With its government debt of about €350 billion approaching 160% of GDP, Greece desperately needed cash to keep its government working and fund its interest and principal payments. This past Wednesday, the Greek parliament approved a new austerity plan, which was required by the European Central Bank (ECB) and the International Monetary Fund (IMF) in order for euro-zone countries to provide a second funding package of about €120 billion. Additionally, part of the austerity plan includes a privatization fire sale of about €50 billion of government owned assets, consisting of land, airports, companies, etc.
MY TAKE: While markets rallied on these short-term fixes, the intertwined relationships among unions, politicians and other interest groups continue to bog down effective long-term solutions to the country’s dysfunctional mess. This socio-economic tragedy is not over yet.