Follow by Email

Wednesday, September 2, 2015

Miracles Of The Greek Economy

If memory serves correctly, the Greek economy grew 0,9% in the 2nd quarter of 2015, roughly twice as much as the German economy. Today, I had an experience which might be part of the explanation for that growth.

We needed a new overhead sunshade for our relatively large balcony. I checked the internet and found about a dozen names in Kalamaria. After the first 6 names I gave up: the places were either closed in mid-afternoon or the businesses had shut down. Except for one. I won't mention his real name for reasons described below but I will call him Yiannis.

I felt sorry for Yiannis. His office was below street level; kind of dark; he was sitting at this desk; apparently thinking; no sound whatsoever. And he sat there with a sad face like he had been waiting for a customer for days. What surprised me was that Yiannis showed no reaction whatsoever about a potential new customer coming through his door. We made an appointment for today.

Yiannis took the measures, showed us a few pictures, made some calculations and then made us an offer of 1.300 Euros. He said the actual price would be 1.500 Euros but he lowered it by 200 Euros so that we would save ourselves the trouble of asking other people to make offers. And, incidentally, the receipt would be for only 700 Euros. He made that sound like it was part of his general business conditions. If we accepted his offer today, he would install the sunshade tomorrow.

Yiannis' performance didn't quite make sense to me. On one hand, I assumed that he was literally dying to transact some business. On the other hand, he didn't show it at all. The way he made his offer was like "Here it is; take it or leave it! I don't care!"

We started talking about the economic crisis and how his business coped with it. And then I learned another lesson about the Greek economy.

Never, never ever, Yiannis said, had business been as good as so far this year. They had to work Saturdays and Sundays and still could not handle all the orders which they had received. And all customers paid cash. Why was that so? Yiannis says that people had become so worried about the money they had left so that they decided to spend it on investments which carried value.

Prof. Paul Krugman always argues that governments have to set 'acts of irresponsibility' in order to get people to spend their money again. Greeks apparently proved him correct.

Saturday, August 29, 2015

Polls Attempt To Start Election Fever

The election campaign is on and the first polls are out. Still, it doesn't feel like there is an election fever around; not yet, at least.

I have come across a rather interesting analysis by Dean Plassaras, a commentator with whom I hardly ever agree but who is making a rather convincing case below: 

"There used to be a time that a Greek political party would take over governance via elections for roughly a 2-4 year period and then pass on the mess created as a liability for the next (successor) party. This for years was the political ping-pong played between ND and Pasok as we knew it in Greek politics.

This is no longer the case because of the Troika or Quadriga's presence. In essence (and despite the deep injustice of the whole set up) the government which will take over Greece in 2-4 years from now is guaranteed to have a much better managed economy and a platform to claim future success. Therefore the old model of passing along your mess and poison the well for the successor party does not exist in Greek politics anymore (for as long as Quadriga's supervision of Greece is on - which for purposes of this analysis let's assume it will be for a long time).

The upside of this new Greek political reality is that, at tremendous social and political cost, a sort of financial equilibrium has been achieved. The downside of this new reality is that you don't want to be the party that implements this austerity model because (a) basically you no longer govern without Quadriga breathing down your neck and (b) the damage to your name and reputation would be great and impossible to either ignore or absorb.

Taking all of the above into account, the bottom line is that you should avoid being the governing party in Greece at this particular point in time because your damages/losses would be far greater than imagined. Therefore (and let's invoke Game Theory terms) the whole strategy and tactics must ensure how this burden of "high wear and tear governance" mode is taken over by (more likely forced upon) your opposition.

Therefore it's quite clear that Tsipras' best choice is to allow ND to win the next parliamentary election." 

Whether or not Tsipras will opt for this 'best choice' remains to be seen. He did have a similar option back in December of last year. Had he not forced early elections upon the country, he could have gathered support while in opposition for another year (or more) while the economy would have recovered a bit more and become a bit stronger to cope with SYIRZA's government style. Back then, immediate power seemed more important to Tsipras than a strategic take-over. Chances are that he will now again go for power even if he eventually collapses under the weight of responsibility.

Monday, August 24, 2015

Negative Personal Economic Indicators

Having returned to Greece today after an absence of 4 months, I immediately checked my two personal economic indicators for Greece: (a) traffic on Vasilissis Olgas, the major access road to Thessaloniki from the South and (b) the number or cargo ships in the Thessaloniki harbor.

Traffic on Vasilissis Olgas was very light and I couldn't spot one single cargo ship in the Thessaloniki harbor.

Greece seems to be in real trouble!

Saturday, August 15, 2015

"So, In The End, It Depends On The Greeks!"

I was very much impressed by the brief statement to the press ("doorstep" is the new lingo for it) by Finance Minister Euclid Tsakalotos after agreement on the 3rd bail-out program was reached. I draw particular attention to the last paragraph which I put in bold. That paragraph is the key to the success or failure of any program. 

"After six months of very difficult negotiations with lots of ups and downs, we finally have an agreement. This agreement is one that many people have worked very hard for. I would like to thank from the bottom of my heart the people in Greece and the technical teams, the advisors that have worked for this deal, and also the institutions. Many Europeans have worked for this deal, whether representing their country or within the institutions themselves. And this deal is something we hope will take Greece forward. It takes Greece forward in the sense that the financial system should be much more stable from now on. There is a promise of recapitalization of the banks without any depositor having any bail in or anything to worry about. So, the process of reversing the negative effects of capital controls will start very quickly and will speedily return the banks to where they were before and hopefully on a far firmer footing.

This deal, we have never hidden the fact, has many opportunities. It has the opportunity for the Greek people to reform their public sector, to address the issues of corruption, to address the issues of tax evasion and a number of very important structural reforms. At the same time, it is a deal that has many problems for many social groups. How we will address those problems depends on how the government presents proposals that the institutions are willing to listen on the economy as a whole – there will be a development plan which will be presented in March 2016. At the same time, there will be plans for instance for the agricultural sector, for farmers, much before that to hopefully develop the agricultural sector. 

So, in the end, how good this deal is, it depends on how the Greek society, the Greek state, the Greek economy, social actors, economic actors respond to it. Any deal is only as good as what you make of it. Let’s hope that the Greek people will be able to make the best of this deal, to make the best of the reforms and the ability to reform and mitigate any negative consequences that surely exist within it."

Friday, August 14, 2015

Have Inflation "Repay" Greek Debt And Growth Reduce Indebtedness!

"The Greek Godfather would say to the official creditors something like this: 'I’ll make you an offer which you cannot refuse. I will do you the favor of repaying your loans down to the last Eurocent. Not today, but in 50 years from now. All I ask you in exchange is that I don’t have to pay interest during those 50 years. That will make a world of difference to me and you will hardly feel it'."

Wednesday, August 12, 2015

Debunking Paul Krugman, Joseph Stiglitz and Jeffrey Sachs

"As Tsipras moves grudgingly to the center and purges his government and his party (if he manages it) of people like Varoufakis and Lafazanis, it is high time for their cheerleaders to look beyond ex cathedra macroeconomics. They should have the honesty to admit that in the hands of such men, an exit from the euro, which Greeks never voted for anyway, either in January or in July, would have been an unmitigated catastrophe, dwarfing the costs even of the bad deal struck on July 13. And they should know by now that the best hope of building the institutions capable of supporting long-term growth in Greece lies within the eurozone, not in the desperate disorder that would sweep the country outside it."

The 'cheerleaders' whom Yannis Palaiologos refers to in this excellent article are the American economy professors Paul Krugman, Joseph Stiglitz and Jeffrey Sachs. Those are certainly 'experts' whom the current Greek government should beware of!

PS: It is very worthwhile to read the comment section of this article!
PPS: Palaiologos' book "The 13th labor of Hercules" is very well worth reading!
PPPS: And here is another excellent article by Nikos Kostandaras!

Sunday, August 2, 2015

Leading Green Manufacturer Started By A Kid From Crete!

"Did you know that out of all the ethnic groups in the United States, the Greek-Americans have proven to rise above the rest and become number two in business success? Why is that, do you think? Isn’t it about time we start uncovering these Hellenic gems in our society and let their shining glory lead us by example to follow, both locally and in the rest of the world – specifically and most importantly now, in Greece?"

This excerpt comes from an article about the current CEO of an American company by the name of Earth Friendly Products. The interesting aspect is that this CEO, Kelly Vlahakis-Hanks, is half-Greek and half African American. Her father, Eftychios Van Vlahakis, had founded the company in 1967. He died in 2014 at age 89

It really pays to google the background of the family and its company. A classic Greek-American immigrant story: born in Crete in 1935; emigrated to the US at age 18 with 22 dollars in his pocket; odd jobs to survive; clever enough to go to college; eventually PhD degree in chemistry; lost his job at 31 and took this opportunity to start his own business as a one-man show; today the leading green manufacturer of cleaning products in the US with world-wide distribution (well over 100 MUSD in sales and over 300 employees). Below are selected links but there are a lot more on Google:


The family's story is so colorful that even a movie was made about it: A Green Story. One wonders what this family would accomplish if, today, they decided to move the company to Greece and to conquer the world from there (actually, the CEO implied that they might start a manufacturing facility in Greece 'if the incentives were right').

It shows that the CEO, daughter Kelly, had majored in communications in College and that she has broad experiences in PR, international media and publicity management. She presents her family, her company and herself in an absolutely smashing way!

And a small footnote: it wouldn't be a Greek family story if it didn't also include a bit of drama. It took Kelly only 6 months after their father died to part ways with her half-brother who until then had been the company's president. One does not get the feeling that it was an amicable separation. Since her half-brother is about 15 years older, one can only assume that he had contributed more to the company than Kelly. And now Kelly motioned a Temporary Restraining Order and Preliminary Injunction on its claims for trade mark infringement and unfair competition. In short, sister and half-brother are now suing each other. At issue is an alleged trade mark infringement by the half-brother who started his own business after leaving the company (even though he hasn't sold anything yet). The threat to Kelly's company seems limited because at issue is a business section of the company which registered sales of USD 38,300.37 in 2013, USD 47,528.09 in 2014 and USD 40.278,.75 in 2015 (out of well over 100 MUSD in total sales). Kelly, the publicity management specialist, makes sure that this story does not show up in any of the media reporting about Earth Friendly Products and/or the Vlahakis family. Of course.
the leading green manufacturer of cleaning products in the US - See more at: http://greece.greekreporter.com/2012/01/30/van-vlahakis-we-either-become-a-colony-of-germany-or-stay-independent/#sthash.9s2u64kh.dpu
the leading green manufacturer of cleaning products in the US - See more at: http://greece.greekreporter.com/2012/01/30/van-vlahakis-we-either-become-a-colony-of-germany-or-stay-independent/#sthash.9s2u64kh.dpuf