By George Petridis*

In recent days, in response to the recommendation of the Troika for privatization and sale of state commercial real estate, it has come to the fore reflection and contrast of the people  the sale of public property.

The first thing I note, unrelated to any ideological reference, is that "sellout of public property" does not exist in any way and there is no technical possibility to be.

Every organization, whether public or private, and yet each one of us has some assets, some principal and some liabilities. If we wanted to represent it mathematically, we would say that:  ASSETS = LIABILITIES + CAPITAL.

The assets may be land, buildings, expected proceeds from sales made, cash on hand, deposits etc. The capital is the initial capital we have, plus any subsequent capital increases made. Finally, LIABILITIES are bank loans, liabilities to suppliers, liabilities to state pension funds of our insurance etc.

From the above equation it is evident that sellout of assets it’s not possible in any circumstances. If for example, a company or the State or each of us, sells any of his property (a plot of land for example), the money you will get you deposit them in the bank or buy another plot of land or a property, or repay suppliers or pay a loan to reduce the bank's obligations and therefore the interest paid each year.

It is obvious, therefore, that the only change it can be done in the above equation is the alternation of assets (such as property to fund, real estate to fund, etc.) or redemption of obligations by selling assets. In any event, the end result is the same regardless of the structure of the above equation parameters.

So then, “sellout of public assets " does not exist in any case, as mentioned at the beginning.

But let’s come in the case of the Greek government. If we make a drastic hypothesis that the Greek State sells ASSETS of EUR 50 billion, then the money it will receive will be deposited first to a bank account held by the Bank of Greece (hence switch assets). Then it could buy properties or businesses abroad (eg  purchase operations in the Balkans, beach plots in neighboring countries, companies in Germany, England, etc.) which again means switching assets. Alternatively it could reduce its liabilities to pay  drug companies or construction companies that have implemented Public works and not paid for. Even it could pay debt obligations, leading to reduce the obligations of future generations and reduce future fund outflows for interest payments.

From the above, it is obvious that "sellout of public property" does not exist and can not technically be in any case. The only case possible is switching between assets or assets and liabilities. The equation is the same (ASSETS=LIABILITIES + CAPITAL). 

*George Petridis is a well known economist, member of D.E.K.A's Think Tank Committee