Greece, Once Again

Brown twilight in Greece. German media are charging. Nice statue cures it all.

At first, the EU officials resolutely deny. Later, they accept a theoretical possibility. Finally, they start negotiating the conditions. But it is clear to everyone that from the very first moment, despite everything, money is on its way. We are of course talking about the rescue packages during the euro crisis which were handed out like nothing. And because we are coping with the snowball effect here, we are facing the same problems again and again – namely Greece. Let’s count how many times this country has come to the brink of default during the last four years. First, it was in 2010, when the problem was solved via bilateral loans (in which Slovakia participated only partly – as a member of the IMF). Later, in 2012, debt restructuring took place when 53.5% of the nominal value of part of Greek bonds was cut. Next, the country received more help in the form of temporary EFSF (European Financial Stability Facility). Connoisseurs can perhaps include a third default, a few months later, after which the repayment was extended and interest lowered in Greece’s favour. (And we are leaving aside the help of ECB to Greek zombie banks.)

And as a result of the support, the debt is inextinguishable; the next bailout is in the oven already. But the elites of the EU and IMF are also discussing new measures how to help Greece, because it is possible that budgetary revenues, even in combination with current loans, will not cover the expenses planned for 2014. The gap amounts to 6 billion euros. What is more, privatisation is not enough to cover it, since there is only a mediocre interest in purchasing the listed assets among foreign “predatory capitalists.” So, what is now on the agenda is extending the maturity of the bilateral loans to 50 years and/or further reduction of interest rates by 0.5%. And German sparrows are already tweeting about a rescue package worth 10-20 billion euros.

But it is not only debts that are presenting a problem in the Hellenic Republic. Last week members of the third strongest and openly neo-Nazi party, the Golden Dawn, destroyed a memorial monument dedicated to a murdered musician, Pavlos Fyssas. They intimidated his family in their house and smashed several bars without any resistance from the security forces. Even though the chairman of the Golden Dawn has been arrested and accused of participating in the murder of Fyssas, members of the party are not afraid to continue their activities. What is more, the party’s Crown Prince Illias Kasidiaris is running for the position of the mayor of Athens with pre-election results of a staggering 55% of votes. Memories of the Nazi occupation of the country, which was the hardest among non-Slavic countries and brought famine and death of several hundred thousands of people, have probably already faded. Not less than five (out of seven) parliamentarian parties in Greece include characteristics of national or proletarian socialism in their programs, and they all hate one another.

All this creates an unpleasant situation for Brussels right before the upcoming European elections. German newspaper Bild has already computed possible share of Germany in the new “package” for Greece to 6 billion euros and it came up with the headline: ” Greeks richer than us…But want another billion – from us.” In the article, the newspaper recalls the recent research of the ECB, according to which even though German households have nice incomes, they own less assets (especially real estate). Results of such research can invite differing interpretation, but for German euro sceptics, they just bring the desired bullets for the pre-election campaign.

Not that they haven’t had any so far. Wirtschafts Woche, for instant, summed up the wasting of European funds in Germany. Among some interesting examples, there is the unsuccessful project of pets’ crematorium, a marketing project to improve the position of isolated butchers, or nearly 10 million euros for the bankrupted factory producing vegetable oils.

Motorized voters might not be pleased with the expected increase in prices of fuels (British experts estimate an increase of 240 euros per motorist – and this sum does not include an increase in food prices) due to new regulations on fuels – they should include “greener” ingredients. Being expensive and being “green” are probably necessarily connected; otherwise, it is hard to imagine that Brussels has introduced duties on imports of cheaper U.S. ethanol. Last week, we informed you about the idea of the EU to equip all cars with a device that would make it possible to deactivate them remotely. Hopefully, there is going to be a by-product invented – a device that would disable Brussels’ bureaucratic machine.

The shadow cast by Greece has eclipsed news from Spain, where additional 113,000 registered unemployed were reported. If you are wondering how the country can actually survive at a 27% unemployment rate, the answer is – grey economy. Its estimated share in Spanish GDP between 2008 and 2012 increased from 17.8% to 24.6%. In Italy, it should be possible to live from just a look at Donatello’s sculptures and landscapes – as local officials imagine. They are actually considering legal action against the credit rating agency S&P for damages worth 234 billion euros. The agency supposedly forgot to fully appraise Italian “history, art and natural scenery” in awarding the investment rating of the country. Well, I bet that at least Italian history was for sure taken into account.

If you cannot call it a week without news from banking sector, here’s one piece on a different topic. One part of the upcoming stress test will also be a test of quality of bank assets (bonds, loans and other securities held by banks). The ECB is slowly revealing the criteria that are used for the test purpose. These assets that are held for trading will be market to market.  The question remains, however, how the others will be ranked.

And we cannot conclude this issue otherwise than by a visit to Sochi. 2014 Winter Olympics cost 40 billion euros, which is more than all previous winter games together. The vast resources allowed the building of many advanced gimmicks – radiator in the ceiling, throwing the toilet paper on the ground, or lawn sprayed with green colour – you can choose your favourite one!

Translated by Stanislava Dovhunová