Everything, pretty much. According to the NY Times (NYSE:NYT) here’s a list of things that the Greek Government plans to sell off in the hopes of raising 50 billion euros through its newly approved austerity plan: “the ports of Piraeus and Thessaloniki; prime Mediterranean real estate; the national lottery; Greek Telecom; the postal bank and the national railway system.” But this is only the beginning for the debt-stricken nation, which will have to slash its federal budget and public spending by radical amounts to maintain debt:GDP ratios mandated by the new plan.
The austerity measure, which passed an early vote in the Greek Parliament yesterday, stipulates that the country must slash its spending incrementally over the next five years. Some fear that the spending cuts will be too little, too late, and that the sale of public assets may ultimately strip Greece of some of the revenue sources it needs to sustain future growth. The measures are so harsh that some (many of Greece’s own people) believe the country would be better off just defaulting on its debt. However, the “troika” of the European Central Bank, the International Monetary Fund, and the European Union, seems determined to save its own hide and prevent that from happening.
“You cannot keep on milking the cow without feeding it,” said Konstantinos Mihalos, the president of the Hellenic Chamber of Commerce in Athens (from NYT), referring to the current policy of hacking spending and still expecting the Greek economy to work. Indeed, the new budget cuts and sale of state assets may capitulate Greece further into indebtedness and make the situation worse. “Debt can only be paid out of income, and that means growth. The Greeks have been told to accept more of the medicine that has already failed to treat the disease” says economist David Tilford.
Greece received its first bailout, a $17 billion dollar package one year ago, and the economy has only grown more crippled, with unemployment rising, GDP contracting, and the country failing to meet provisions of the loan requirement. If this second bailout fails, which given the current state of the country it very well may, a default could be nation’s only choice.