Olli Rehn Says Unlikely Greece Will Meet €50 Billion Privatization Target

It is now as if Europe is urging Greece to fail. The EU's Olli Rehn, better known as lord protector of Ireland (and now Portugal), for once said the sensible thing when he commented on Greek prospects to privatize €50 billion worth of assets: the latest condition for the country to procure additional bailout funding. In word (or two) - not good. This obviously could be a major issue because as we noted yesterday, the country now suddenly only has 2 months of cash left. So if even the very entity that imposed this condition is saying it is a moot point (something we observed yesterday), then why engage in the exercise at all? And how long before Europe (and whoever heads the IMF at that time) decides to pull the plug entirely...

From Reuters:

The EU's top economic official cast doubt on whether Greece was on track with its privatisation programme, saying on Monday Athens could not privatise 50 billion euros of assets in the coming years.

"We estimate that meaningfully Greece cannot privatise 50 billion euros worth of its assets in the course of the coming years, which represents more than 20 percent of its GDP," Olli Rehn, the economic and monetary affairs commissioner in the European Union's executive Commission, told a conference in Vienna.

He added that Greece had not made sufficient progress with its budget steps to allow it to return to the markets for financing in early 2012.

And just to make sure the message was not missed, RanSquawk adds that according to sources, the "reprofiling" word was again used as the key option before Greece, which is basically a debt maturity restructuring while praying that the rating agencies won't define it as an Event of Default... Which they have already said they will.

Slowly but surely it is becoming all too clear that the European clown is not only juggling with far too many live grenades, but is about to lose his balance.

Comments

[Josephine29]

I guess Oli Rehn is getting ever more worries as problems also spread to Spain and Italy. Meanwhile in Greece.

If we consider that position in more detail we see that last year under what was quite a severe austerity programme the fiscal deficit was at 10.5 % of GDP whilst public debt reached 142.8 % of GDP. So two problems immediately come from this. How is Greece going to cut another 3% of GDP off her fiscal deficit? And how will she ever repay a national debt of that size? As these numbers have emerged there have been increasing doubts about how committed Greece is to this problem and to the more thoughtful whether the programme itself is credible. These doubts are not confined to those outside Greece as this quote from the newspaper Kathimerini indicates.

To some extent, missing the fiscal deficit target in 2010, despite the significant reduction achieved, and the delays in the implementation of the structural reforms have a common denominator: The strong opposition of politicians and trade unionists in ruling PASOK.

http://t.co/aK6Fhal

Notgoing well is it Oli?

[KlausK]

"Reprofiling" ... still such a harsh word. How about something like "Papaya"?

http://www.youtube.com/watch?v=7XzLbGssArQ

"Papaya, papaya, coconut, banana!"

[Kyron95131]

that video should be illegal or mandatory to watch...

im on the fence

[KlausK]

Mandatory. It is the most insightful commentary on todays politics that I know.

[jeff montanye]

link to an english translation, please?

[KlausK]

It's just pure nonsense about a journey to a land called "Papaya", culminating in the chorus "Papaya, papaya, coconut, banana". Classic Dada.

[pappacass]

I'm scared enough of Germans as it is..

[steveo]

thats funny

[agent default]

Greece is a failed state at this point.  They will be lucky to get 50 Euro for the whole country.

[Mentaliusanything]

Hilter was a brain dead pussy - he could have had it all by becoming a Bank of last resort but he killed 'em off

Indebt them and rule 'em was obvious but he thought manpower was enough to over throw the reparations.

 Prediction - Climate change money changers coming to a Street corner near you to pay for the "mistakes made blowing bubbles in a bath and paying for the soap to blow a few more"

Note: Through the entire writing I have never disparaged any race/ religion because I am one (a race/religion) 

My race is Human and my religion is Living well

[cherry picker]

Reminds me of loan sharks in the old days.  Default or be a little late and interest goes through the roof and someone comes by and breaks your legs.

Then there is debtor's prison, where you sit until the debt is paid, but how can you pay if you can't work.

Yes the borrowers are at fault, so are the lenders.  Anyone who has ever lent money, realizes there is a risk in getting paid back.  It is about time we took this insurance away from the lenders so they can understand what reality is like and let the chips fall where they may.

[THE DORK OF CORK]

Me thinks Germany has no Gold as they would have monetized already if they had the 3000 tons +

How can the lose ? - if the wealth is internally generated Germany , France and Italy would be the winners again.

Whats the big deal ?

Unless the wealth is not internally generated......... opps

[agent default]

Yeah well according to Germany and France, their debt situation is sustainable. MUAHAAHAHAHAHAHA

[Herne the Hunter]

Meanwhile, 2yr greek bonds at 26% and 10y bonds at 17%...

[kaiten]

Give those assets to the banks as collateral. Problem solved.

Greece, supposedly, have assets valued at $400bn. That´s the size of their debt. Again. Where´s the problem?

http://www.terradaily.com/reports/Walkers_World_Greek_tragedy_unfolds_99...

[Sudden Debt]

It has been a commonly used trick to sell off assets from the states to funds and investment companies to brighten up the books.

The prices paid have always been to low.

The income those companies generate will be lost forever and the lease back of the services (those contracts are always signed before the sale) make the investments to be paid back in 5 to 7 years.

Selling off assets is the MOST STUPID thing to do!!

I only makes things worse in the future and takes away any chance of a better future.

In the 1990's most European countries sold of their electric grid and the nuclear powerplants to companies like Suez. All of these have been written down and making massive profits for those companies.

It would be robbery of unknown proportion if they did and could cause civil unrest that could lead to civil war.

Default, keep everything, nationalise whatever brings in money and start all over again.

[THE DORK OF CORK]

I agree completly sudden death.

How / why people cannot make the connection between Bank utilties using extreme leverage and Power utilities running down capital assets is beyond me.

They are the same phenomena.

[kaiten]

I agree with you, but those assets dont generate profits. That´s the problem. It´s mostly property, as I understand.

You say default. If Greece defaults, then Ireland, Portugal will default too, then Spain, Italy ... banks go bust etc, which means depression first in eurozone and the next week in the whole world. That´s the solution?

[oogs66]

default first, and then use the assets to secure new funding.  i expect they would not get good prices for the assets as there has to be some risk that the future governments of greece would just nationalize them again.

[jeff montanye]

study john hussman's archive: http://www.hussmanfunds.com/wmc/wmc100517.htm

this is an example; he has many others (and is hardly unique, but is a convincing proponent).

[THE DORK OF CORK]

That article was the biggest load of crap I have read in a long time Tiger.

The Greeks don't have a defence industry - they buy stuff - such as German subs and French jets

www.youtube.com/watch?v=MLxhOzyF-Pg

[kaiten]

They dont have ANY industry and that´s the core of the problem. And no, they dont buy stuff, they get it free. I mean, they buy it on loans on which they default, i.e. free stuff.

[THE DORK OF CORK]

@Kaiten

Maybe Sun , Sex and Sand reached its peak in the 80s........

The banks create money out of thin air - they can do it anytime - they just want people to be good citizens and pay the interest.

Maybe the Greeks ain't good citizens - bad citizens make poor subjects.

[kaiten]

Well, Im not going to be the banks advocate, because I think all should be nationalized, but what about those poor, beaten-up, battered citizens´ responsibility? Did banks force anyone to take a loan? By a gun, perhaps? You need two for a tango, you know. Im so tired of this fingerpointing. It´s always you, you, you, and never me. West is in decline, because it deserves to be in.

[Urban Redneck]

Management is taking another look at the Greek debt whores and only now viewing the situation about as attractive as sloppy seconds following Bill Lumbergh and Milton Waddams at a Munich Re party?

[M.B. Drapier]

The EU's Olli Rehn, better known as lord protector of Ireland

That should be 'Lord Lieutenant of Ireland'. But yes.

So if even the very entity that imposed this condition is saying it is a moot point (something we observed yesterday), then why engage in the exercise at all?

Probably because the ECB still has its heart set on it. We knew things were getting interesting when EU Commissioner Rehn, who'd been of one voice with the ECB in public, started contradicting them publicly a few days ago. This is most likely more of that.

It is now as if Europe is urging Greece to fail.

I got that feeling from Merkel when she started talking loudly about restructuring back when the Irish bailout was looming. It's at least possible that some politicians in Europe are by now so tired of holding everything up that they'd much rather get the big drop over with and pick up the pieces, if only they could get someone else to take the blame for causing the collapse.