Several months ago, the Athens office of McKinsey published the "Greece 10 years ahead report". When I posted on it, one Greek observer commented to me that "it got about 2 minutes' worth of fame". I suggest that it definitely deserves more than 2 minutes' worth of attention!
In a nutshell, the report shows how 500.000 new jobs could be created in Greece over the next 10 years adding 50 BN EUR to the GDP. Around 100 projects are listed. I would suggest to the Greek government that this deserves some attention. Perhaps there are even other reports which have similarly interesting ideas!
My recommendations to the Greek government:
1. Read the report.
2. Take the first 10 projects which appear most interesting.
3. Implement them immediately and create 50.000 new jobs during 2012.
That would seem to make a lot more sense than seemingly endless debt negotiations which will not lead to any new economic activity in Greece.
In a nutshell, the report shows how 500.000 new jobs could be created in Greece over the next 10 years adding 50 BN EUR to the GDP. Around 100 projects are listed. I would suggest to the Greek government that this deserves some attention. Perhaps there are even other reports which have similarly interesting ideas!
My recommendations to the Greek government:
1. Read the report.
2. Take the first 10 projects which appear most interesting.
3. Implement them immediately and create 50.000 new jobs during 2012.
That would seem to make a lot more sense than seemingly endless debt negotiations which will not lead to any new economic activity in Greece.
I would firstly like to say that the situation in Greece worries me. Whatever happens, the sun will still come up and the olives ripen.
ReplyDeleteAll I can say is that any sensible employment is a step up. In the position that most of Western Europe finds itself in, there is not much going on in the job market - in the last three months or so, the number of vacancies in the Netherlands has declined by around 10% and from two years ago by around 50% (rough stats from the vacancies placed on Werk.nl- wholly unscientific of course). (So are humans, by the way, so don't complain when the science doesn't work!)
There is another way: make your own job. I have done this several times, and I can recommend it to anyone struggling to find a job. In many economies, it is the only sensible answer to large-scale umemployment in the periphery of Europe.
The Executive Summary is 70+ pages.
ReplyDeleteEven when people aren't in crisis and/or don't know whether they will have a job in the morning my experience is they're not inclined to read 70+ page summaries.
However a 10 page large font "Recommended Action Plan" would be read, I'm surprised there isn't one. Perhaps there is but not in the public domain - otherwise more people might read it.
Can't see Greece competing with India and Brazil on generic pharma. And would the big European brand pharmas (GSK, AstraXeneca, Roche, Bayer etc) allow that anyway - probably not.
One of the themes in my blog is that the Greek economy will require a period of "protection" to get its act together and to become more competitive. "Infant-industry protection" is the technical term for that. Such protection can have 2 consequences: it will either lead to a more competitive economy or it will be misused to cover-up domestic inefficiencies. That process must be managed. I have described this in the link below.
ReplyDeletehttp://klauskastner.blogspot.com/2011/09/endgame-for-greece.html
Other than that, I only need to take a pad of paper, walk through a Gran Masoutis and write down all imported consumption products which could be just as well produced in Greece if the economic framework were "right". Why should my tootpaste in Greece be produced in Brazil, exported to Germany and from there to Greece?
Import substitution has got to be the first priority because that can be implemented very quickly. And in a second stage one could attack all the "new" things which McKinsey & Co. recommend for Greece.
I've read your Endgame post. I have one question, why should the EU give dispensation to Greece to close its economy, create Free Trade Zones etc; and not countries such as Hungary, Bulgaria & Romania.
ReplyDeleteGreece has had almost 40 years of democracy, it's enjoyed the largesse of the EU for 30 years, and it knowingly lied its way into the EMU.
By contrast Bulgaria, Romania and Hungary freed themselves from the shackles of communist dictatorship 20 years ago, and they've only enjoyed EU largesse for 8 years in the case of Hungary and a mere 5 years in the case of Bulgaria and Romania. And their economies are being clobbered by the disaster that Greece has created largely by its own malfeasance, with some help from out-of-their depth EU elites.
In my opinion there are more than a few other EU countries (eg the Baltic states) that are more worthy of consideration for a suspension of "the guarantee the free movement of goods, capital, services, and people" than Greece.
Greece should receive no special consideration, otherwise the EU might as well shut up shop.
Greece would be better off if it left the Euro and the EU and operated within the European Customs Union, as Turkey currently does. Then it would have its own currency, and it could have Free Trade Zones etc. Bulgaria and Romania might also do better under such an arrangement.
Okay, that's a very valid question. Almost a year ago, a Viennese university professor asked in an interview "Why should Greece concern us?" After corresponding with him, I had to admit that, if one asks the question that way, it is very difficult to answer it convincingly. Perhaps I wouldn't give Greece much of a thought if I weren't married to a Greek and spent so much time there.
ReplyDeleteWhat I propose does not need to be seen as an exclusive offer for Greece. It is a suggested approach to deal with imbalances of trade and service flows within the Eurozone. Overall, the Eurozone has a balanced current account, so that is the good news. Within the Eurozone, there are those dramatic imbalances which are the cause for those huge cross-border debts (much more so than budget deficits). I guess I have posted on that a zillion times. The irrefutable mathematical fact is: without deficits in the current account, cross-border debt cannot build up.
http://klauskastner.blogspot.com/2011/12/finally-importance-of-current-account.html
http://klauskastner.blogspot.com/2012/01/four-eu-freedoms-two-too-many-for.html
http://klauskastner.blogspot.com/2011/11/greece-current-account-and-foreign-debt.html
Why only the “Eurozone” and not the “EU”? Because this issue of current account imbalances leading to the necessity of transfer payments is primarily relevant in same-currency economies (like, for example, Germany where the West still has to transfer close to 100 BN EUR annually to the East to replenish their hole in the current account). Same-currency economies can make necessary adjustments only via deflation and that is extremely painful. The other countries can make necessary adjustments via devaluations and that is much more tolerable.
But I have to agree that Greece is being overly “handled with care” by everyone. Probably has to do a bit with the fantastic ability of Greeks to put themselves into the victim’s role and blame others for their self-caused misfortunes. As it seems, that strategy is finding quite a few followers on the EU-side. When my wife exaggerates about the undeserved suffering of Greeks, I remind her that Spaniards, Portugiese and Irish have probably suffered more so far and one doesn’t nearly hear as much about them as one hears about Greeks…
http://klauskastner.blogspot.com/2011/11/reality-checks-for-greece.html
http://klauskastner.blogspot.com/2011/11/humiliation-of-greece.html
And the last 4 paragraphs of this post didn’t make me a lot of new friends in Greece…
http://klauskastner.blogspot.com/2011/10/greece-versus-former-yugoslav-republic.html
I'll concede your point about the Innerzone having specific issues related to trade imbalances. But much of the export business in the small Outerzone states is conducted in Euro's. Greek banks are reported as holding more than 25% of Bulgaria's lending assets, and one-sixth in Romania and Serbia. I'm not a banker, but I would think these things do matter.
ReplyDeleteGiven you live in Austria you would be even more aware than I am of the effect that the Eurokrisis is having on the EU Outerzone and beyond. A couple of weeks ago there was talk of a second round of "Vienna Initiative" medicine, I'm not sure what happened to that. It seems that Erste, Unicredit and SocGen are the big players in the region, and because they're struggling with the Eurokrisis and Basel III - many other countries (in and out of the EU and the Eurozone) are suffering from a credit squeeze.
Greece is a tin-pot country of 11 million people that's holding the rest of Europe to ransom. This is having an impact on the confidence/trust of an already stressed global financial system. So when will it be time to "say enough already" and tell Greece to revert to its own currency (Drachma, Alexander, Elgin - whatever). The EU would of course help Greece in the transition but future EU money should be conditional on reform, same for Portugal, Bulgaria and Romania.
BTW, I spent time in FYROM prior to and after the Kosova War, they're no better than Greeks. But you do have a choice of bandit - Bulgarian or Albanian - and all bribes must be paid in Euros :)
Given your connections to Greece, you might be interested in this http://geocurrents.info/cultural-geography/linguistic-geography/the-turkic-speaking-greek-community-of-georgia-and-its-demise
Geocurrents has been running a series on the Caucasus, the Greeks in the region get several mentions.
I've also read of Greek communities in the former Soviet Union who are members of the Greek Uniate (Catholic) Church. I don't know when or why they went there - but nor have I looked into it.
Anyway "enough already".
I suggest you read more history about Greece, and its not a tin-pot country, like yourshelf "tin-head".
DeleteGreece fought Italy and Germany for Oct1940 until May1941 defending free world. Greece joined EU and opened its market free for EU, becouse of this, industry in greece collapsed after 1985 on behalf of european dubing prices.... Because of common EU agriculture policy, greece stopped producing many of its fruits and cotton (nowere else in EU produced)... All of machinery and most of weapon bought by EU firms like SIEMENS etc by corrupting greedy politicians in greece....
EU statistics covered a lot of shit !!
Greeks have the largest ship fleet in the world.
Greeks are large depositors in swiss banks.
ARE YOU STILL BLAMING GREEKS ?? SHAME ON YOU !!
so i say to you: Anyway "enough already"
Read history of eventual time, for any point, to discover what the Greeks offered to human kind...
And how we are paid back, by hatred jealousy, like your writing appeared to me.
p.s @ kleingut, i admire the attitude of your writings and the correctness in positions....
Again, your arguments about Greece's holding the rest of Europe in ransom are rationally convincing. One can't really argue against that.
ReplyDeleteNote, however, that it takes two to make a ransom work: the one who does it (Greece) and the other one who lets it be done to him (EU).
I have stated over and over again that Greece is entirely responsible for the mess which she created up to 2008. That was a domestic mess in Greece. The fact that this has now turned into the risk of a nearly global financial Armageddon goes entirely on the account of incompetent EU-elites. Anyone who has ever been involved with sovereign reschedulings (I was directly involved with the Chilean/Argentine reschedulings in the 1980s) knows that an external payments crisis of a country (i. e. a run on a country's debt instruments) must be stopped in its tracks (that would have been early 2010 at the latest in the case of Greece). And risk takers MUST remain risk carriers (that, and not a haircut, is what is required from banks as PSI). The governments (EU/IMF) take care of Fresh Money.
Again, I have no disagreement with your views, only a closer personal connex to Greece.
http://klauskastner.blogspot.com/2011/11/jaccuse.html
http://klauskastner.blogspot.com/2011/06/how-not-to-manage-sovereign-debt.html
ok i can accept many criticisms of Greece,as a greek.The reason that Germans and others should bear some responsibilty and help Greece is that they have been a,and i stress a cause ,of the failure of governance in Greece.German companies have been bribing and corrupting greek politicians for decades.They are reaping what they sowed.northern Europeans are happy to claim how little corruption excists in their homelands but are happy to cause it for the sake of their export markets.....
ReplyDeleteWhat fantastic logic - impressive obfuscation of reality to redirect blame back out towards anyone but those where true blame should be.
ReplyDeleteCan you elaborate? Who bears the true blame? Not clear from your answer.
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