A very brief post from Limassol, Cyprus. The errors or misleading statements in the media this past week on the Greek debt crisis are simply astounding. Here are only a few examples:
The Sun: Grecian Earner: The deal was hammered out at a nine-hour session - and comes 14 months after Greece, which is more than £300billion in debt, was given its first £100billion cash injection.
Ø This is wrong, or misleading: Greece has only received approximately EUR 50 billion of the first bail-out package of EUR 110 billion. This is UKP 44 bln out of UKP 96.9 bln. The full “£100billion” hasn’t been disbursed.
The New York Times, After a Deal, Only More Challenges, 21 July 2011: It includes 109 billion euros ($157 billion) in aid to Greece.
Ø This is not aid to Greece, it is a mix of new sovereign loans or private sector loan roll-overs. This ignores the whole question: can Greece repay its old and new loans?
The BBC: EU austerity drive country by country, 20 July 2011: But the Greek government has not delivered on a major element of the rescue plan - large-scale privatisation. The goal is to raise 50bn euros from sales of state assets by 2015.
Ø This is a true statement, but fundamentally a wrong one. The government passed the EUR 50 billion privatisation package in June 2011, about three weeks ago. Of course the package hasn’t been implemented yet.
Nicole Itano in a Bloomberg video Legal Disputes Complicate Greek State Asset Sales, June 28: “There isn’t even a land registry to help sort out the mess.”
Ø Actually, there is a land registry: you can view it here. The problem is that there are ownership disputes on some parcels of land, mainly a result of historical factors, tradition and the backlog in the Greek legal system. The other problem is that the registry does not cover all areas, as not everyone has declared their property. Most individual property is already in the land registry.
There are others too numerous to mention. There are also numerous errors regarding the interest rates offered by the private sector: they are higher than the EUR 3.5% offered by the EFSF.
You can view the Eurozone press statement here. Check also the IIF press release. There is precious little by way of detail. I’m still running the numbers – some are very unclear – and hope to post an update over the weekend.
(c) Philip Ammerman, 2011
Navigator Consulting Group Ltd.