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.


  1. You'll know if the picture of flourishing business is real if you don't get your sunshade before you return to Austria.

    In the mean time, I doubt the story that Greeks would be eager to get rid of their physical cash. I expect the eagerness to spend and invest increased circulation of electronic money instead.

    As for bargain hunters with cash, they'll delay until they feel GR economy is near the trough or demand better than deals with a nominal 13% discount.

  2. " I doubt the story that Greeks would be eager to get rid of their physical cash"

    Not their physical cash. Most Greeks spent their money on investments which carried value using their debit cards. There were rumours that bank accounts with more than 8000€ (in some other cases 20000€) would be subjected to bail-in, and almost everyone who found themselves in such danger tried to protect themselves.

    I did it as well. Self-employed have to pay the VAT to the tax-office once every three months (January, April, July, October) from the first to the last day of these months. Under normal circumstances I would pay the VAT after the 10th of July. This July was not normal, so I paid it on July 1st. It was a mitigation strategy. :-)

    I have heard numerous stories from these days: from employees unpaid fo months who were paid as their bosses feared losing their working capital, to people who have spent in the supermarket ten times as much as they would occasionally spend. In general, we can say that the period from 26/06/2015 το 13/07/2015 was the period when everyone paid everyone.