If you believe that, I’ve got a bridge in Brooklyn to sell you. Well, maybe not Brooklyn, but Athens. The recent ousting of the Greek finance minister, coupled with domestic and foreign investors dumping Greek bonds has led to the yield on the two-year note to rise to more than 30% for the first time ever. This in turn has led to fears of a default, as concurrent with this Greece’s credit rating was lowered from B to CCC by Standard & Poor’s. Essentially the message is that Greece is likely to default.
To make matters worse, Greece has to raise US$71 billion [€50 billion] in the next four years in order to meet its obligations vis a vis money it has borrowed, and push through severe austerity measures, including the laying off 150,000 public workers. All of this has been set forth as a requirement by the financial heads of the European Commission to ultimately provide Greece with what would in effect be a second bailout of the Greek government.
There have been protests, many of them violent, as the Greek Prime Minister George Papandreou used the central 2012 talking point from the U.S. Republican party – the government must stop spending more than it takes in. Papandreou’s comments foreshadow a showdown in a few weeks when Greek legislators will vote on the selling of government property, cuts in social programs, government layoffs and tax increases.
In concert with all of this, the New York Times reports that the government will sell 49 percent of the state railroad, list ports and airports on the stock market, and privatize the country’s casinos…[it] will also sell minority stakes in water utilities serving Athens and Thessaloniki, sell 39 percent of the post office, and combine its vast real estate assets into a holding company to be listed on the stock market. Further, airports, highways, banks, various government real estate and gaming licenses will be up for grabs.
So, if you have some extra cash laying around perhaps you may want to look into a bridge in Greece. Let’s hope that the economics of the current downturn do not become so bad in the U.S. that the old joke about a bridge in Brooklyn to sell becomes reality too.