All your euros are belong to Greece.

Perhaps their economy would be in better shape if they hadn't banned video games.

I'm interested in Stels opinion on all this obviously and what it's like on the ground right now for ordinary Greeks.

Keep in mind, this bailout does not put them in the clear... Greece is still really fucked, they're just not fucked before June 1st, 2010.

Sure, why not. Sorry for the wall of text that follows.

First if you don't mind a little history lesson about how I believe we got here. After the 1821 revolution, Greece was never what you'd call a stable country. Starting with getting an Austrian king imposed on us as a condition for getting international recognition as a free country and ending with losing 38% of Cyprus and the Junta getting ousted, the years from 1974 until now have been by far the longest period in our history without a coup, a war (civil, regional or world) fought in our country and with a stable political system. The left was pretty much persecuted up until the Communist Party was legalized by the conservative government that took over in 1974. Now despite our political troubles the '50s and the first half of the '60s were pretty prosperous economically for those with access, i.e. not in the Left. WWII and the Civil War left Greece with about 15% human casualties and about 25% of structures (houses, roads, railroads, etc) damaged. Once things stabilized there was huge building boom. Couple that with the Greek merchant marine fleet really taking off and Greek economy regularly posted gains of around 15% per year. There was also a quite large development in heavy industry in sectors complementary to shipping and construction. Economically things were looking pretty good.

Then came the first blow. The Junta in trying to solidify its control over the Greek higher class, which regarded them as hillbillies and below them, started a campaign to essentially take control of the private economy. They began heavily subsidizing industries that were deemed 'loyal' and making life difficult for those that weren't. This easy access to no questions asked government funds practically crippled any forward drive and desire for development of the private sector. Even after these assholes were sent to jail, we went straight into the oil crisis. Nonetheless the fundamentals of the economy were still pretty sound due basically to a very frugal management of the economy by the government. There wasn't a big public debt and the budget was still under control.

Which takes us to 1981 when shit really hit the fan. That was when the Socialist party took over. They won the election by promising that they would offer those on the Left, which admittedly were usually left out, a piece of the pie. They did that not the correct way, by growing the economy and therefore the pie, but by creating eventually hundreds of thousands of positions in the public sector and by indiscriminately employing people in them. They also raised the wages of those already in the public sector like mad. My mother who was a nurse saw her wage more than double in the first eighteen months. Finally they went from one extreme to the other regarding unions. Instead of beating, jailing or exiling their members as happened until 1974 they gave them carte blanche. The combination of the low hanging fruit of the public sector, its reliance on government subsidies, the unions running rampant and the nationalization of every failed large business essentially destroyed the private sector. The only way for the government to support this policy was by borrowing obscene amounts of money. Something that was easy because as I said until 1981 the fundamentals were sound. So at the end of the '80s we were in a pretty large hole.

During the '90s the government oscillated between a more centrist version of the Socialist party and the Conservatives. They both concluded that the way for the country to go was tourism, the service industries and the stock market. For a while it worked, too. We were making money had over fist. Even every other Joe Shmoe wanted to get in the market. People were selling real estate and businesses to get cash. Money was abundant and cheap. Until the market crashed in '99. Along with it it took most of the public sector's capital and evaporated almost every last bit of cash from the market. By now it was practically impossible for us to climb out of our hole by ourselves.

During the '00s we thought that we could make do by leveraging a strong euro so we could borrow enough to get by. So we started lying through our teeth to get into the euro and since things were going well everyone decided to look the other way and carry on with business as usual. This last crisis put an end to that. Everyone stopped lending us money and we got to where we are now.

This stabilization program is very severe. The majority of the Greek population will lose about 10 to 15% of their annual income, instantly. And that's discounting the hikes in various taxes. But besides a certain expected numbness and anxiety for the future the people are taking the hits in stride. The Communists are bleating as always but they never wanted Greece to be prosperous anyway so it's not a big loss. The unions will make a lot of trouble the coming weeks but in the end they'll only make themselves even more marginalized. One thing I keep hearing from regular working people is: "Greece went though much more difficult stuff in the past. We'll get through this and fuck anyone who thinks otherwise." Because there's nothing that motivates a Greek as some foreigner claiming that he's in any way inferior. The people will take this and even more if only so they can have the pleasure of telling those who go on about 'those lazy Greeks' and 'beggars' to go fuck themselves once things are fixed. The people's reactions kind of make me feel nice in a way.

Sentimentality aside most of the people I've talked to, including myself hope the government sees this as an opportunity to reboot and finally properly structure the economy so this will not happen again. I hope they do because this is probably the last chance the current political system is ever going to get.

This description of the average greek reaction made me smile a lot, as it reflects every greek I've known and been mates with growing up here in the city with the third largest greek population in the world.

Thanks for the background stel, it's fascinating and I wish your country the very deepest luck and hope for the future that this is the catalyst to get your economys shit together. Will you struggle personally as a consequence of this if I can ask?

Personally, no. At least at first. The measures have wisely left the private sector alone for now. The market is cooling down a lot though so it's going to be tough to stay open. We mostly deal with IT for companies and educational institutions and orders have been way down lately. Whatever will be, will be. Who knows, maybe I'll get out this in better condition than I went in.

As for the reactions keep in mind what I said about this being the current system's last chance. At the first indication of them fucking up the mother of all shitstorms is going to break out.

Can I be the asshole and ask what difference is the above scenario from the "Government By Crisis" being rammed through at every turn by the Obama administration?

Not toxic at all. We know better by now. We're in this together and we either all make it or none of us. It's the fucktards in charge of the big parties that rightfully get the vitriol.

The difference is that when these things happened in Greece there wasn't any sort of crisis. It was just the government throwing money away trying to buy the electorate. There wasn't any end game planned either.

Great wall of text, gave me some good insights into your politico-economic past, plus I love reading very long posts.

Stelios, you're a good guy and I like you a lot - but as a fellow european (and economist) I can't help but think: fuck you Greece (Greek politicians that is). You lied, begged, borrowed and stole get into the Eurozone and now that shit your gvts pulled has bit you all in the ass. Sorry to hear it man, but things are tough all over - you don't deserve the money because of the long-standing comical mismanagement of your economy (as shown) and the fact that there is no reason to think that anything has changed (why stop lying when you get paid anyway) in the way the economy is managed. It's like the wall street bail out of countries but with more austerity taxes.

I just hope that tourism isn't hit by this, but it's inevitable.

Good luck with everything dude, I hope it all works out.

Are you fucking serious?

There is arguably manufactured crisis in America. Obama is utilizing a Cloward-Piven strategy in order to achieve his end game of a centrally planned economy that is hostile to the private sector.

I can only see America following the same pathway but whereas Greece has the EU to bail them out America has no one able to keep us afloat if this dangerous game of central planning plays out.

All good thoughts headed your way and for your countrymen in weathering this and coming out better on the other end.

Apparently he is serious.

Don't worry, Tzu, when Obama declares himself Caliph he can just ask Muslims worldwide for a loan of a few dollars each.

Surely China could bail you out? Again.

Tzu, your politics remain absurd, as always (IMHO, that is. People have said the same about my politics)


Anyway, I was just going to say that the hey day of Megas Alexandros must be looking pretty darn good to the Greeks these days. His empire was the richest the world has ever known, and the greeks lost it due to dunderheadedness when they poisoned their king. Now look at whats become of them.

I can't really protest your sentiment. By now, it's out of anyone's hands anyway. Let's just hope that by some miracle our government wises up and makes things right so we can pay you guys back eventually.

Remind me, just how did Alexander accomplished that again?

Fury on streets over Greek austerity cuts

It sounds worse than it is actually. Hundreds of thousands of protesters? Please.

Except for the fuckers defacing Acropolis. I wish the police just threw them off the cliff along with their banners.

http://www.nytimes.com/2010/05/06/wo...ce.html?src=me

Why do I have a feeling that if the Federal government ever tries to drastically rein in Social Security or public employee benefits/salaries we're going to be surprised at the reaction we get?

In California, you basically look at the any of the government sector unions the wrong way and they lose their shit.

I doubt most people would be surprised.

The U.S. public sector currently enjoys salary and benefits packages that range from 30-100% more than their private sector counterparts. All financed through taxpayer dollars.

These are the dangers of teaching a populace they are entitled to the fruits of another's labor.

Yet conservatives have been telling the top 5% of earners in this country that they're entitled to the fruits of the labor of the other 95% of the country for the last thirty years. Weird.

Sad but still not indicative of a danger for widespread violence. This was not the work of protesters. The people who did this are professional troublemakers that are half on the police's payroll as informants and half getting an 'allowance' on the sly by various political parties and underworld figures. They try to use protests or football matches to hide into and start trouble to serve their dual purpose. First provide an excuse for forceful police intervention during protests that didn't need it and second so they can be used by parties mostly on the Left as indications for some non existent imminent popular uprising, therefore justifying their existence. The only long run consequence this tragic incident will have is that they will finally get the squeeze put on them and they'll have to scurry into some sewer and hide for a few months.

I may sound like Baghdad Bob, but this was definitely not the first shot in a war. It was a bunch of piece of shit junkies accidentally doing more damage than they intended.

I'm not sure what you're on about.

Perhaps you're referring to producers who create jobs and wealth and are then entitled to the fruits of the labors of the people they employ? Entirely different concept and you know it.

Shock Doctrine, anyone?

Oh god yes, to the letter - stel?

Pretty much. The stuff that was coming out of journalists' mouths the week prior to the announcements was apocalyptic. Most logical people more or less predicted the measures quite accurately. But the mainstream media would have you believe and are still trying, that we're mere days away from having to search through dumpsters for food while evading bands of post-apocalyptic cannibals. So when the austerity plan was announced the people's reaction was much more subdued.

Considering how we love to throw fits over anything and the unprecedented severity of the various measures, I'd say this level of unrest is probably a best case scenario for the government. It's just sad that those fucking junkies had to fuck their job up so badly and kill these poor people.

For example when a policeman killed some kid last year the episodes were much much more serious than they are now. Inversely proportionate even.

So never let a good crisis go to waste, eh?

This so $%$ing much.

Make no mistake, measures had to be taken. In fact they seem pretty fair. The methods described in Shock Doctrine are mostly used to keep the popular unrest manageable.

I'd hate to be a 52 year-old public sector worker. Retire next year? Sorry - not for another 15 years!

Seriously, It seems like the problem has been covered up since they joined the EU in 1981. Apparently they included as ASSETS the potential future income from something ridiculous like Airport taxes. Can't remember exactly what but it was really
dumb.

Shame, the Olympics showed that Greek authorities can get their act together when they put their mind to it.

And I can't believe that German seriously suggested they should sell some islands.

It’s pretty obvious now that countries like Greece, Spain, Portugal and Italy should never have joined the Euro until they got their fiscal house in order. The Euro project would have worked a lot better with just the northern European countries – excluding the UK, thank god – which had strong currencies, were not corrupt and managed their finances reasonably well.

Now we are faced with Greece and Spain possibly defaulting on their debt commitments – which will screw many big European banks, especially if Spain defaults – and / or Greece leaving the Euro. It’s possible, though unlikely, that the Euro may break up.

Interested to hear the views of Stelios and other Euro-chewers.

In Europe much of the discussion is starting to turn into a "Markets vs. States" debate and on this Europe falls on the entirely different end of the scale than the US.

Yes, political considerations definitely had too much of an influence on the Euro project. One of Gordon Brown’s few good decisions was his refusal to ditch the pound for the Euro. I shudder to think what would have happened to the UK economy if Blair had got his way 8 years ago and we joined the single currency.

I agree that European governments will do anything to support the Euro but what will be the medium / long term political implications? Already a majority of Germans are fuming about baling out Greece and a majority want the Deustchemark back. Leaving the Euro was never considered – there’s no exit clause - but it could happen. If things get a lot worse and the current crop of politicans are voted out it’s not inconceivable that Germany might consider leaving the Euro. Still highly unlikely but not impossible.

Other countries – such as Greece and Portugal – who have few exports and so don’t benefit so much from a falling currency – apart from increased tourism - would face short term chaos from exiting the Euro. All their debts would be in Euros but they would be paying them in weak drachmas. Worst case scenario, but you would think politicians would have learnt to think the unthinkable.

On the contrary. A weaker Euro would be quite beneficial for Greece. Agricultural exports and tourism are two of our biggest money earners and they both benefit from a cheaper currency. The Euro trading for 1,4-1,5 dollars was beyond stupid and it really crippled tourism in Greece from non European countries. Overnight Greece became twice as expensive Turkey and Egypt which are our natural rivals for tourism. We tried basing our economy more on the financial market and exploit the fact we had a strong currency but it blew up in our face.

I wasn't that clear - I meant if Greece had to exit the Euro, there would be huge short terms problems. For example, how would everything be priced? And all their debt would still be in Euros. Many Eastern European people - whose countries had not yet joined the Euro - took out big mortgages in Euros a few years ago. Then last year when their currencies plunged in the crash they were ruined. Another example of how people you might think be competent, (or at least hope are competent) such as banks and governments, are anything but.

I think the best argument for why this is not going to end with the expulsion of Greece is that the other "PIGS" would be immediately attacked by the market and cost the stronger economies even more money.

Us exiting the Euro and defaulting would be a fucking disaster for everyone involved. Both for us and for the EU.

Yes, it appears that Greece has been chosen as the battlefield for this particular conflict. And if it will ensure long term financial stability in the EU I'm kind of glad for us to take the bullet now. It's not like we don't deserve it.

In my humble opinion we are witnessing the bare and naked consequences of the birth deficits of the Euro through the brutal prism of the Washington consensus driven market forces we unleashed decades ago.

The euro is one of the most impressive economic achievements in the history of European integration, which in itself is marvelous given the historical background. However, from the moment of inception the common currency always lacked the flanks of a common economic and financial politic on EU level. And I´d wager the argument that this was done under cold calculation by many member states. It was always blatantly obvious that the PIIGs where well within the Maastricht criteria in the flexible views of political and economical opportunism only. Especially Germany, up until very recently Nr. 1 export nation in the world, did profit exceptionally under the economic imbalancies of the Euro zone. After all, with the internal market taking up the lions share of German exports, the Euro ensured a steady flow of export profits without currency swaps. All this while strangling the spending power of national citizens. While other countries like France have taken the opposite approach of substitute and strengthen the national spending power instead of focusing on other fields of economy.

Given this incoherent and sometimes downright at odds economic political mosaic on the national level that is in no way embraced by a meaningful strategic policy on EU level you have a recipe for disaster in these days and age. The frantic activism of the EU, the before unheard of active role of the ECB and the amount of money taking into hands to change the odds in this huge gamble does only cover the short comings and inherent systemic deficits that are anything but an open invitation to the financial industry exploit these very failures.

And the biggest problem is that one can only cry foul so much since we where putting up the legal and economic framework for this situation in place despite knowing full well about the risks and weaknesses.

One can only hope that this situation will eventually lead up to a real european approach to economic politics that don´t stop at the internal market and the common currency.

From your mouth to our provincially "It's better to be the big fish in a small pond, rather than a small fish in a bigger pond" leaders.

Ernest Hemingway once wrote, "The world is a fine place and worth fighting for." I agree with the second part.

I called it.

German-Franco call for EU ban on short selling.

Things are kicking off in Greece. It looks like the austerity measures will just be past, therefore ensuring yet another EU bailout. But this will just delay the day of fiscal reckoning. Instead, why not restructure the debt, possibly paying it off over a longer time period? The investors will take a 'haircut' but that's better than a Greek default.

This mess proves that the Euro project was horribly designed. Monetary union without fiscal union, or at least similar fiscal plans, is a recipe for disaster.

Stelios, I hope your company is doing ok. What outcome are you hoping for?

We're doing quite shit, actually. The whole private sector is in shambles, which is funny since it is the public sector that needs to be razed to the ground if we're to actually recover. Something that doesn't seem to be in the minds of either the government or the EU. The government seems content with squeezing the life out of private employees and pensioners making the obscene amount of money of 500 to 700€ per month while leaving the public sector, what's left of their powerbase unmolested. The EU, led by the Germans, only wants Greece to make enough money to pay the monthly installments to their banks and damn the long term. Meanwhile I have to put up with every dumbass "journalist" and financial "analyst" supposedly in the know in western media keep going for the easy target of the lazy (wrong as fuck) no tax paying (impossible for anyone on a salary or pension to cheat in his taxes) Greeks and their huge salaries ( 540€ median pension for the non public sector, less than 700€ salaries for people with university educations) causing all this. The only person dealing with this that seems to have spent more than a weekend actually being in Greece is the one writing the Charlemagne blog at the Economist.

 

Fuck them all, I don't give a shit anymore. Let everything crash, I'm smart, I'll make do in the end. The only thing I regret is not leaving for Britain when I was 19.  

Americans should be watching Greece closely.