4 + 3 questions missing from the “Greek solution”. But now let’s discuss seriously. What are we going to do with Italy and Spain?

Hello to everyone. This Thursday is not a normal one, but “the day that the Greek debt crisis problem was solved”. At least this is what they tell us. The foreign press says that Greece should be happy for the solution, as the write down of Greek debt reached 50% (but in reality it is less than 20% in the total amount). I personally doubt that this solution is sustainable without modifications, as there is no discussion regarding how Greece will return to some sort of growth. (I leave aside the feeling of humiliation that every Greek feels today). So, Greeks have the benefit of relieving their debt by 70 billion Euro (100 – 30 that will be borrowed again and used for recapitalizing the banks). This is a positive issue. At the same time I find 7 important subjects that are missing from the announcements. Let us review them together:

1. The Greek banks will be saved. But are they going to have money to lend and restart the economy?

I am happy that the Greek banks will be bailed out, using a 30 billion Euro facility. This will lead almost all of them to nationalization. But are they going to have money to lend and restart the Greek economy? How are they going to cope with the crisis, when Non Performing Loans will further increase and their liquidity will be dried off?

2. Greek exports – imports. How are they going to be in the future?

With Greece writing down debt and Greek banks under a recapitalizing procedure, which company will accept a (Greek) bank guarantee? If it will not be accepted, how are Greeks going to continue importing – exporting? By paying in cash? Is there anyone out there who finds it “logical” and “helping the economy to recover”? What is the new way for Greece to organize its business? (Probably there is none…)

3. Who will pay the Greek State’s debt to providers?

One of the reasons the Greek economy is in deep recession is the huge amount of money that the Greek State owes to its providers. Many billions of Euro are “to be paid” to companies, in the detriment of the economic activity and forcing many entrepreneurs to bankruptcy or to major difficulties at least. We were waiting for a solution about this issue, but nothing happened. Troika mentions this problem but still no sum has been added for this.

4. What will happen with the European Grants?

Greece has not absorbed European Grants, correlating with Romania’s… success in this segment. There was an issue for the country’s co-financing, announced to be diminished from 15% to 5%. But since then almost all Grants are still blocked and we did not hear any news. If they will not be absorbed, how is the Greek economy going to be restarted?

At the same time another questions rise:

1. Isn’t it obvious that Greece is used as the “guinea pig” of the story?

It is the first time in history that this kind of problem happens. Greeks are guilty indeed for spending money they did not have. But I remind you that since the first bail out was signed, the European Union and the troika changed its predictions about Greece more than 4 times. I still remember Mr. Oli Rehn in December 2010 estimating that “Greece will start exiting the crisis by the end of next year”. It is clear that no one knows what is going to happen and that Greece is also used as a “guinea pig”. They will try all “solutions” on this country, in order to be ready once Italy and Spain enter in the picture.

2. 9% for Tier 1 means shrinking the economy. Isn’t it so?

European banks will need tens of billions of Euro in order for them to recapitalize, after the Greek write down. In the same time they have to reach the figure of 9% for the Tier 1 target. They have announced that this will happen through reducing their exposure to loans and by capital increases, trying to avoid their nationalization. Doesn’t this mean that the (European) economy will shrink? In this environment Greece will try to… grow and exit the crisis?

3. 106 billion Euro for the banks is enough?

We heard a big number of officials estimating that a Greek “haircut” would lead to new capital increases of 250+ billion Euro. Now they announced that they will give just 106 to the banks. Is it going to be enough?

Let us discuss seriously. What are we going to do with Italy and Spain?

Let us assume that the Greek story ends here and that no new problems will happen. Does this mean that we solved all our problems? No, on the contrary. Greece was just the smallest of Europe’s problems. Now we see Italy and Spain reaching the stage, in order to replace Greece. Let us discuss seriously: What are we going to do with Italy and Spain?

How are we going to resolve THEIR problems? For Greece 100 billion Euro write down is enough, but for Italy and Spain it is “nothing”. 2012 will be a very interesting and difficult year…