Tuesday, May 31, 2011

Greece cracking again?

This post is actually something I wrote for me. In case I forgot in years from now, and wondered what happened, I'd come back here and read what my thinking was then... I mean now. So, if you got something better to do, you don't have to stay and read further. It's probably the right thing to do. Because, if on top of this, you happen to live in Greece, and you get upset with what I'm suggesting you as well as the rest of you are doing, you might want to chase me down for my thoughts and opinions. Either way, you are not going to change your country's fortunes by beating the messenger. Or shoot him...

The question is, would the European Commission and Central Bank, primarily responsible with their policies enforced upon member states, mostly conform the wants and needs of the most powerful members and their lobbyists, allow an impoverished member of its family to default on its debt? Would they move in to force the Greeks, for instance, to restructure their debt, or will they bail them out again? By supplying fresh cash, and keep doing the bailing out until the cows come home? Who knows? In the latest developments concerning an upcoming June debt payment by Greece most member states and the Commission favor provision of the necessary financial assistance to the Greek government. With exception of Germany of course (no news there), the Netherlands (alsjemenou!), and Finland (one of EU's tiny nations decided to roar as well).

For governments in trouble there are usually two possible public debt restructuring scenarios: Either renegotiate loan maturity terms for paying back debt, and by so doing one 'buys' much needed time, or simply tell creditors to shove it and kiss their principal good-bye (parts or maybe the whole). In private business in general, restructuring could also be effected by conversion of debt to company stock. But governments are not stock holding companies; no share capital shown in the liabilities columns of their balance sheets. What they do own though is a participation through traditional stock in private companies that they (partly) nationalized and own from long time ago. They do usually own the assets of their national patrimony as well (the Acropolis and Parthenon, for instance)

What would consequently happen if Greeks decided to withhold payments to their creditors in the immediate future? You know, it happened before in the (recent) history of mankind. Who's gonna suffer then most? Simple answer: Everybody. The global Economy is like a red thread that keeps everyone connected with everyone else, the actual thread (or blood-cells) being the money stream, interlinking governments with their citizens, and the companies the latter work for. Say for instance the Greek cabinet comes out in a few days and declares: As a sovereign state, We decided and We command (I like these 'Royalty-inspired' plural forms in Central Authority public statements - they add 'weight' to the content) that We shall not pay back a diddly freakin' squat of our June 2011 debt of so many billions of sweet lovely euro's, na-na-na-na-naaaa-na! (I hope you can properly pronounce and sing the na-na-naaaa's).

First, those who'll go deep under water (big time!) are most of the large domestically operating Greek Banks. Because traditionally, it is them who keep most of their own investments placed in government "risk-free" (you bet) paper. Who can get a better spread, short term, (leading to double digit yields) that Greek Authorities are paying their bond creditors these days? You'd be a fool not to buy yourself massively in such instruments, and then think, oh what's the risk?... too bloody Big to fail! So, in a heartbeat, we'll get the entire Greek Financial system on its knees. Ouch! Their economy will collapse and common citizens in the streets will start a 'revolution' by plundering shops and stealing anything that moves in order to survive just another day. Viva la Revolución! Will give KKE's SecretaryAleka Papariga much wanted wet dreams... She already declared "Bankruptcy has begun!" Like she knew what she's talking about, that is, but that's another matter.

Is that all? Are you kidding me? It only started, mate! Remember Lehman Bros? Remember what happened to the UBS, DB, SG, BNP-Paribas, Dexia, ING, RBS, and Barclays of this world? How many governments didn't step in then, only three years ago, to bail out the failing European financial landscape because of the Lehman Bros collapse? Banks would have simply vanished from the face of the earth, like in a modern-day Souli dance, if governments hadn't intervened with our dimes and cents (that is yours and mine, lads, good and obedient tax-payers...)  We now got a Whole bleeding country for crying out loud (and another three -PIS- waiting right behind) with the best part of 400B Greece's euros (half a trillion US?) public debt defaulting its debt payments. We'll all start riding bicycles again, mark my words. Welcome back to the Stone Age, folks. At least, I hope we can keep our iPads, but we still need to find ways to charge them, nevertheless.

In conclusion, despite their current bullshit, the Germans and the Dutch, and those pathetic Fins, will eventually need to step in as well, and bail out the Greeks again in a few weeks' time. Is tough Angela M. going to stop the bail-out and burry beloved Deutschland into a financial tsunami? No way! In the meantime renewed insecurity will hit the markets again, the VIX will start climbing, speculators and hedge fund managers will start shorting anything that moves, and wealthy capitalists are gonna get richer once more (remember, fortune favors the bold and wealthy). Hallelujah.

What is really happening back in Greece to solve the basic problems, in the meantime? Not much, I am afraid. Unfortunately, the problem eventually needs to be solved, in any case. The issue is, it is so bleedin' basic that the currently imposed short term remedies by the über powerful and omnipresent Troika cannot do a single thing to help the issue. On the contrary. These measures dig the country deeper and deeper, until it emerges with its thousands of beautiful islands and all up in China. Meltdown!

To tackle the problem requires character, education, long term investments, infrastructure; concepts that remain to be seen whether they'll ever become part of the modern Greek vocabulary. Success in Greece is measured by how much a dick-swinger you are with cash and wealth that either your ancestors (often illegally) sneaked away, or you done the same in your time. Mind you, the type of fiscal and otherwise corruption we witness happening in Greece for thousands of years, we also see here in our central European countries as well, incl. dear Angela's Germany. Only problem, what happens to be an exception in our geographies, is the rule back in Greece. It happens all the time. As unbelievable as it sounds, an average Greek is born, and also learns early in his/her life, to be selfish and 'efficient'. Efficiency, like in 'maximum leverage'. Receive the most by doing the least. A Greek usually knows more than anyone else about any subject, and mostly cares via all sorts of machinations about his/her own good and his/her own loved ones. Greeks don't care much about the community they live in, neither the damage they cause to the environment. Positive voices in that direction are appallingly faint! For anything average Greeks decide to do they first think "να βρούμε ένα μέσο". Meaning, let's find someone who can help get out of the 'queue', where the rest are sweating, and get on top of it. Bend the rules and get to our objective real fast, and who cares about the implications to others? 'Queue respect' is again another concept Greeks forget to add to their daily vocabulary. And in their stride to bypass the 'queues' and bend the rules they even neglect elementary characteristics of human dignity too. They typically 'κλαίγονται', in other words, they pretend to be needy, suffering of some evil, having thousands of good reasons to bypass the rules and regulations. Every Greek does that! Young or old, healthy or sick. Because they are smarter, ain't they? You bet!

They simply lack character. They saw too many role models in their life get away with murder and reach 'success'. Their experiences are flooded with examples. In a recent trip to my birthplace, Takis, a good friend from my youth, had a story of financial abuse for almost every building raised in the last 30 years, public or private, that we drove by. Greeks also love to complain about everything. If they only got at the PM's seat for a day. They'd change the world. There are as many opinions in Greece as there are Greek a-holes (pardon my French). Bitter to admit. In fact, Greeks should be taught at school to use their hands and body more than they use their tongues. If Greeks decided to learn to do that for say, 10 percent more of the time, their GDP productivity would probably improve by thirty basis points. Honest!

Look for a moment at the (otherwise beautiful) picture I posted here. It shows recent demonstrations by a new class of revolting Greeks: The Anxious! The 'Anxious' are nowadays spending time daily at the Syntagma Square 'revolting' against the government and hoping for a better future. Let's do some simple math for argument's sake. Suppose there are 15K protesters out there (actually there are many more). Assume a big chunk is part of the labor force, say 2/3s... Suppose this lot spends 5 hours a day lazying in Syntagma square and shouting, before getting bored and going home to do something useful with their lives. Like repair the house, do some real work to earn a loaf, even do some gardening, clean the neighborhood streets, do some voluntary community work (dream on), shag the spouse (still a much more productive enterprise). The simple math sez, on a day like this, the best part of 50K person-hours, or (by the Central European standards of 36 hrs a week) 30.2 person-years of equivalent labor is LOST, gone and never coming back (I considered 46 labor weeks in a year by subtracting four vacation weeks and 2 weeks of public holidays like xmas and August the 15th). At an average salary cost of 30K a year for such a laborer, and a cost markup of say 30%, the mentioned lost labor leads to, give-'n-take, 1.2M euros of GNP. So, 15K Greeks lazying on a single day at Syntagma Square, achieving nothing useful at ALL (other than increasing their blood pressure and pissing off every-body else) strips a million euros out of the Nation's GNP. This is what is known as the large numbers effect. My model is overly simplified, of course. I didn't account for instance for the physical and emotional disruption the 'anxious' herd, and the ambient noise they cause, to those who actually do want to remain productive and do useful stuff. Those who live in Greece know that my simple model, applied to the real numbers behind the current socioeconomic and political turmoil add to much more than a million lost a day. No wonder Greek debt keeps galloping with pride at the speed of sound higher and higher.

Where's the solution? I wish I knew! I might become PM one day if I did. Nor any of the fat salaried non-tax paying Brussels based Eurocrats know a diddly squat about it either, I am sure. There's no short term solution for sure. The country needs a serious shake-up from the ground up. Greece lacks the standards, the work ethics, the character. Without those, they also lack the infrastructure and business potential to build and produce, and therefore enhance their output numbers, and consequently their government's tax income. And as long they stay hooked on the Euro, their tourism income will suffer too. Pay 4.5 euros for a latte coffee? Why not? No wonder most of our tourists choose to enjoy the brilliant blue Greek waters and sun... from the other side. The Asia Minor (say modern day Turkey) coastline. But who cares. Not the rich Greeks, anyways. Many of them with loads of funds hidden in Swiss bank accounts and in Turkey/Cyprus banks, like the recent pastime dictates, they'll continue to import Cayennes, Mercs and BMW's, paying a price for those of north of 50K euros a pop! Greeks may often despise being seen as 'working' (labor is for the stupid) but they definitely know the latest fashion trends and brands, and all the tricks of the Western European and US beauty trade. Truth be told.

Do I despise them? I don't think so. I am one of them, you know, so how could I? It bleeds my heart to see them in this process of self-destruction, while they themselves remain too passive and indifferent to see and do the right thing. They wouldn't see it even if it hit them in the face. If I lived there, I'd probably be lust like them, thinking I am so right and the rest of the world is so wrong. And that "όλοι οι ξένοι μας αδικούνε".

What a mess.  God protect us from the cluster-fuck of the four members of our European PIGS alliance. Inshallah.