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Tuesday, December 31, 2013

Was 2013 "The Year of the EU Task Force for Greece"?

A year ago, my New Year's Eve proposal was that the year 2013 should be made "The Year of the EU Task Force for Greece". Well, what can be said about that in retrospect?

The TFGR had been established by the EU in 2011 so that its resources could be used by Greek authorities to meet 3 great challenges facing the country and Greek society:

1. Supporting growth, employment and competitiveness.
2. Enabling growth through reform of Greek public administration.
3. Maintaining progress towards fiscal consolidation.

Its key mission was summarized as follows:

The Task Force is a resource at the disposal of the Greek authorities as they seek to build a modern and prosperous Greece: a Greece characterised by economic opportunity and social equity, and served by an efficient administration with a strong public service ethos. 

To date, the TFGR has published five reports, two of which during 2013: one in April and one in October.

When the TFGR was established, I thought it was one of the greatest things for Greece since sliced bread. There was, on one hand, Greece, a country which badly needed technical advice and help in all matters relating to bringing the country into modernity and, on the other hand, there were other European countries which had centuries of know-how in public administration and so forth. I thought Greece would jump enthusiastically at the opportunity and facilitate an accelerated transition to modernity.

I recognize that the TFGR has to keep a low profile for political reasons. The impression must be avoided that 'foreigners are showing Greeks how to run their country' (even though that's what the TFGR was and should be all about).

The TFGR's progress reports are diligent excercises in demonstrating and documenting success. There is a lot of talk about 'broadening and deepening technical assistance'; about 'helping to build the administrative capacity to prepare and implement reforms'; about 'helping the Greek administration to better service the needs of its citizens'; etc. etc.

I am certain that there were quite a lot of tangible results accomplished through the assistance of the TFGR. There better be some tangible results after 2-1/2 years!

What I have not seen todate - and this is what I had in mind when I wrote my New Year's Eve proposal a year ago -  is that the TFGR would become a widely recognized and appreciated force of change in Greece; change for the better; change for better public administration. No country can use its potential if there is not an efficient public administration and if there are not strong institutions.

Thus, I propose for 2014 the same which I had proposed a year ago today, namely: that 2014 become "The Year of the EU Task Force for Greece!"

Wolfgang Münchau's Sobering Assessment of the Recent EU Summit

In this SPIEGELONLINE article, Wolfgang Münchau makes a sobering assessment of the recent EU summit. The good news is that, according to Münchau, Chancellor Merkel does fully understand what the Eurozone issues are all about. That surprised Münchau; me, too.

The sobering news is that consequential action based on the correct definition of the problem is not in sight. Merkel allegedly stated that, without consequential action, the Euro would 'blow up in the air'

Whether Merkel's proposal is the right one or not should be subject to debate. What should not be subject to debate is that the Euro will indeed blow up in the air if everyone keeps bickering against one another and if no action is taken.

The Very Unusual Year-End TV Address of PM Samaras

Yesterday, the Ekathimerini published an article about PM Samaras' year-end TV address which I was going to comment about today; today I can no longer find the article. Perhaps it was withdrawn as insufficiently newsworthy; perhaps because the government wanted to eliminate any traces of an unfortunate year-end TV address.

Fortunately, I found a report on this TV address in Der Spiegel. The PM had very good news for the suffering Greek population: Greece would return to the markets in 2014; Greece would no longer need to borrow from the Troika; Greece would thus become a 'normal country'; Greece's primary surplus would be used to strengthen the economy; etc. etc.

I can literally see a suffering Greek family watching the TV address in a barely heated living room jumping of joy about this splendid news! "We will become a normal country!"

The PM was confused about his audience. Had he been addressing an audience of foreign creditors, his speech might have been understandable. Still, foreign creditors would have asked some questions like: What benefit is it to the Greek economy if Greece borrows more expensive money from the markets instead of less expensive money from the Troika? How can Greece use the primary surplus to strengthen the economy when it is contractually obligated to use it for paying interest?

The audience which the PM addressed probably asked a much less sophisticated question such as: What the hell does that have to do with us?

Only a couple of days ago, I wrote an article about the government's reckless ignoring of the soft facts while only focusing on hard facts. To use a year-end TV address to talk about returning to the markets, to talk about the primary surplus etc., well, to put is politely --- that is the epitome of bad taste and/or misguided intentions.

Greece's returning to the markets, if it will be possible in the first place, has absolutely nothing to do with the well-being of ordinary Greeks (unless, of course, 'the markets' would return to throwing tons of money at Greece). Greece's primary surplus has absolutely nothing to do with the well-being of ordinary Greeks if it must be used to pay interest on debt. Greece's becoming a 'normal country' again has, per se, absolutely nothing to do with the well-being of ordinary Greeks

And, most importantly, what the heck are these kinds of issues doing in a year-end address to the nation which address should uplift the spirits of suffering people?

I feel bad about expressing such criticism when, in actual fact, the PM and his government deserve praise for some of the hard facts which they have accomplished during 2013. But the government's job is not only to accomplish hard facts.

The main job of leaders is to provide leadership!

Monday, December 30, 2013

Summary of European Bail-Out Facilities

Observing Greece During 2013

At Christmas 1945, when a war-torn Austria was economically devastated and hunger prevailed throughout the country, the then Chancellor Leopold Figl said the following in his Christmas radio address to the nation:

"There is nothing that I can give you for Christmas. I cannot give you candles for your Christmas tree --- provided that you even have one. I can give you neither bread nor coal. We have nothing! All I can ask you is: believe in your country!"

Historians later described this as one of the most important speeches by an Austrian politician ever. It is said to have had a significant impact on the morale of Austrians during terrible times.

If a Greek politician said something like this over this past Christmas, then I have missed it. We are, of course, talking about soft facts; not hard facts. About compassion (not comisery). One has to bear in mind, however, that a most important instrument to influence the hard facts is to focus on the soft facts in a society. On morale, on motivation and - in times of misery - on compassion.

The Greek economic leadership has accomplished most remarkable hard facts during 2013: a primary surplus, a surplus in the current account and quite a few more. However, throughout 2013, my impression was that the focus was entirely on hard facts with the soft facts being more or less ignored.

My wife and I spent 2 months in the spring in Greece and another 3 months in the fall. I can't say that, living in a city like Thessaloniki, any change in the hard facts, be it positive or negative, was clearly recognizable. The superficial oberserver saw a city at the end of the year which did not seem to be any less bustling than at the beginning of the year. And a bustling city Thessaloniki is!

However, there was a very noticeable change in spirits. Not too long ago, it seemed quite easy to get Greeks excited in conversations and discussions. Only the mentioning of the name 'Merkel' would get some people up in arms. It seemed that someone like Alexis Tsipras had the pulse of Greeks at his fingertips and could arouse disenfranchised people whenever and wherever he wanted to. As the year progressed, spirits changed: passivism, fatalism, depression could be felt all over. My wife has, more than once, suggested that we give up our apartment in Thessaloniki because witnessing all the depression in her family and in society is getting too hard for her to bear.

Regardless which economic policies Greece will pursue going forward, regardless which politician will lead the country --- it will take a very, very long time until an improvement in the hard facts will trickle down to those who need it the most. Yes, there may be bullish periods from time to time when the world (particularly the foreign creditors) will hail Greece as a 'success story'. However, little of that success will be felt by the common people.

When, as I understand, at least one-third of the Greek population are in extremely dire straits, it is simply inconceivable that any economic policy can improve the lot of one-third of a population in a reasonably short timeframe in a significant way. Yes, there may be a little growth in 2014 and, yes, the unemployment figure may go down a little. But what is the difference for a society if unemployment is 'only' 25% instead of 27%? Only if and when unemployment returns to pre-2009 levels will the people feel that 'we have made it!' And that, as I said, will take a very, very long time.

In such a situation, it is almost reckless governance to focus exclusively on hard facts and ignore the soft facts.Yes, one could bank on the hope that, one way or another, suffering Greeks will simply remain passive, fatalistic and depressive --- but no more than that. On the other hand, one might want to read what John Maynard Keynes once wrote about such situations:

"Economic privation proceeds by easy stages, and so long as men suffer it patiently the outside world cares little. Physical efficiency and resistance to disease slowly diminish, but life proceeds some how, until the limit of human endurance is reached at last and counsels of despair and madness stir the sufferers from the lethargy which preceeds the crisis. Then man shakes himself, and the bonds of custom are loosed. The power of ideas is sovereign, and he listens to whatever instruction of hope, illusion, or revenge is carried to him on the air (...). But who can say how much is endurable, or in what direction men (Greeks?) will seek at last to escape from their misfortunes?"

In mid-2013, a NYT-article suggested that 'an unlikely campaign to change the flawed policies that govern the European Union has begun in Greece, a small, proud country that has, in the past, given quite a few ideas to the world — including one, people’s government, that we like to call by its Greek name'. Well, anyone who argues that Greece can and will change the flawed policies of the EU needs to have his head examined, in my opinion.

However, there is, I believe, one area where Greece could set the standard; could carry the torch. Extreme hardships can, if soft facts are well employed, set loose enormous energies in a society which otherwise remain dormant. That requires true leadership.

The EU is a place which, nowadays, is very long on top politicians but very short on true leadership. Or can anyone quickly name a politician who would fit the mold of predecessors like de Gaulle, Mitterrand, Brandt, Kohl, Thatcher, Palme, Kreisky and so forth?

There may be no other place in the EU which needs true leadership more badly than Greece does. Leadership in the sense of bringing people together in the midst of misery; in the sense of setting loose energies in a society which otherwise would remain dormant; in the sense of presenting a vision of a better future which makes today's sacrifices appear worthwhile; etc. etc.

Such leaders are unlikely to come out of an entrenched political system like that of Greece. But they don't necessarily have to come out of the political system. They could come out of the economic sector; the cultural sector; even out of sports. 

Back in early 2011, the HuffingtonPost published an article titled "What Greece Needs Now is a New Hero". There are undoubtedly enough potential 'new heroes' in Greek society except they do not come to the forefront.

My wish and hope for Greece for 2014 would be that those potential new heroes pluck up the courage and step forward to employ their talents for the benefit of Greek society. During the first half of 2014, Greece will hold the EU Presidency and the country will have the stage. That would be as good a time as any for potential new heroes to get on that stage.

It is not in the area of correcting flawed EU policies where Greece can leave a mark on Europe. Instead, it is in the area of leadership where Greece could distinguish itself in a continent which is, for the most part, without true leadership. Greece could set an example how a society, in the midst of misery, can be brought together; how a society can set loose energies which otherwise would remain dormant; how a society can present a vision of a better future which makes today's sacrifices appear worthwhile; etc. etc.

All that is necessary is that those Greeks who have the potential of being heroes pluck up the courage and stand up to be counted!

Tuesday, December 24, 2013

Merry Christmas!

I wish the readers of this blog a Merry Christmas! Those who have had enough of warm climates may wish to come to Austria and visit the lake where we live! Contrary to Greece where the sun is out most of the time, we have to always wait a long time to see a day like below. We then quickly take a picture because it may be quite a while until such weather returns.

Saturday, December 21, 2013

Greece's Current Account --- Cause for Jubiliation Among Foreign Creditors!

Below are the figures of Greece's current account for January-October periods (10 months). I have compared this year's results to the previous year's and, to put things into perspective, I have compared both periods to the same period of 2008 (Greece's worst current account year). The numbers and their trend are remarkable, to say the least!

(in BEUR)

January - August

2012 2013
Revenue from abroad

Exports 16,9
18,0 18,8

Services (e. g. tourism) 30,4
24,4 24,7

Other income 4,6
3,2 3,0

Current transfers 5,9
4,7 6,5

---- ----

Total revenue from abroad 57,8
50,3 53,0

Expenses abroad

Imports 54,8
35,3 33,4

Services (e. g. tourism) 14,3
10,3 9,2

Other expense (e. g. interest) 13,5
4,8 5,4

Current transfers 3,3
3,2 2,8

---- ----

Total expenses abroad 85,9
53,6 50,8

Net foreign deficit (current account) -28,1
-3,3 2,2

Trade balance -37,9
-17,3 -14,6
Services balance 16,1
14,1 15,5
Other balance -8,9
-1,6 -2,4
Current transfer balance 2,6
1,5 3,7

---- ----
Net foreign deficit (current account) -28,1
-3,3 2,2

Below are some observations:

1) Where Greece had a deficit of 28,1 BEUR in 2008, it now shows a surplus of 2,2 BEUR in 2013. That's an improvement of 30,3 BEUR (or about 15% of GDP)!
2) No one, only a few years ago, would have considered such an improvement possible, in my opinion. Certainly I wouldn't have.
3) One caveat about the 2008/2013 development: the 'nice' improvements are those where revenues go up and expenses go down. The 'not-so-nice' improvements are those where expenses go down but revenues as well. The large revenue decline came in 'services' and here it is the line item 'transportation'. Regrettably, I cannot tell what is behind 'transportation'.
4) The 2012/2013 development is 'nice' in the sense that revenues went up and expenses went down. The improvement in the current account balance versus 2012 is primarily attributable to a significant decline in the trade deficit and secondarily to increases in the current transfers and services surpluses. By contrast, the income account deficit increased.
5) Oil exports accounted for the bulk of the improvement in exports but foods, beverages, minerals and non-metallic mineral products were also significant. The declince in imports resulted mainly from lower oil imports.
6) The significant increase in current transfers was mainly due to higher general government net transfer receipts (mainly from the EU).

What can be said about all this?

This is certainly cause for jubilation among Greece's foreign creditors. A current account surplus means that the national economy cannot only cover all of its foreign operating expenses but, and this is the cause for jubilation among foreign creditors, it can also pay all of its foreign interest expense. Admittedly, Greece's interest rates are well below-market but who would have thought only a couple of years ago that Greece would be able to pay any of its interest expense without having to borrow the necessary money from foreign creditors?

The 2013 results are also cause for jubilation among Greece's economic leadership. They have promised to deliver results and they have delivered them.

The 2013 results would be cause for jubilation for the entire economy if only the price hadn't come so high. The price is essentially domestic economic contraction. Expenses have been driven down with a sledge hammer but there are no clear signals that revenues and economic activity will go up. If nothing happens soon, it could become the classic story of the operation having been successful even though the patient died.

The export growth since 2008 is dismal for a country which has gone through domestic devaluation in order to become more competitive. All statistics suggest that domestic devaluation has been quite substantial. Against that background, one can only assume that the Greek economy does not have enough of a productive sector to benefit from an improvement in competitiveness.

And that, the build-up of a productive sector, should be the number one priority of Greece's economic leadership!

Tuesday, December 17, 2013

Three Interesting Proposals by Hans-Olaf Henkel

Hans-Olaf Henkel makes 3 proposals in this article from Handelsblatt which, I believe, I originally made about 2-1/2 years ago:

Three measures against the evil
1. Across Europe, banks must be forced to mark their holdings of sovereign bonds to market. Once that is done, the real level of undercapitalization will be apparent.

2. The then inevitable bailouts must be handled on a national basis. For example, this would mean for France the temporary nationalization of its banks. In Germany, the federal and state governments should get more involved with Commerzbank and certain Landesbanken. While that would have as a consequence an increase in the national debt, for the first time our "saviors" would have to acknowledge what they are saving and where the saved ones are.

 3. After stabilization, and, where necessary, after closing banks, the banks can be privatized again. This has worked well in Sweden.

Only when the banking sector is stabilized, do policy makes have true 'freedom of action' (i. e. they don't have to fear at every step along the way that horror scenarios might explode if certain measures were not taken. What was called 'without alternative' so far would then allow many alternatives.

Sunday, December 15, 2013

One Key Difference Between Greece and a Country Like Austria

Having returned to Austria after 3-1/2 months in Greece, interesting perspectives come to mind...

Austria had an election around the same time as Germany did. Austria now formed a new government around the same time as Germany did. Austria and Germany opted for Grand Coalitions of the two largest parties. In Germany, the negotiators started on the premise that it is a good idea to give each side the success experience of having accomplished one of their major campaign promises (the SPD got the minimum wage, and a couple of other things; the CDU/CSU got the toll fee, and a couple of other things). In Austria, the negotiators focused on preventing the other side of accomplishing any of its major objectives. So much about the difference between smart and dumb negotiating methods.

The 'new' Austrian government is the same one as the 'old' one had been. Together, the two largest parties had lost a lot of votes at the election. However, they promised a 'new style of governing'. Sort of like ND and PASOK.

Reforms of an overboarding state (particularly of an overboarding public administration) were promised but hardly any of that can be found in the new coalition agreement. In fact, the continuation of a two-party domination (serving their parties' interests) was confirmed. Oh, I forgot to mention: taxes were increased.

So what's the difference between Greece (a country near default) and Austria (a country at triple-A)?

Austria has a very strong private sector. The two-party government would argue because of it. The population at large feels despite of it. Nevertheless, there is a very strong private sector.

The Austrian economy has huge private wealth (domiciled in the country; not offshore!). Fiscal conservatives argue that Austria is on the way towards bankruptcy à la Greece because of the overboarding state. They fail to realize that the state will find ways, for a very long time to come, to get a hold on that private wealth in one way or another; elegantly or less elegantly. All in the interest of 'preserving the social peace'.

Austrian governments, for years, have been very 'social-democrat' (even the conservative party). The general idea was and is to spend other people's money. So what's the difference with Greece?

Austrian governments, even when the Socialists had the absolute majority under Bruno Kreisky, were always very much aware of the fact that if you want to distribute milk, you have to nurture the cow which produces it. Put differently: do not inhibit the private sector too much from being successful so that it can generate the resources which the government wants to distribute.

Greece's private wealth, in sum, was, not too long ago, very high: financial and real estate assets. The only trouble is that much of the financial wealth has always been outside the country (guestimates are in the triple-digit BEUR figures) and much of the real estate has been devalued. And the private sector has essentially been the loser under the austerity program.

My advice to Greece?

Copy Austria! Do everything you can to nurture the cow which can provides you with the milk that you desire! Once the private sector is strong and profitable, the state will live happily ever thereafter!

Or to quote Churchill:

"Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon".

Wednesday, December 11, 2013

Memories of Mount Athos

As I prepare to return to Austria after 3-1/2 months in Greece, key impressions of my stay here come to mind. Right near the top would by my visit to the Mount Athos peninsula about a month ago; my third visit to the peninsula. Below are some impressions.

Costas (from Athens) and I are sitting in a cave at the boat landing site of Skiti Kafsokalivion watching the stormy rain pouring down, the huge waves braking at the dock and hoping that a boat will come to rescue us. This is the southernmost point of the peninsula; sort of the end of the world. It is my second day on Athos. I had planned to spend four days. Right now, in the middle of the storm, I just want to see a boat come around the cape and pick us up and take us back to Ouranoupolis.

24 hours earlier, things had been quite fine. I had arrived at Skiti Ag. Annas, where I had been before, and the plan was to walk to Kafsokalivion on day 1; from there to Prodromou on day 2; and from there to Megisti Lavra on day 3. From Lavra, I would take the bus back to Dafni to catch the ferry boat back to Ouranopoulis.

A minor problem: I had only checked the horizontal distances of the path. I should have checked the altitude changes as well! By the time I had made it to Kafsokalivion (first 800 meters up and then 800 meters down!), I was exhausted. Then the rain storm began. Then the electricity at the church where Costas and I stayed went out. No way to charge a mobile phone. No way to communicate outside. No way to read anything. No way to talk because there was no talking at the church. No way to consider climbing back 800 meters in altitude during a rain storm. In short: trapped at the end of the world with the only hope that a rescue boat would come.

Costas and I are just about to give up when a miracle seems to unfold. Clap, clap, clap. We hear approaching sounds. Suddenly, a young man appears with four mules in tow. It is Elias and he is Albanian. He is here to transport materials from the boat to the church. Elias doesn't think the boat will come but he is here anyway. 

Elias comes across as a smart cookie; in fact, a bit precocious. While Costas and I are ill equipped for the rough weather, Elias has a heavy (and expensive!) raincoat and big rubber boots. No way that he is going to get wet! I strike up a conversation with Elias. Before long, I have the strong feeling that he has classified us as 'dumb tourists'. I am sort of impressed by his natural, cocky self-confidence. Costas, a rather cultured Greek, tells me that the Albanian is just silly. He has no culture. Yeah, I tell Costas, but he looks like a survivor...

Elias has decided that no boat will come and sets out to return to the church 300 meters up the mountain. I ask him whether I could ride on one of his mules and he says yes - for 10 Euros. And, he adds, another 5 Euros for my rucksack. I tell him that this is very expensive and he tells me that it is not. 'What's 10 Euros? Just a couple of packs of cigarettes', Elias explains to me. I tell him that it is a question of having 10 Euros or not having them. Elias is not impressed. 

I tell Elias that I will pay him 10 Euros but carry the rucksack on my back. He says that this will create balancing problems for me. I remain stubborn (because I don't want Elias to literally take me for a ride) and keep the rucksack on my back. And for the next half hour, I learn everything about balancing problems when riding a mule with a rucksack on one's back...

By the time we got back to the church, it seemed that Elias, Costas and I had become rather good partners. Not friends, because Costas didn't think that Elias had culture. And Elias probably thought that both of us were rather dumb (or cultured, for that matter). But we were in conversation. Elias told us that he had been working in several European countries. The last ones were Switzerland and France. He had made good money wherever he was. Now he would stay in Kafsokalivion until next summer. The monks gave him shelter and food in exchange for work he did, and on the side he could make money with his mule business. In the summer he would go back to Albania where the beaches are wonderful and the girls are beautiful. After all, he would have to spend all the money he earned.

I finally agreed to pay Elias 25 Euros to take me up to the top of the path the next morning, and I gave him the money upfront. Costas said he would walk because he didn't want to be taken for a ride by an uncultured Albanian.

The next morning, Costas and I wanted Elias to put our rucksacks on the mule. Elias said that this would be another 15 Euros. Grudingly, we agreed to pay him, and we would pay him once we reached the top. Good thing we did because the path was narrow and the cliffs were steep. One small imbalancing with my rucksack and I might have gone down the cliff. 

As we chatted along the way, Elias told me that he could also take me up all the way to the top of Mount Athos. 100 Euros would be the price. I laughed and suggested that he was crazy.

At the top, Costas pulled out 7,50 Euros for his rucksack. I had no coins and only 50 Euro bills. Elias had no change. BUT: I happened to have a 10 Swiss Franc bill which I gave Elias in lieu of 10 Euros. And then, in the middle of nowhere, one-third up Mount Athos, the uncultured young Albanian said to me:

"Ten Swiss Francs are only 8 Euros at current exchange rates".

Little had I known that the young, uncultured Albanian was also a foreign exchange expert. Neither had the cultured Costas known that 10 Swiss Francs were worth only 8 Euros...

As Costas and I continued our walk back to Ag. Annas, I pondered the idea of ever being at the top of Mount Athos, albeit at the cost of 100 Euros. 

By the time we were on the boat back to Ouranopoulis, I felt rather certain that, possibly next year, I would take up Elias on his offer to take me up to Mount Athos. What the heck! He may be taking me for a ride but what an unforgettable ride it would be!

Monday, December 9, 2013

Test Question: EU Has How Many Currencies?

It helps to remember from time to time that the Euro is not the only currency in the EU. The EU has 28 member states, of which 11 states have their own currency. Of course, the EZ member states have by far the bulk of the EU's GDP but, nevertheless, the EU is an economic and political union which has a total of 12 currencies.

EU members
EZ members
Local currency

1 Austria
1 Austria

2 Belgium
2 Belgium

3 Bulgaria

1 lev

4 Croatia

2 kuna

5 Cyprus
3 Cyprus

6 Czech Republic

3 koruna

7 Denmark

4 krone

8 Estonia
4 Estonia

9 Finland
5 Finland

10 France
6 France

11 Germany
7 Germany

12 Greece 
8 Greece

13 Hungary

5 forint

14 Ireland
9 Ireland

15 Italy
10 Italy

16 Latvia

6 lats

17 Lithuania

7 litas

18 Luxembourg
11 Luxembourg

19 Malta
12 Malta

20 Netherlands
13 Netherlands

21 Poland

8 sloty

22 Portugal
14 Portugal

23 Romania

9 leu

24 Slovakia
15 Slovakia

25 Slovenia
16 Slovenia

26 Spain
17 Spain

27 Sweden

10 krona

28 UK

11 pd.sterling

Too bad if only one of the twelve currencies would bring the entire EU down!

Sunday, December 8, 2013

What the Heck is Going on in Greece?

Even a more than casual observer can't help but despair every once in a while about the Greek situation. Of late, I have gotten used to hearing good news: a primary budget surplus is in place; the current account approaches balance; growth will return next year; and - the budget was passed last night. Additionally, foreign officials have visited Greece and expressed compliments about Greece's progress.

And this morning I read that the Troika is freezing the next tranche for lack of reforms! Below are the facts:

Reform completions

Plan Actual Percentage
July 35 28 80%
August 26 15 58%
September 47 13 28%

I wonder how many people really know what these planned reforms were; what benefits they were supposed to accomplish; which reforms were completed; and what benefits they have achieved. All we have is statistics and these statistics are certainly lousy.

Which raises the question why one plans 100% reforms when the track record shows clearly that, at best, 50% will be completed. Why not only plan 50% and make sure that they really get done. That way, one would avoid the perception of failure.

This is what Alexis Papachelas recently wrote in the Ekathimerini:

"Here’s one discussion, however, which has never reached Greek society: What are those infamous structural changes that could increase the country’s GDP by 1 or 2 percent? How many have been approved by Parliament following battles and large-scale protests? And exactly how much have they benefited the country’s real economy? How many were actually voted in the House (such as the liberalization of port services) before being subsequently annulled via circulars and other means?"

Well, if a newspaper editor doesn't know what's going on, how should anybody else?

I don't remember the author but I do remember the phrase: "The tragedy of life is not that man loses. The tragedy of life is that man almost wins".

The uninformed public is far from 'almost winning'; it is definitely losing. If a company goes through a major restructuring requiring substantial sacrifices from its staff, one of management's most important task is to keep the staff informed about 'Where were we? Where are we now? Where do we plan to get? And, Why things will be better when we get there!'

I wonder who in the Greek governments feels that his job is to do the same what corporate managements need to do when they manage a crisis?

Friday, December 6, 2013

Personal Views on Greek Mentalities

In an earlier article, a reader asked why I no longer thought that the Euro was the right currency for Greece and I responded as follows: "If the Euro is a currency which doesn't fit Greece's economic capabilities (and the culture of Greeks!), which I have felt for some time now, then there are only two options: (a) get Greece's economic capabilities so that they fit the currency or (b) change the currency to fit Greece. It would be better for Greece, long-term, to get its economic capabilities to where they fit the Euro but I have given up hope that Greece can do that".

I was then asked whether I could substantiate my feelings with factual arguments. Another reader said that his ONE eye-opener had been reading Nikos Dimou's booklet about "The Misfortune of Being Greek". He wanted to know whether I had such a ONE eye-openener, too.

In reply, I used the well-known strategy which one uses when one does not have a specific answer to a specific question: I wrote a long story in reply, hoping that readers would read their own answers into it. Below is my reply.

Not specific hard facts, rather soft facts influence this judgment of mine (which, I agree, may be totally wrong). It is a judgment which has grown over time (‘riped’ so to speak). Every once in a while, I find myself backtracking in this judgment but such periods usually don’t last very long at this point of the game.

I, too, think that a lot of answers can be found in Dimou’s booklet because I think it is really a question of mentality, national character, etc. I don’t want to put a value judgment on mentality and/or national character; I just want to recognize and accept that such things do exist and they develop over centuries. Alexis Zorbas led a life which, from a value structure standpoint, was about the opposite of the value structure which I had been raised with. From that standpoint, I should fully criticize the man’s conduct. And yet, I – like probably many people – envy him more than my mind can pull itself together to rationally criticize him. Why should he be criticized? Because if everyone behaved the way he did, society would fall apart. The point is, however: life would be so much more boring if there weren't people like Zorbas; if there were no Greeks, for that matter.

Let me quote Dahrendorf (from 1995): “For Italy, periodic devaluations are much more useful than a fixed exchange rate and for France, higher government expenditures are more meaningful than a rigid adherence to stability criteria (which are, above all, an advantage for Germany)”. That’s what I try to say about Greek mentalities and value structures. There are apples and oranges in life; thank God there are! Apples may fit the Euro; oranges may not.

Strangely enough, most of the Greeks I meet in day-to-day life are as ‘normal’ as everyone else in Central Europe or elsewhere. We have rational discussions and where we disagree, we agree to disagree. When I am with such people (including some very smart university grads), I come away with the (temporary) hope that Greece will eventually make it in a ‘normal’ world. Those are experiences with individual Greeks. My experiences with Greeks as a collective quickly bring me down to reality (by ‘collective’ I mean mostly what one hears, reads and observes through the media).

So, contrary to you, I don’t have ONE single event. Instead, it is a gut feeling that, after 4 years of rather dramatic crisis, one ought to feel a tendency, a wish for real change. Frankly, I don’t see Greece all that different today than 4 years ago (except a lot poorer) and I don’t sense much of an energetic wish for radical change running through society. 

However, there is ONE experience I had many years ago which I am now reminded of very often. The American bank where I spent my first career had 3 large units in Greece and I was supposed to take over country management in 1986 (shortly before that happened, my bank sold the Greek operations to NatWest and that was the end of my wife’s dream of returning to Greece, but that is a different and very complicated story…). We were based in Argentina then and I once had the visit of a colleague/friend, an American who had been country manager in Greece in the 1970s. He felt he had to coach me a bit as regarded my future job in Greece and said some like this: “You know our job application form has sections on ‘personal strengths’ and ‘areas for improvement’. You will find that Greek job applicants leave the ‘areas for improvement’ blank. When I first noticed this, I thought they were inhibited to put anything in writing and would prefer to discuss this in the personal interview. The strange thing was that, even in the personal interview, they would not volunteer any ‘personal areas for improvement’. Not because they seemed inhibited or embarrassed or anything like that. No, they were quite natural about it. They simply could not address the issue that they might have ‘personal areas for improvement’. I should add that we never had anything but the best experiences with local staff!"

A good friend of mine, a Brit who is now retired, spent the last 10 years of his career as a bank consultant based in Greece (his wife is Greek). His projects would always take him to far away places. I once asked him why he wouldn’t seek consulting mandates from Greek banks. His answer? “That would be masochistic! You cannot consult Greeks because they already have all the answers. They will not accept your advice. They will, instead, pretend that, whatever you tell them, they knew it already, anyway”.

In my early years of schooling in Austria, we learned about ancient Greeks' themes like ‘know thyself’, ‘accept yourself’, ‘know that you know nothing’, etc. etc. Somehow, it seems that these themes got lost through the centuries.

One of the key aspects of the Greek mentality, to me, is this ‘susceptibility to flattery’. It is referred to in the Encyclopedia article but also in a briefing which a former US ambassadador once cabled to Washington (published by Wikileaks). He said: “The Greeks are susceptible to flattery and quick to be offended by a perceived slight”. This susceptibility to flattery, one might also think of it as a bit of gullibility, is, to me, a landmark characteristic. Greek voters seem to fall for politicians who are good at playing on these susceptibilities. Someone like Alexis Tsipras strikes me as an expert at this game.

I have visited, as a guest, all 5 or 6 Rotary Clubs in Thessaloniki. Between them, I could easily form at least one complete Greek government of responsible and professional leaders who know what they are doing. Add to that the thousands and thousands of Greeks who have the same capabilities. Consider that against the certainly millions of decent Greeks who would like to be governed by decent leaders. The resources are there! They just don’t seem to come together.

The widely spread ‘Greek irrationality’ is part of the great charme of Greeks and it can be a lot of fun to watch; in relaxed times, I hasten to add. In stressed times, that irrationality can take one’s nerves apart (and I say this after close to 40 years of marriage with a Greek…). Colleagues at my first employer who had spent time in Greece would crack the joke that “Greeks gave the logic to the world. The only problem is that the world never gave it back to them”. Good for a lot of laughter. When it plays out in serious reality, it can drive someone nuts.

In conclusion: since I didn’t have a short answer to your question, I had to write this long piece but I, nevertheless, hope that you can understand what I am trying to get across.

Wednesday, December 4, 2013

Encyclopedia Britannica 1911 on Greeks

"The Greeks display great intellectual vivacity; they are clever, inquisitive, quick-witted and ingenious, but not profound; sustained mental industry and careful accuracy are distasteful to them, and their aversion to manual labour is still more marked. Even the agricultural class is but moderately industrious; abundant opportunities for relaxation are provided by the numerous church festivals.

The desire for instruction is intense even in the lowest ranks of the community; rhetorical and literary accomplishments possess a greater attraction for the majority than the fields of modern science. The number of persons who seek to qualify for the learned professions is excessive; they form a superfluous element in the community, an educated proletariat, attaching themselves to the various political parties in the hope of obtaining state employment and spending an idle existence in the cafes and the streets when their party is out of power. 

In disposition the Greeks are lively, cheerful, plausible, tactful, sympathetic; very affable with strangers, hospitable, kind to their servants and dependants, remarkably temperate and frugal in their habits, amiable and united in family life. Drunkenness is almost unknown, thrift is universally practised; the standard of sexual morality is high, especially in the rural -districts, where illegitimacy is extremely rare. 

The faults of the Greeks must in a large degree be attributed to their prolonged subjection to alien races; their cleverness often degenerates into cunning, their ready invention into mendacity, their thrift into avarice, their fertility of resource into trickery and fraud. Dishonesty is not a national vice, but many who would scorn to steal will not hesitate to compass illicit gains by duplicity and misrepresentation; deceit, indeed, is often practised gratuitously for the mere intellectual satisfaction which it affords. In the astuteness of their monetary dealings the Greeks proverbially surpass the Jews, but fall short of the Armenians; their remarkable aptitude for business is sometimes marred by a certain short-sightedness which pursues immediate profits at the cost of ulterior advantages. Their vanity and egoism, which are admitted by even the most favourable observers, render them jealous, exacting, and peculiarly susceptible to flattery. 

In common with other southern European peoples the Greeks are extremely excitable; their assionate disposition is prone to take offence at slight provocation, and trivial quarrels not infrequently result in homicide. They are religious, but by no means fanatical, except in regard to politico-religious questions affecting their national aims. 

In general the Greeks may be described as a clever, ambitious and versatile people, capable of great effort and sacrifice, but deficient in some of the more solid qualities which make for national greatness".