Tuesday, December 22, 2009

Have An Economic Meltdown Christmas!

The very first thing that happened when I set my dainty foot on the main floor of the office where I work in London last week is that all the analysts wanted to know what the dealio was with Greece. Is Greece the next Dubai? How soon do I think Greece would default on her debt? What are the odds of Greece abandoning the Euro and the EU? And now you guys have riots on the streets too because of the economy! Tell us, Bollybutton, what in Zeus's name has happened to make the Greek economy so bad!

And I was standing there thinking "For shizz?" Let's straighten out a few things here. Greece's economy isn't that bad, because it's never been that good, and to understand why, let's take a quick refreshing dip into her past.

For a country to have a strong and stable economy it needs a strong and stable past. Once's Greece's glory day party was over, all she was left with was an unmade bed and the West promising to call.

In the 1800s, Greece emerged from a 400 year Ottoman occupation which is no mean feat. By lots of scheming and dodging, Greece is one of few countries that emerged from a 400 year foreign occupation with her religion, language and culture practically unscathed.

How does this relate to the economy? While much of the West was having the Age of Enlightenment and the Renaissance, the Greeks were standing infront of the equivalent of a bored bank employee telling them "Computer says no" every time they wanted to try something new, say, like develop their country.

So in the 1800s the Greeks waged a bitter and bloody battle for their freedom and won it in a totally David vs Goliath kinda way. They'd barely had a chance to crack open the ouzo when World War I busted in to break up their party.

World War I ends, and Greece ends up pretty much bankrupt having sided with the Allies. The Allies think "Jolly wot wot, let's give Greece Smyrna as a reward". They let Greece invade Smyrna, the Greek army runs wild, and the Turks brutally retaliate while the Allies wonder what's for pudding. As a consequence of the immediate tragedy and the League of Nations' ridiculous solution in 1923 of forcibly moving all Christians from Turkey to Greece and vice versa, 1.5 million refugees pour into an already ruined country.

So that's Greece in the 1920s, absolutely at her wits end and being saddled with more people. Soon follows World War II, a civil war, a military dictatorship and it isn't until the 1970s that any kind of democtratic stability returns to Greece.

Now, how exactly do you build a world-class economy in the space of 35 years? The answer is you don't. You can't. It's like taking a starving orphan and saying "Next week, I want you to look like Mr Universe."

So back to what my colleagues asked me:

1) Is Greece going to default on her debt?

Not a chance. We're in the EU. Why would we want to go the way of Iceland? Though part of me thinks we should do it just to piss off Europe.

2) Is Greece the next Dubai?

You mean a ridiculously oil-rich country with more money than taste? Again, no way. And this is for a number of reasons. First, Greece hasn't enjoyed anywhere close to Dubai's boom to be in danger of a bust. Second, Greece has next to nothing in common with Dubai as a society, and that is very important to factor in.

A friend of mine earlier this year wrote an article on how well Greece was weathering the credit crunch compared to her neighbours. This has a lot to do with the social set-up. Greece didn't suffer the wave of bank crackdowns and reposessions that the UK did.

In Greece, it's unthinkable for someone to let their child or friend lose their house because they fall behind on payments. People will pitch in to save you losing your house, because home ownership is extremely important to the Greeks. Never underestimate the Mama Factor! Mama will sell everything she owns if it means saving her child's house. Are you listening, analysts in London? Next to Greece, write MAMA FACTOR in big red letters and put a circle around it.

If it's known that you are financially comfortable and let your child or friend lose their house, you will never be able to show your face in public again.

3) What are the odds of Greece abandoning the EU or the Euro?

Minus 2000. Neither of the above will happen. Greece totally lucked out by getting into the EU and will not jump ship. It's ridiculous to even suggest this. Same goes for the Euro. Sure, life is a lot harder for people here since the Euro, but if Greece still had the Drachma when the credit crunch hit, with the way interest levels went haywire Greece would have been totally screwed with a cherry on top.

The Greeks are crazy, but not that crazy.

Why then, is the economy in such a hideous state? Because pretty much everyone avoids following the law. You have more chance of getting a Greek woman to tell you her natural hair colour than you do of your average Greek paying their taxes. They just don't like doing it, because all Greeks distrust the government, and if you look back at their history it's not surprising why.

Still, these shouldn't be excuses, and maybe this crisis is exactly what Greece needs to get our ass into gear. I've always believed in Greece and her potential. It's an amazing country with amazing potential, especially the new generation. Greece deserves progress, change and reform, but this has to come from within, and it's a very messy situation to untangle. Undoing so much corruption will take a very long time. The public sector, where everyone gets paid to do nothing, needs to be shruken or made electronic, as does the system for paying taxes.

Also, declaring self-employed earnings needs to be simpler. I know people who tell me they tried to get their earnings legalised and taxes paid, but it became such an impossible maze of stamps and paperwork that they gave up and went back to flying below the radar.

So, dear analysts in the West, relax. All you need to do with Greece is wait and see. I know a lot of your bonds went bust because of the downgrade, but sit tight and you'll see things will look brighter in the summer. And lastly, those economy-related riots all the news channels in the UK were showing actually have nothing to do with the economy. Those riots were pretty much unrelated. Think of it as our equivalent of a street party.

Have a good Christmas and next time check your facts a little before you go off downgrading your little hearts out.

Image: http://www.athina984.gr/files/imagecache/main/files/news-images/finance_0.jpg


Anonymous said...

I can't even comment on your post, I can't find the words. You moved me.
You see greece as a mom would see her child. A fair mom. And an optimistic one.
I am Greek. I've lived abroad, i know our difference to other people. It is true the mama factor is strong but that's not always good. We lie, we cheat, not always because we don't trust others but because we can, we believe we are above the law and everybody else.
We do help, but most of the times because we want to feel superior. And we always, always envy what our neighbour has, not to mention that we never like it when someone is better than us and we will make everything in our power so that they fail or disappear.
And if you don't like bouzoukia something's wrong with you.
Yeah we party, we laugh, we enjoy ourselves, we are not so anal about things, we usually make things work even at the last moment.
But this time I don't think it's enough. We have to just shut up and work. Responsibly. And that means admitting to a lot of things and changing even more.
Given all i've said, i'm really glad that there are people like you living in this country, because I for once have no hope and there are many like me.

Anonymous said...

I don't agree with your account of modern Greek history -- particularly the Revolution and the Asia Minor disaster...

Of course, you are right that the Greek economy was always peripheral and the Great Powers never invested in it. But since 1981 Greece has wasted all the money coming here, and the corruption has increased. And increased...

So for me, the real issues are the Greek nationalist crap, the culture of corruption, and the lack of meritocracy. These do not create a modern economy.

bollybutton said...

I agree with both of you. Whatever may have happened, Greece has been given a golden opportunity by being an EU member and wasted it. We're about to enter the second decade of the new millenium - this culture of dishonesty and corruption may be shrugged off in Greece but it makes us look really bad. I've lived in a third world country and it pains me to say that Greece is not that different from a third world country, and there is no good excuse for it to be that way.

The change has to come from a grassroots level, from Greeks themselves getting their act together. It's not fair to congratulate yourself when you dodge the authorities by building an illegal house in the forest and then complian that those same authorities aren't doing their job when they fail to save your illegal house from forest fires.

That's why I think everyone freaking out about Greece's economy is good because maybe it will force some changes. It's time to get serious!

bollybutton said...

And I believe the change can happen. Ok our economy is a mess but it's not because Greeks are lazy. How is it that the Greeks keep coming near the top of the table for the longest work week? Because they work like dogs and get paid so little for it. It's not exclusively the governmen't fault to clean up the mess. That's like living in a messy house with dozens of siblings, all of you making a mess, and all of you telling Star TV how you wish you lived in a cleaner house and Mummy better sort that out.

If everyone cleans up a little after themselves, this mess can be fixed too. Though it will take time. It will not be easy undoing an entire way of thinking.

Sesi said...

I'm optimistic about our future. The way of thinking has already started to change and I see this in the simpliest of things.
Just check drivers behavior: my generation and below (I'm in my mid-thirties) buckle up, allow priorities, drive thoughtfully, use their flash signals. In last year's strike of the people gathering trash, the inhabitants in my building kept their trash in their balconies, till the strike seized, to avoid flodding the streets. The younger taxi drivers rarely cheat. A complete stranger lend me his super market card in my lane, because I had forgotten it, and would have lost a big discount if he hadn't. Tiny little things like these.
That, and people growingly expressing their dissatisfaction in an organized, collective manner.
That, and my trust in the new government that they somehow understand what needs to be done and do what they can to do it. I don't know, but our new primeminister kind of makes me believe there is hope.
Better days are coming, I trust, and even if its not our generation who will have a significant betterment of living conditions, I feel that the next one will see and live it.
But, Bolly, this was an interesting read. Mainly because it provided a sober insight of our lives here, unbiased.

Anonymous said...

I'm not sure that the "Greek nationalist crap" (which you don't define so I'm not sure what you're talking about) you mention, Anon, seriously affects anyhting. Perhaps you're referring to immigration and the need for human resources? I'd like you to explain in any case since I could build scenarios in my mind that you never even had in yours.

Corruption, on the other hand, is indeed a very serious problem (clientelism, for example, has been a problem since the state's birth).

The way Greece was forced...er "sided" with the Entente in WW1 is quite interesting. You should look into it, bolly, if you haven't already. It's another event in the long history of Great Power intervention.

As for the population exchange - it was absolutely necessary and it was the Greek side that wanted it most. Otherwise, all Greek Orthodox would have gone the way of the Armenians. Witness what happened eventually to the Greek Orthodox community of Imbros, Tenedos and Istanbul that wasn't exchanged, anyway. The fact that the exchanged Greek Orthodox population was around four times that of the Muslims or that in the end the Muslims got all Anatolia for themselves despite their numbers is irrelevant in the end.

Lastly, a biiiig thanks to the UK for wanting the Eurozone to fail so bad. :)

bollybutton said...

Where I'm holidaying in Greece I went swimming yesterday and roamed around in 20C in a T shirt. Northern Europe is just jealous of us so trying to make us feel bad :( but who cares when Greece has such fine weather.

Ok, back to my holiday now.

Anonymous said...

Καλή Χρονιά
με υγεία, χαρά και ευτυχία!

Ηappy New Year
with health, joy and happiness!

truestarr said...

I just found your blog and I am enjoying it immensely! (also your Tango site... please update as I am curious to know how the lessons are coming along!)

You write well and engagingly, thanks for the insights.