Nomura: Greece and East Germany privatisation

Nomura’s chief economist Richard Koo is seeing parallels between Greece and East Germany, shortly after the fall of the Berlin Wall, right now.

 

In a note sent to clients on Tuesday, Koo attacks Greece’s creditors for negotiating a deal based on “highly unrealistic” assumptions and reaching an agreement that “resolve none of the fundamental problems facing the effectively bankrupt nation of Greece.”

 

One of Koo’s big problems with the bailout deal is the massive privatisation fund that the EU and the IMF have demanded from Greece. The country must raise €50 billion (£35.3 billion, $55.1 billion) selling off state-owned assets.

 

Europe and the IMF are hoping Greece’s big sell-off will be like the Thatcher-era privatisation boom in Britain. But Koo says the creditors have “overestimated to a grotesque degree” how much Greece can raise and predicts the privatisation boom will mirror the fire sale of East Germany in the 1990s.

 

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