Today the Greek government announced that it will issue an additional €26 Billion in austerity measures and sell €50 Billion in state-assets to meet its targets to reduce the country's public debt and deficits. Bottom line: Greece is accelerating its position on the road to the Keynesian Endgame. While the measures announced today may at best quell investor fears over the short run, longer term the government is putting another band-aid over the deep fiscal imbalances that are not being properly accounted for by the government.
So what’s on the chopping block? The Greek Finance Minister put to auction today stakes in the Hellenic Telecommunications Organization (HTO) and Public Power Corp (PPC), estimated to yield €15 billion by 2013 and €50 billion by 2015.
With Greece’s debt estimated to ramp to 159% of GDP in 2012, and expectations to cut the budget deficit from a high of 15.4% of GDP in 2009 to 3% by 2014, as the government works against €13.1 Billion in debt (principal and interest) due in the months of April and May (of the some €42.5B due this year), while the Greek 10YR yield rips to over 13% -- we’d say the country is 1.) going to need a far greater life line and/or solution to restructure its debt, and 2.) rife for some more civil unrest.
In the meantime, be patient and wait for your price on a beautiful Greek island to call your own. Bon weekend!
Matthew Hedrick
Analyst
