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Thursday, January 26, 2017

Another Boost For Foreign Investment?


There has been extensive discussion in this blog about foreign investment. Of late, the discussion has focused on the question whether foreign investment is a rip-off of the country or a benefit for it. One case in point has been the Trainose deal where - in the opinion of some - immense value of the Greek nation was given away to an Italian investor for a song, i. e for 54 MEUR.

The Ekathimerini now reports that this give-away deal may not come to fruition after all. Allegedly, the Greek government has neglected to amend to ministerial decision for the transaction in accordance with the agreement between the two parties upon signing.

If that is true, it certainly brings to mind the not too distant episode where the government tried to pull a fast one on Cosco only to be caught in the act by the Chinese investor.

"How can Greece attract foreign investors?" is a question very frequently asked. The much easier to be answered question is "How to scare foreign investors away?"

17 comments:

  1. Dear Mr. Kastner,

    This is something i also feared. Small print in the background not seen within the agreements. I don't know what Syriza is cooking with the Trainose deal, but I was reading a few days ago somewhere that there is discussion of the possibility of creating a new public train company which has rights to various lines and infrastructures. Not sure if it is relevant to this deal.

    I am hoping on the other hand that this is something that was overlooked in their incompetence and correct this accordingly. If is not amended, then it is a deliberate dead deal, made as to not have the sale come through, just like DESFA. (The Public Natural Gas Sale that failed.)

    Cosco, on the other hand was already in Greece when Syriza came to power and had no choice than to back down after Syriza's pitiful muscle flex.

    If this deal is a botch it means we will have made only 1/3 record with Syriza sales of public companies, with only Fraport sold. Trainose and Desfa fails.

    I can not express my anger for the flee market mentality of our government.

    Sincerely,
    V

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    1. @ V. at 4:05 PM:
      Quote: "Cosco, on the other hand was already in Greece when Syriza came to power and had no choice than to back down after Syriza's pitiful muscle flex."

      If I got the story right it was not Cosco but Syriza that backed down after Cosco told them to stick to what they had agreed or forget it.
      Urs

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    2. Yes, Syriza immediately backed down once they were caught in flagranti.

      Delete
  2. To add....

    I can not comprehend how Tsipras is even younger than me and he and his has the mentality and persona of a old man of a forgotten period with sneaky intensions. Young people should have fresh ideas and fresh energy. He has become a aged piece of slime that protozoa only eat, in my mind.

    Sincerely,
    V

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  3. These are not investments. These are sales under duress and they best fail just because they are not free market sales.

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    1. I respect this opinion. No one should force a state to sell its properties under duress at below-market prices.

      I would only point out that, in all likelihood, many of these state-owned companies need cash injections to finance operational losses. They should get even more cash to make the investments necessary to stay alive. And quite a few of them would probably need new competent management and know-how in order to become valuable again.

      My question: where will all of that come from?

      Delete
    2. @Anonymous,
      Since 2009 successive Greek Governments have formally obliged themselves to divest their various holdings and use (part of) the proceeds to pay down the country's debt.
      Trainose is a decrepit, bankrupt enterprise, where ticket and freight revenue does not even cover operating expenses. It is a disgrace to our country's infrastructure and its main use has been to provide jobs for votes.
      We should be glad that the Italians agreed to take this burden off our treasury.
      That the Government failed to legislate the subsidy is another proof of the immense incompetence, the cheap slyness (in Greek: κουτοπονηρια) and the inability to learn (from the Cosco debacle) of the morons ruling our country.

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    3. I agree to both replies,

      I do not agree with Anonymous January 27, 2017 at 3:38 PM

      "These are not investments. These are sales under duress and they best fail just because they are not free market sales."

      Sales under duress yes, investment yes they are, as if you see the glass full it is an investment to get the black hole off your back. And if they fail whether as at sale or as a private company in the hands of the Italians, both options only create more weight on the people of Greece.

      Right now we are divided as a country by our ideological idiocies and we do not see logically, what needs to be done to save our own salvation, because things will get worse otherwise. Anyone that is not producing or creating growth, jobs, basic economies for our country needs to be "managed." It is not socialistic and even as i am writing it sounds like fascism. But unless we pull together and pay our own share, ALL go get real jobs, whatever the salary, this crisis will not end for us.

      A lot of people are waiting for miracles and it is these people who in the end "off themselves."

      I myself wonder where to find the endurance to surpass this carpet bombing of our country, whether foreigners or from our own selves. I guess i try by stop pitying myself and seek the true Greek in all of us. It is that type of Greek they all fear. A Greek who will walk through hell and after say thank you for a nice time.

      I wish my compatriots endurance and zeal.

      Wishing U Well,
      V

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  4. Here is a piece of advice. When looking for investments in Greece the last place you want to look at is a fabricated sewer of misinformation and propaganda like ekathimerini which is a disgusting manifestation of Troika's nonsense.

    According to those who truly know Greece there is a list of 20 projects which will bring plenty of investment in Greece.

    http://www.ypodomes.com/index.php/alles-ypodomes/endiaferouses-eidiseis/item/38613-ta-20-erga-pou-tha-feroun-tin-anaptyksi-symfona-me-ton-sev

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    1. Sorry Anonymous January 28, 2017 at 10:10 AM,

      But all of those projects need huge funds. Of which will come from where? How much of the state budget which shrinks every year for infrastructure works can pay for all of this. And managed by whom, public servants, who have proven their worth?

      Even point 2 is on the list of privatizations which you adhere that are not investments. The privatization of island marinas.

      As for reporting or sites, all have their angle and followers, i follow all and none and try to read between the lines.

      Sincerely,
      V

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  5. Greece will not for decades be able to attract meaningful FDI, neither will she be able to change her subsidized loans with private loans at sustainable rates.
    Every day she demands/beg that the world should trust her, and every day she demonstrate why the world should not do that. That the Greeks don't trust her make matters worse.

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    1. If this false statement was true then how come Greek FDI is well above its historical average?

      http://www.tradingeconomics.com/greece/foreign-direct-investment

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  6. Everybody his own positive statistic, and the consolidated is garbage.

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  7. Even if it was true, it would still be a Greek historical record. If Greece were to match their all time best on the corruption index it would still be a lousy result.

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  8. As a matter of strict objective fact, Donald Trump’s trade guru is correct. Germany is the planet’s ultimate currency manipulator.

    The implicit Deutsche Mark is indeed “grossly undervalued” The warped mechanism of monetary union allows Germany to lock in a permanent ‘beggar-thy-neighbour’ trade advantage over Southern Europe, inflicting mass unemployment on the victim countries and blighting their futures.

    Whatever you think of Peter Navarro’s trade philosophy, he is right that Germany’s chronic, huge, and illegal current account surplus - 8.8pc of GDP - saps global demand and seriously distorts the world economy.

    Source: The Telegraph

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    1. The trouble with Trump is his gross misdemeanor which destroys his credibility more often than not. The even greater trouble with him is that, if one succeeds in ignoring his misdemeanor and thinks about his points, many of his points are quite valid.

      The observation about Germany's "exorbitant privilege" within the Eurozone is absolutely correct. I don't know why people feign surprise. Almost every country South of Germany and the majority of economic commentators have been making that point for several years now. Are they now going to deny the point simply because it is being made by Trump?

      Not too many years ago, the USD traded between 1,50-1,60 against the EUR. Today, it's between 1,00-1,10, a staggering devaluation of the EUR (certainly not due to the weakness of the German economy...). So thank you, Eurozone, for bringing down the exchange rate! Yours, Germany.

      But even if the EUR had not weakened, it is an obvious fact that the EUR will always be cheaper for Germany than a separate DM would be. I don't think any German (or Austrian) of sound body and mind will disagree with this. On the contrary, politicians in Germany and Austria have publicly warned of late that any EU exit which the far right is proposing would overnight cause a revaluation of at least 30% and cripple the economy. So no one is really denying the "exorbitant privilege". They just don't accept that responsibility goes along with that privilege.

      In a recent article, I have pondered what might happen once Donald Trump finds out about Germany's "exorbitant privilege". Well, it looks like he just found out...

      http://klauskastner.blogspot.co.at/2016/12/will-donald-trump-brand-germany-as.html

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  9. Klaus:

    Giving a windfall to German exporters was never part of the plan.

    The euro has been bad for German democracy and for German savers and may well ultimately prove to be a disaster for its taxpayers too, but it has been a boon for the country’s exporters. The euro is far weaker than the Deutsche Mark would have been (as was always likely to have been the case). This means that Germany’s decision to abandon its old currency in favor of the euro has acted as a disguised devaluation, a devaluation that has only deepened as the structural imbalances within the common currency have dragged the euro down still further.

    As to what Trump will do after the discovery, the answer is quite straight forward. He will impose tariffs on german exports to the US.

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