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OBSERVING GREECE

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Is Greece reforming or not?

My British friend was, for once, wrong: he had predicted a Grexit for Friday, January 11, 2013 at 22 hrs, but it didn’t happen.

True to form, he sent me the following defence of his position today:

“Read today’s ‘Comment’ in Ekathimerini entitled ‘Samaras and the madhouse’. A true reflection of how I see the insurmountable problems in Greece – which can only be resolved by a return to the Drachma and a sole concentration on Tourism, Agriculture and Shipping together with an abandonment of true reforms across a myriad of professions. I.e. the Greeks will never change – except to be encouraged to enhance their activities in the three areas that I have mentioned”.

Personally, I am at a loss. For quite some time now have I read reports how much progress Greece was making on just about everything and now the Executive Editor of a major newspaper writes that this is not so. 

Who in the world knows what’s really going on in Greece? 

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Can The Left save Greece?

A blog by the name of New Left Project published an article titled “Can the Left save Greece?”, as well as an interview with Yiannis Milios who is a Professor of Economics at the Polytechnic University of Athens. Prof. Milios heads a group of economists including Yiannis Dragasakis, Giorgos Stathakis and Efklidis Tsakalotos, who collectively shape SYRIZA’s economic policy (according to the article).

The article impresses because it is quite balanced. Put differently, it is not demagogic, which is what one might expect articles from such a source to be. It is the interview with Prof. Milios which I find particularly interesting, at least interesting enough to comment on Prof. Milios’ statements.
“They (EU countries) are mostly governed by neoliberal parties, while their socialist parties are actually neoliberal as well. There is obviously intensification in class struggle, not just in Greece but also in Italy, Spain and Portugal, which slowly de-legitimizes the neoliberal spin on the crisis. Therefore, it’s the class struggles themselves that change the circumstances and create this new situation in which the Left perspective steadily gains ground” – I have trouble seeing it that way. Certainly France is not governed by a neoliberal party and there are many, many Conservatives in Germany who criticize Merkel for having moved even left of the center. The whole idea of a ‘neoliberal spin’ is far-fetched to me. I think what we have seen in Continental Europe for much of the post-WWII period is the unfolding of Keynes-policies. Except that Keynes, I believe, recommended deficit spending only during parts of the economic cycle with a balance over the entire economic cycle, whereas most Continental European countries have had uninterrupted (or only briefly interrupted) deficit spending for decades now. And what made matters worse: the spending was, to an excessive degree, ‘true spending’ (on consumption) instead of investment in the future. Yes, I agree that there seems to be a new perspective for The Left but that is more the result of ineffective leadership of cozy political establishments than the consequence of a failed market system.
“The Left has a very clear position: only through reshaping the social and production models can European societies get through this crisis” – I wish members of the established and cozy political elites would make statements like that! This is assuming that Prof. Milios means what I think he means, namely: a common market (particularly when a large part of it has a common currency) cannot be sustained when investment, production, employment, etc. move into one direction and loans flow into the other direction to finance consumption there.
“The model of a social co-operative economy, operating in a more democratic context, is the one that can take our societies out of this crisis” – the so-called ‘Genossenschaften’ represent an important part of the economies in the German-speaking countries.  The concept for such ‘Genossenschaften’ was developed by Friedrich Wilhelm Raiffeisen in the second half of the 19thcentury. Essentially, they are somewhat closed systems where the customers are also the owners. The owners’ profit motive becomes of secondary importance: if they earn less as owners because the ‘Genossenschaft’ makes less profit, they make up for that as customers who pay lower prices. Such ‘Genossenschaften’ are clearly interesting alternatives to capital market based ownership.
“Back in the 1980s, PASOK favored capitalist interests over the interests of the vast majority of the people.  Our lead is what society needs and not the imaginary ‘foreign ties of the country’ to its lenders. We say ‘people over profit’” – well, that is a statement for populist consumption. It would lend more credibility to SYRIZA if they didn’t use such statements which have general appeal but no specific meaning.
“We represent the social front created in Greece against austerity policies and our ambition, together with the affiliated forces of the European Left party and others who will join in the process, is to enable the establishing of a European front against austerity” – sounds like milk & honey! Prof. Milios should explain that there is not one Eurozone country which can print its currency. Thus, and to the extent that the above involves deficit spending, a country must be able to borrow. If it can’t borrow and if it doesn’t have the above-mentioned ‘foreign ties to lenders’, the country is caught in extreme austerity.
“We will call for an international forum to discuss the viability and targets of Greek and European debt and budgets. We also intend to take up initiatives in the direction of re-examining the European Union treaties that make up the pivotal points of what brought us to this” – well, I think Angela Merkel could live with that.
“Wages, for once, will be decided through free negotiation between social institutions that represent the productive classes” – I presume Prof. Milios means that wages should be freely negotiated between employees’ representations and managements of a company. That would be a dream come true for many entrepreneurs who despise dealing with central union dignitaries who have other things on their agenda than the well-being of the entrepreneur’s company.
“SYRIZA considers increasing revenue from taxation to be a major priority. We will use tools like the newly established assets list, we will establish a code that will discourage tax-dodging and we will achieve a dramatic (according to current data) increase in revenue” – all I can say to this is: more power to you!
“It’s unthinkable that in a society facing a humanitarian crisis, expenditure is directed towards military spending instead of covering basic necessities like feeding the population and heating schools and hospitals” – all I can say to this is: more power to you!
“It’s certain that the prosperity they (powerful lobbies) enjoyed for decades, the immunity from taxation, has created enough “stock” the powerful could and need to share in order to restart our society” – all I can say to this is: more power to you!
“There certainly need to be new ways to finance our dying economy. For instance, apart from the savings from structural adjustment, special purpose banks will be founded, to operate essentially as investment funds” – Prof. Milios is blowing smoke again because he leaves the impression that all Greece needs in order to finance new productive investment are special purpose banks. As pointed out above, Greece needs the money from those ‘foreign lenders’ because Greece doesn’t generate enough savings on its own in order to finance the necessary growth. Even a new special purpose bank can’t do any lending if it doesn’t have the funding.
“If we define ‘investment’ as a fund coming to buy up businesses which have found themselves in a tough spot because of the crisis, downsize them, fire staff and sacrifice its long-term prospects for short-term profitability, then we are categorically against this” – all I can say to this is: more power to you! Greece does not need asset strippers as it tries to turn-around its economy!
“If we define ‘investment’ as providing capital for the development of activities that respect our society as a whole, that in order to produce profit make use of what modern technology can provide, that respects the worker’s rights and the natural environment, if they cover basic social criteria like jobs creation, then yes, we are for that kind of investment” – all I can say to this is: more power to you!
“If a left-wing government is backed by the people who, in the past, flooded Syntagma square and demonstrated their dissent against austerity policies in every city in Greece, then we have nothing to fear. This negotiation will prove to be of benefit to the vast majority of the Greek society” – all I can say to this is: power away from you!
Conclusion: I am reminded of a previous interview with Mr.Yiannis Dragasakis of SYRIZA. He, too, had given a rather reasonable interview only to blow it with his last statement. Prof. Milios repeats that experience: by and large a reasonable interview but with his very last statement he confirms all the fears that some people have of SYRIZA.
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Lest ye forget HP, Unilever and Cosco!

Positive news have a way of being forgotten so quickly when there is such ample supply of negative news. Thus, I want to bring back to memory two important events of the last couple of months.

Last November, it was announced that HP had chosen Piraeus as the site for its central distribution center for products destined for Central Europe, the Middle East, North Africa, the Mediterranean region and the former Soviet republics. HP products will be distributed by sea from the terminal that Cosco controls in Piraeus and by rail via state railway service operator TRAINOSE. That then rekindled Russian interest in Trainose which will transport a considerable share of that volume to other European countries.

Also in November, Unilever announced that 110 of its products that are currently imported to Greece from elsewhere in Europe will soon be produced in this country, in a much-needed boost for the local economy. Even a high school student will quickly understand that this move will have some positive impact on employment.

There is no new employment without new investment and there is no new investment without demand for logistical support. Thus, at the center of all this is a good infrastructure and outstanding logistical resources. That, of course, brings Cosco to mind again, an investment which I have already praised several times as the prototype of a good foreign investment in Greece.

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Bill Gates invests in Greece!

The reader Tsigantes recently made a reference to ‘a small town near Veria in northern Greece which backed the vision of its trained librarian and has produced probably the most educative, much loved and inspiring library in Europe!’ So I became curious and started to google.

Out came the Veria Central Public Libary. Now that may not be the library which Tsigantes referred to because it is in Veria and not near it, but it is nevertheless a learning experience to look at their website.

Up in the right-hand-corner of the homepage, it says that the library was the ‘2010 Access to Learning Award’ recipient. Not all that exciting news because there are so many awards being given these days that one more of them for a library in Veria isn’t necessarily breaking news. But I did check what this ‘Access to Learning Award’ was all about. And…

I landed on the homepage of the Bill & Melinda Gates foundation. Now, I may not be all that familiar with Veria but I have heard of Bill and Melinda Gates before. And here I read in the press release that ‘a Greek libary receives a USD 1 million international award for embracing technology and creating a vibrant community asset‘. There is even a very nice video about the library.

That piece of information took a while to settle with me. I mean, we have now seen for almost 3 years an unparalleled undressing of a nation/society, coming up with every piece of dirty laundry that one can imagine. Presumably, even the natives of a most remote island on the other side of the globe have heard by now that there is absolutely nothing positive to be said about Greece. And now this?!?

I googled a bit more to check what kind of headlines this award had prompted in the Greek media. Regrettably, I am a poor Google searcher which is probably the reason why I couldn’t find any.

Now let’s get this straight. Here is a foundation which isn’t exactly like any other foundation in the world. Presumably, only the most qualified projects attract the attention of the Bill & Melinda Gates foundation. And here is a Greek project which did attract the attention of this foundation. A project about the blue skies of Greece? About the blue waters of Greece? About the ancient treasures of Greece? About the hospitality of Greeks? About any other Greek stereotypes?

No! A project about ’embracing technology and creating a vibrant community asset’ instead!

Ever since the Euro-crisis erupted, the term ‘contagion’ has made the rounds. Meant by that was the risk that the crisis of one country could spread to another country, and so forth. The classic domino effect.

There is another kind of contagion, namely the contagion of negative information. Everyone knows the question whether the glass is half-empty or half-full. Imagine a situation where there are 70% negatives and 30% positives. If you only talk about the negatives, the 70% will gradually move towards 100%. But if you talked more about the positives, the 70% might even retreat.

I trust I have made my point.

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A debate about Greece’s future economic development

In my last post, I had raised – once again – the urgency of developing a long-term economic development plan for Greece. A most interesting debate among two readers with the pseudonyms of Tsigantes and Canutely King ensued. The debate is too interesting to leave it buried in the comments section, which is why I reproduce it below.

Tsigantes
There is no development plan in Greece because of the simple fact that we still have ND and PASOK in power. Please note that, since 1974, neither party has come up, not even once, with a development plan and it is safe to conclude that none of the politicians in these two parties have that competence. Meanwhile, I also believe, with the writing so strongly on the wall considering their future, that beyond what they can pocket from privatizations now in the short term, they have no interest in making a real development plan.

Meanwhile, Mr. Stournaras is up to his ears with the bigger budget and EU / Troika picture and has no time.

It is important to remember that ‘elite’ parties in Greece – ND and today’s PASOK – are not stocked with the best and brightest. The financially elite families in Greece traditionally placed the least clever of their children in politics, i. e. the ones deemed incompetent to run the family business – either for lack of brains or because of character problems.

As for the IT professor who doesn’t know about memory sticks…. He is obviously a party man saying what has to be said to support the government’s case. No doubt he also received his professorship through the same party channels. Please wake up and stop being so naive about the pitiful ways of Greek ‘power’! You can take for granted that nobody in a position of power here academically, judicially, etc. is the best in their field in Greece. All these positions have long been the ‘prizes’ of the top parties to disburse among its most loyal members.

Meanwhile, Tina Birbili, an engineer in her 30s and Minister of the Environment under the last PASOK government who oversaw various university planning boondoggles of PASOK professors, is today representing Greece, in its moment of greatest crisis outside war, at the OECD. Need I say more?

Of course there are competent IT people here! They are in the private sector! Greek companies have been working for the EU for years and internationally.
 
Canutely King
Tina Birbili, who is a physicist & environmental economist, is 42. That’s only 3 years younger than the Dutch Finance Minister Jeroen Dijsselbloem who is tipped to take over from Jean-Claude Juncker as the Euro-Group czar. Dijsselbloem is also an engineer (agricultural), but unlike Ms. Birbili he doesn’t have a PhD from Imperial College London or anywhere else.

Unlike most politicians Tina Birbili did have appropriate qualifications for the Minister of the Environment job. Unlike her replacement, Giorgos Papakonstantinou – who has an LSE economics PhD, perhaps that’s where he found out how to copy memory sticks.

If I were a Greek then I would not be worrying about whatever Birbili is doing at the OECD – which is just another think tank. I’d be much more concerned about having, as the next Euro-Group czar, an agricultural engineer with no ministerial experience prior to becoming the Netherlands Finance Minister in November 2012!!

If you think Greece is bad in respect of jobs for mates, take a look at the Obama administration, or the one before that (G. W. Bush) or the one before that (Clinton)…

I’ll stay out of the memory stick/IT Professor debate; except to say that most IT professors and professionals (of which I am one, of 40 years standing) wouldn’t have a clue how to definitively determine when a memory stick was formatted or copied. The people who may know will be found in military intelligence or similar.

Yes Greece is ‘bad’, but maybe not as bad as we sometimes think. Does any other EU country have a long term economic development plan? The only countries I can think of that might are Poland and Estonia. Cameron commissioned Michael Heseltine (a Europhile and eventually Thatcher’s bête noire) to produce one, which he did. It calls for decentralization and ‘more Europe’ so it is unlikely to be adopted. Britain has spent the last 150 years centralizing and ‘more Europe’ is blasphemy for many (most?) Brit’s.

The main thing the Greek government must do is to create an investment friendly environment (like Ireland did before it went on its property binge) and keep its fingers crossed – and not go on a property binge.
Tsigantes
I agree with you about the investment plan.

I also have no problem with people being young if they are competent. But it is unwise to assume that further degrees describe competence – I say this as a University professor (in Spain, Belgium and before that in the UK, Germany and NL) who sits on the marking board every year, passing students’ extremely mediocre work (most students are mediocre, especially at PHD level, because they tick all the correct boxes). Degrees don’t guarantee anything – it is what you do afterwards.

Tina Birbili is known amongst professionals in Greece as having landed a very plush, i. e. wildly overpaid, commission to design bicycle paths at the extremely large main university campus which is off-limits to cars anyway. This was a PASOK appointment and later she received much media attention for her ‘green’ intervention. I invite you to visit the campus to view these paths. Basically you will wonder where they are. Or even the need, since the campus is crisscrossed with decommissioned roads and is basically one big ‘path’ and largely empty forest area.

I do question the appointment of an engineer to an economic think tank. Especially now.
There are plenty of highly experienced economists in Greece with far better credentials for this post, and the appropriate skill set (statistics, etc.) – who are presently jobless! Unfortunately for them, they have spent their lives in economics rather than in party politics.

Greece is a small country and so top appointments in all public sector fields are infiltrated by politics. In my view too much, even tragically so. This is not to say all appointments are inappropriate, but that it is political pot luck. For example, Greece’s greatest living architect, by staying out of politics, has only been given occasional temporary junior posts as a tutor of the lowest rank at the polytechnic of Athens.

However I saw the same and even worse, especially in Belgium. And as you say, all administrations appoint their friends.

In the Greek universities this has unfortunately led to lower standards. In the Greek hospitals it is different, though departments with corrupt heads tend to be demoralized.

Basically the private sector is where the hope for Greece lies. Our country is NOT rotten from top to bottom; it is only rotten where it meets the state sector.

The best of Greek talent and brains is in the private sector.

For example, Greece until 3 years ago was rated no 5 worldwide in terms of the quality of its doctors, healthcare and access to health care. At least half of Greek doctors train abroad in the highest levels of medical education, mostly privately, or through Onassis scholarships or armed forces funds.

Unfortunately, the private sector is the sector of greatest frustration, since any kind of work that could benefit Greece as a whole comes up against the political favors/kickbacks system and usually fails or is bastardized. This certainly applies to all professions in the engineering and construction sector and science.

However, great strides can be made at the local level, such as when the port of Mytilini installed the newest and greenest sewage disposal system in the late 90s and won a European award. Or when a small town near Veria in northern Greece backed the vision of its trained librarian and has produced probably the most educative, much loved and inspiring library in Europe!

Meanwhile Greece is at the forefront in Europe with alternative medicines and cosmetics, herbal knowledge and medicines, herbs and food products, organic farming and agricultural tourism, pilates, yoga, tai chi centers, green building knowledge… Please note, once again, all businesses that can be kept small & private, flying under the government radar.

The easiest area to succeed in is Import/Export and exporting services. This on the whole can avoid government interference, provided the company stays small! If it grows, it starts attracting the attention of government parasites who act more or less like Mafiosi ‘protection services’. To succeed in Greece, you must be small – or grow so big that you can hire a self-protection department to deal solely with government ministries!

By feeding on the private sector, feeding on its own state commissions in the form of kickbacks, feeding off the money from all the bureaucratic payments & paperwork put in the way of private sector business, feeding on EU business commissions (famously Siemens and defense contracts), the governments of the last 35 years have been so sated with illegal wealth that it actually didn’t matter to them that they sacrificed Greece’s shipping industry – no 1 in the world and Greece’s number one sector – which simply moved its companies out of Greece.

As for large scale investors from outside, most have given up and gone away millions poorer and after 5-7 years, since successive governments quarrel between themselves on who gets the illegal spoils. The same reason applies to European investment funds (highways, etc.) which were infinitely delayed on take-up because of inner kickback fighting. The money was allocated for the Athens metro 25 years before work began! (See Siemens scandals, then …..and now in 2012, when following the decision of the German court that Siemens pay Greece fines of x billion €, Venizelos in the first act of the present government awarded Siemens the contract for the next 2 metro extensions exactly equal to this fine. This was awarded in a contract competition of one aspirant. Which no doubt is a Germy-pleasing EU move, but according to the EU’s own competition rules is illegal).

Finally, Greece has numerous Chambers of Commerce and private sector business chambers and committees. But their hands are tied and they are forced to avoid mentioning the elephant in the room for libel reasons and their own survival!

In sum, there is enormous competency, far-sightedness and energy in the private sector here. But the way forward is always blocked. Greece is much blessed and not a poor country by any means, and there is no reason, given good governance, it could not be the Switzerland of the Mediterranean.
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11-year old has found solution for Greece!

In October 2011, the Ekathimerini published the following letter: 

“Dear Mr Papandreou, 

My name is Theodore Vasilopoulos. I am 11 years old and I live in Athens.

I am writing to you because I have found a solution to Greece’s debt crisis. The government could build a factory that converts solar energy, wind power and waterpower to electrical energy.

Please try to convince countries that we owe money to and ask them if we could pay our debt in energy. It might take a while, but if we have that factory, we might become the most resource-rich nation in the world.

I have listed the advantages of implementing my proposal in point form below.

1) We would be able to pay back our debt for free.

2) We wouldn’t have to buy raw materials from other countries to produce energy (for example coal and petrol).

3) We would get the energy for free.

4) When we pay back the debt, we could continue supplying countries with our alternative energy, making a profit.

5) If the countries appreciate the work we have done, we might be able to stay in the euro.

I hope you seriously consider my proposal. Looking forward to your response.

Yours sincerely,

Theodore Vasilopoulos

Theodore Vasilopoulos will soon be two years older but he will sadly have to recognize that there is still no economic development plan for the Greek economy.

It is simply not understandable why no one in Greece (be that the government, the academia, the media, etc.) is coming up at least with a proposal for an economic development plan. A proposal which could serve as the basis for debate. I have made an appeal to Greek brain power once before and I repeat it again here!

Those who think Theodore’s plan won’t work should come up with a better plan; and again with a better plan. And if Greek brainpower gets its act together, there would probably be a fairly decent plan within weeks. 

But for heaven’s sake, don’t leave the planning up to 11-year olds!

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