Marinopoulos - The Cascade Of A Possible Bankruptcy

The Economist Intelligence Unit provides a report about "Marinopoulos - the decline and fall of a retail giant". It provides for scary reading because it shows the follow-up damage which comes as the result when a large company goes bankrupt (n. b.: Marinopoulos is not bankrupt yet but it doesn't look good).

The casual newspaper reader might say ok, there is a large company going out of business; too bad for the employees but that's that. What that casual newspaper reader does not understand (yet) is that there are enormous consequences of such a bankruptcy which might even affect himself.

For starters, Marinopoulos has over 1,3 BEUR in liabilities, i. e. money which they owe to someone else. One might say ok, so the banks will have to take a loss but that's their problem because they made bad loans. When 4 banks have to take losses of over 500 MEUR, that may quickly turn out to be not only the banks' problem but someone else's, too.

Marinopoulos owes over 700 MEUR to trade creditors. Now the bullets are starting to hit closer to home because the reverse conclusion is that trade creditors may lose over 700 MEUR. Huge amounts of money are owed to individual large suppliers which raises the question how those suppliers will handle those losses and whether, perhaps, there will be another chain reaction among the suppliers and their creditors. But then there are also an assumed 3.000 small suppliers, perhaps even your small neighborhood farmer, who might be entirely wiped out by their losses.

Taken in sum, a Mariopoulos bankruptcy would cause shock waves throughout the Greek economy whose final impact can only be guessed at this point. And then the next question is: Will there perhaps be another Marinopoulos soon? 

Varoufakis As The Killer!

Xenia Kounalaki of the Ekathimerini, in a blistering critique of Yanis Varoufakis 'and his acolytes' for writing books and giving lectures about their various plans ("A", "X" or whatever) of a year ago, has coined a new unique analogy of Varoufakis' conduct:

"It's a killer designing a murder he never executes advertising his plan to sell knives".

Well, I must admit that that's a good one!

Was It "Plan B" Or "Plan X"?

Prof. James Galbraith, advisor to Yanis Varoufakis while the latter was Finance Minister and close friend of his, has published a book titled "Welcome to the poisoned chalice: the destruction of Greece and the future of Europe". It is a collection of his writings, interviews and speeches on Greece from 2010 through the summer of 2015.

The media celebrate this as a major revelation of what happened behind the scenes (and top secretly!) in the first half of 2015 when Varoufakis had commissioned a small group of advisors to develop a Plan B (or Plan X, as Varoufakis allegedly called it) for an exit from the Eurozone. In fact, Galbraith had already reported on that a year ago. Some of the key points of the plan were (allegedly):

* declaring state of emergency
* nationalization of the Bank of Greece and selected other banks
* conversion of bank deposits from Euro to New Drachma
* payment of salaries and pensions in IOU's
* emergency measures to keep public order

Galbraith writes that the plan was developed at the request of Varoufakis to prepare for the risk of Greece's being kicked out of the Eurozone. If true, that would be a remarkable statement because one of Varoufakis' major points, which point he has stressed consistently in his blog for several years, was that no one could kick Greece - or any other country - out of the Eurozone.

Still, it is good to be reminded of what happened a year ago. Greece today seems rather stable politically and SYRIZA seems rather a serious party. The fact, however, is that this party, particularly several of its key proponents like Varoufakis, had recklessly played with the future of their country.

Galbraith concludes that, in his judgement, Varoufakis had carried out his responsibilities with distinction. True, just like Salvador Allende had carried out his perceived responsibility to convert Chile into a Cuba of the South with distinction even though, ultimately, he failed. Failure is a negative word which in the case of Allende and Varoufakis assumes a positive meaning.

EU Elites Are Seriously Flawed. But British Elites???

Below is an article from one of my other blogs which does not have as large a readership.

EU Elites Are Seriously Flawed. But British Elites?

Cosco Deal Final - At Long Last!

For several years now have I been stating my view that the Cosco investment at Piraeus is arguably a prototype of the foreign investment which Greece should attract: no short-term cash milking; instead, longer-term investments with longer-term perspectives and longer-term contributions to the Greek GDP.

Long before SYRIZA, leftist Greek politicians had criticized Cosco as a classic example of Chinese sweat shops being introduced to Greece. When SYRIZA assumed power, it seemed like one of their top priorities would be to reverse the Cosco investment (but certainly not allow an expansion).

It did not require much from the Chinese side. Only a few reminders from China what they meant by old friend status had a magic mind-changing effect on SYRIZA. Negotiations were quickly started and in April of this year the deal was signed: Cosco will buy 51% of Piraeus for 280,5 MEUR and another 16% for 88 MEUR after 5 years and once Cosco completes investments of 350 MEUR over the next decade.

A few days ago, the Greek shipping ministry submitted to parliament for approval the terms of the Cosco deal. Only one slight glitch happened: Cosco immediately sent an email stating that "the content of the specific plan is a complete reverse of what was agreed between Cosco HK and Taiped". Ouch!

At first, shipping minister Theodoridis Dritsas misjudged the situation and said that while there were differences, the government had the right to make changes. That must have prompted another few phone calls from the Chinese side.

And then things happened quickly: one day before PM Tsipras' departure to China, parliament ratified the Cosco deal with 223 votes (out of 300). And the alterations which the shipping ministry had made? No longer a problem, they were all rectified.

I don't consider this as an embarrassment. Instead, it is a terrible faux-pas which sheds bad light on the intentions of the Greek government which obviously ignored the 11th commandment ("Don't get caught!"). And it also questions the government's international wherewithall when they don't know that a foreign investor will always closely monitor how their cases are treated in parliament.

The British Are Outdoing The Greeks!

It is one year since the world wondered whether the Greek government, particularly SYRIZA, had taken leave of its senses. Whether it had senses in the first place. How one would allow a handful of mavericks to essentially destroy their country. The only excuse was that ‚those’ were leftists who lacked the wherewithall regarding proper conduct. And perhaps they were not all that smart, some said.

I would have never thought that any other European country would ever outdo the Greeks of a year ago. Perhaps the UK? C’mon. That’s an insult. The UK is the motherland of civilized and responsible democratic conduct.

They were not leftists. They did not lack the wherewithall regarding proper conduct. And they certainly were smart: Eton, Oxford, Cambridge. And yet - they certainly outdid the scandalous conduct of SYRIZA a year ago, by far. With consequences for their own country and for Europe far greater than anything a Grexit could have provoked.

Last year, some of my Greek friends were suffering. They felt totally embarrassed that foreigners would get such a bad impression of Greeks. From that standpoint, I am happy that Brexit and its follow-up happened because my friends (and the Greeks in general) no longer have to feel embarrassed. In fact, they could feel good that small Greece eventually handled the crisis better than the mighty UK is doing right now. A little bit like Iceland - England.

The EU leadership is showing that they had a lot of practice with Greece: slap the finger if a member is showing it in protest! The hilarious tandem Juncker & Schulz is warming up for the fight. Like spoiled brats who didn’t get a wish fulfilled, they immediately became hotheads. The UK should get out of the EU almost like yesterday. It was scandalous that the UK had not yet invoked Article 50. Schulz even gave a deadline for it (apparently not being familiar with Article 50).

In the EU Parliament, Juncker’s conduct raised questions whether perhaps he was under the influence. First he welcomed Nigel Farage with kisses and laughter, and then the President of the EU Commission had the nerve to ask a member of the EU Parliament „Why are you here?“ When there was laughter from the UKIP side, Juncker deadpanned „This is the last time that you laugh here!“ He seemed to forget that the UK is and will be a full member of the EU, with all rights and responsibilities, until an exit agreement is signed.

This may well become the hour of the Great Procrastinator Angela Merkel. It seems like she is the only one who manages to stay calm and collected. And possibly the only one who thinks clearly that an undue damage to the UK will cause similar undue damage to the EU economically.

So why can the Greeks feel good that they were not as incompetent, irresponsible or even reckless as the elitist British?

Greece’s Prime Minister did not lose his nerves and did not throw the towel. David Cameron, on the other hand, broke all promises to stay on and to invoke Article 50 in case of a Brexit. He announced his resignation for next fall and stated that he would leave everything regarding Brexit to his successor. In so doing, he left his party leaderless and the government as a lame duck. One wonders whether there still is a government. If there was ever a case of walking away from responsibility, this is it!

Greece’s opposition was there to step in in case SYRIZA would throw the towel. The major UK opposition (Labour) took Brexit as the starting point to dismantle itself. There seems no longer an organized opposition.

Alexis Tsipras took a long time until he gradually informed his followers that perhaps not everything he had promised would be fulfilled and he very skillfully put it in such a way that he was not accused of lying by his followers. The Brexit camp had no such inhibitions. Before the final vote count was out, Brexit representatives told the public the their 2 key promises (funding for the National Health Service and significant reduction of migration) were promises only and could not be kept.

Only Boris Johnson gave Tsipras a contest for populist maneuvering. The morning after the referendum, he acted like it was a day like any other. Brexit? No need to hurry. Invoking Article 50? Is not necessary. Does he have a plan? Yes, Boris had a plan and he published it in The Telegraph. It reminded me of SYRIZA’s Thessaloniki Program or a Dear-Santa-Claus-Letter: „There will continue to be free trade, and access to the single market. There is no great rush for Britain to extricate itself from the EU. There will be intense and intensifying European coorperation and partnership in a huge number of fields. EU citizens living in this country will have their rights fully protected, and the same goes for British citizens living in the EU. British people will still be able to go and work in the EU; to live; to travel; to study; to buy homes and to settle down“.

A member of Parliament commented on this as follows: „Boris has a plan. His plan is to join the EU!“

Paul Mason, the leftist journalist, posted the following: “Well done Boris Johnson and Nigel Farage – you’ve turned Britain into the (expletive deleted) Weimar Republic!”

It may have looked a year ago like Tsipras was going to turn Greece into something like a Weimar Republic. Today, and in comparison with the mighty United Kingdom, Greece looks like an island of stability!

Alexis Tsipras' New 5-Year Plan

Well, my question is: where can I find this plan???

According to news reports, PM Alexis Tsipras had outlined this plan in a speech at the Acropolis Museum a few days ago. With great interest, I read that the plan would aim "at fair growth, at productive reconstruction, at boosting policies to put an end to the vicious circle of recession and unemployment and at redistributing burdens and wealth".

Ok, that sounds good. Reminds me a bit of SYRIZA's first and second Economic Manifesto.

I assume that, before long, we will receive details about the plan which the PM has announced. Or perhaps not?