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Thursday, April 17, 2014

Reviewing Horst Reichenbach's Prediction of 2011

I came across an article titled "Good news! Greece will grow again in 2014!" which I had posted on October 30, 2011, i. e. 2-1/2 years ago. At that time, I meant to be a bit sarcastic because the prospect of another 2 years or more of economic decline didn't really strike me all that positively. Today, I must admit that Horst Reichenbach, the Head of the EU Task Force who had made the above prediction, was right and that I was wrong when I expressed this warning at the time: "Or does anyone really believe that social peace can survive another 24 months the experiences of the last 24 months"?

Life is all about perceptions. What was a terrible perception 2-1/2 years ago (i. e. living another 2-1/2 with economic decline) is nowadays being turned into a positive perception (i. e. there may well be growth in the first digit after the zero this year). 

If foreign creditors remain happy as long as Greece has surpluses in the primary balance and in the current account, and if Greece can adjust to living with unemployment above 20% and one-third of its population in very dire straits, this thing can go on for a very long, long time.

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