity (the capital markets to understand the rules and to adapt solutions) without. The European decision-makers have tried the traditional methods to solve the problem, but so far these efforts have only exacerbated the situation. To solve the crisis, however, critical of European unity and development of the union - is the German Roland Berger Consulting, Europe's third-largest consulting companies in the analysis.

    The project, christened as a strategic consultant by Eureca package, based on a new the Greek state property holding company, which is a collection of companies in 125 billion euros, and then to the holding company is up for sale in the European Union's 125 billion euros. The amount of the Greek government bonds are redeemed from the ECB and the EFSF to (the European Financial Stability device).
    Thus, the Greek government debt is 145 percent of GDP would be reduced 88 percent, while the ECB and the Greek European taxpayers' exposure would be zero.

    Greek state property ownership gets more efficient operation, plus an additional 20 billion euros would be needed to pay, which resulted in the privatization of this property and a value increase of 40-60 billion - according to the study. Side effects of the amount invested 8 percent increase in GDP, which the GDP growth minus five to plus five per cent increase, and that 4 percent of GDP in the marginal increase in tax revenues.

    The debt can reduced by more than 50 percent, and additionally the debt rating improves, as of the combined effect of an improvement. These measures would allow Greece's debt to further reduce by one percent per year, which will be available by 2025, the Maastricht debt ceiling of 60 percent.

    The EU is purchased by the Greek and improved tools are largely privatized. If the resulting revenue would exceed the amount of 125 billion euros, the profit of the Greek state in 2025, foreseen by debt relief to turn. If the Hellenic Recovery Fund would be a loss of 125 billion euros, compared to the value, so that in 2025 the Greek state should kipótolnia up the then 30 percent of GDP (150 billion) last.

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    • The Berger plan will never fly in Greece. The Greeks will continue to play their “threats card” of taking down the entire EU‘s economy unless they get what they want.

      The fact is the Greeks have no intention of selling any of their assets beyond what they have agreed to (50B Eur) and even that is iffy. The Greeks are already feeling resentful at the world of being forced to pay for their entitlements.

      Basically, the Greeks want to have their cake and eat it too. You can't change one's habit.


    • Thus, the debt will end up below 60% of GDP in 2018 and the debt crisis that now threatens the foundations of the euro zone will be just a historical fact. Greek banks will be able to "clear up" the Greek government bonds and even record profits of around € 30 billion. Roland Berger states that the CDS-securities market will collapse and all who have accepted the default option of Greece, Ireland, Spain and Portugal will lose the game, and the rapid and bulky privatization of part of the Greek public property will bring new long-term investments in the local economy, guaranteeing positive economic growth.

      The whole plan seems more than promising, but because economic models are never exact as mathematics, there is a slim chance to implement the plan to succeed, especially considering the "effectiveness" and prejudices of Greek politicians and society to changes, privatizations and European intervention in their internal affairs.

      While abroad they are plotting how to quell the Greek problem quickly enough before becoming a pan-European issue, the representative of the European Commission officially announced that the Troika will finally return to Athens on Thursday morning this week to finish the long lasting fifth inspection on the progress of reforms in the Greek economy. Statements made it clear that this time the Europeans and the International Monetary Fund are not inclined to exchange money for promises and want to see in black and white not only the compensation for the obligations outstanding so far, but the exact action plan by the end of 2013.

      Once the supervisory Troika of the European Commission, the European Central Bank and the International Monetary Fund clear the situation in Greece, it will become clear whether the mission will give the green light for the next financial injection, which this time is € 8 billion. Meanwhile, an extraordinary meeting of euro zone ministers, Eurogroup, is expected, which most likely will be held this weekend. This is the supposed date based on statements by the European Commission according to which the ministers should meet as soon as possible to discuss the Greek issues, which means that this meeting will be held before Monday, October 3, 2011 when the regular session of the organization will take place.

    • continued....

      The measures would have several positive effects as Roland Berger expects. The CDS spreads of the current 20 percent is huge, leads to huge losses to speculators, and to discourage them from picking them up in Ireland, Portugal or Spain to play on the collapse.

      In Greek the full privatization of state enterprises would also destroy state corruption, and boost the long-term growth and investment.

      The bond holdings as the capital of Greek banks via an increase in the value of the bonds would increase by 30 billion euros. This will restore the solvency of the banking system and 95 per cent reduction in the ECB's risk exposure relating to Greece, while Greece would put an end to the financial crisis.

      In the short-term impact on debt 145 from the GDP, 88 per cent reduction in rescheduling without, and Greece also regain investors' (A or A +) rating of the CDS spread is from 20 to 5 per cent would fall almost immediately, greatly reducing the interest burden. The ECB Greek risk exposure would be reduced to zero, while the European taxpayer is minimal risk of falls.