Monday 27 April 2015

Quote of the day

Hat tips to Migeru of European Tribune:

"Imagine 18 ministers telling a 19th that his government is not throwing enough virgins into the volcano. When the 19th replies with lectures about how how that's not the way the world works, the 18 react by rolling their eyes and calling him unprofessional and a gambler. "

And that is exactly that.
A case in point among many: the insistence that Greece privatises pretty much everything.
Markets demand much higher return on equity than any reasonable sovereign debt interest rates. So unless you are so misleading as to be liable to be sued, you should expect to get a much lower price than the net present value of the future flows.

That's in normal circumstances. Of course, in the case of Greece, the assets will be considered to require a massive discount due to the poor economic situation of the country. So they would not bring anywhere near the normal inflow which, as I said, would itself not be anywhere near the net present value (for the State) of the economic stream that the State would lose.

But that will not stop the Eurogroup from demanding it on the grounds of improving the fiscal position...

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