like a crash-test as the spreads of Greek bonds in the international market have risen to unprecedented levels, higher than a year ago, which was prior to our paying the card of the 110 billion package by which Greece was threatening the speculators.
If the Greek state were to borrow now, not for three months but for ten years, it would have had to repay at 14,8, about 16,4% for 5 years or 19,8% for two years. If a Greek were to pay such interest rates for wanting to borrow money in order to buy an apartment in Pagrati he would certainly yell that he was being robbed.
However, contradictory statements, conflicting information and the “inner desires” both of speculators who bet heavily on the bankruptcy of the country, and of the government who whishes to get over this situation so as not to bear the burden of fiscal adjustment, all spread panic to investors who hear the word Greece and suffer a nervous breakdown.
Even after last Friday announcements for mammoth privatizations in OPAP, PPC, OTE, and the rain of denials from Athens, Brussels and Washington, the markets “honored” Greece with an explosion of interests. The debt restructure is beginning to look like a self-fulfilling prophecy, even despite the “brake”, which the manager of the Bank of Greece sought to put yesterday on several scenarios.
Even the premiums on bonds against risk of bankruptcy, suggest bankruptcy probabilities at 64%, breaking every record in the meantime: the investors who would like to make an insurance and be compensated if their Greek bonds do not get redeemed in full, would have had to pay record-high premiums (CDS 1065 units for 10-year and 1283 for 5-year bonds).
As if we are going to return to the markets…
Under these circumstances, one year after the memorandum, Greece is far from returning to the markets in 2011 or 2012. The restructure of Greece’s debt is a permanent subject of international debate and denials can barely calm the markets, when only yesterday:
* Dominique Strauss-Kahn from Washington replayed in an ostentatious manner the same “tape” that there won’t be a restructure and sounded as if talking from a recorder, pronouncing slowly and almost dictating the response.
* Christine Lagarde, French finance minister, replied that “Greece has a contract to repay the debt” and relied on the Greek prime minister who announced “additional measures” on Friday, ignoring the fact that no governmental member has officially said anything about the sale of PPC and OPAP for example.
* Commissioner Rehn, following Wolfgang Schäuble, the German finance minister, once more dismisses the restructure possibility but reveals that he has requested a study on the sustainability of the Greek debt and will wait until June to see if the figures are satisfactory, or if EU and Greece will be forced to change the memorandum and the political conditions for the provision of 110 billion euros for Greece.
* EU president Herman Van Rompuy, like Belgian finance minister Didier Reynders, exclude debt restructuring, but send the message that Greece might not be able to reach the markets for loans in 2012.
* SEV president Dimitris Daskalopoulos, although dismissing the public announcements by Simitis and all those who support the immediate restructure, appears to be considering the possibility of such an occurrence in the future surrounded by a European frame…
Considering these facts then, it seems that once again – as pointed out by BoG director Giorgos Provopoulos – the developmental and financial benefits from the implementation of the memorandum are being cancelled, at least as long as the government won’t dare support the purpose and usefulness of its measures included in the adjustment program adopted in consultation with the troika.
souce: PROTO THEMA
