The Future Of Greece

The Greek Analyst is an anonymous Greek commentator who has almost 90.000 followers on X. While his observations and commentaries are generally of excellent quality, he has now outdone himself with this article about the Future of Greece. It is one of the best, if not the best, description of the 'Greek Challenge' which I have ever read.

He begins the article with the following introduction:

"There’s something deeply idiosyncratic about Greeks that makes us love the present. We are thrilled by the immediacy of life. We thoroughly enjoy living in the now. And we are great at improvising on the spot and manoeuvring our way out of tricky situations. It’s one of our greatest strengths. Unfortunately, it’s also one of our deepest weaknesses. While we might be great at enjoying (and surviving) the moment, we are notoriously terrible at planning beyond it. The result? A country that keeps inheriting the unintended consequences of yesterday’s short-term decisions."

He then showcases 3 wonderful examples to demonstrate his point, only to conclude the following:

"The future of Greece will not be decided by how cleverly we navigate the present, but by whether we can finally look beyond it. Our cities, our coasts, and now even our new digital foundations all bear the marks of a nation that has mastered improvisation but is neglecting preparation. Each new generation inherits the outcomes of our creativity; it is time to stop inheriting the burden of our haste too. To change our predicament, we need to think long-term. To build Athens not for the following tourist season, but for the next century of citizen living. To protect our precious islands and coastal areas not as fleeting assets, but as enduring treasures. To pursue technological progress in the age of AI not as spectacle, but in a structured and viable way that builds lasting value for the country. Greece will be both smaller and weaker if it continues on reaction mode. To avoid such fate and ensure a better destiny for our country, we need to augment improvisation with intention, and crisis management with a culture of preemptive planning. At the end, the real miracle will not be our ability to survive the moment. It will be finding the reservedness to plan for the next one."

The rest I will not quote here for fear that I might be infringing on copy rights.

OPEN THE ABOVE LINK!

Is Greece Being "Ripped-Off"? (Trade Deficit)

I had started this blog in June 2011. Early on it became clear to me that one of the greatest problems of the Greek national economy was the current account deficit. The two principal components of the current account are trade and services. Greece has historically had dismal trade figures because it imports so much more than it exports. If one excludes oil and shipping (which distort the figures), Greece currently imports about €65 billion. The highest figure before the crisis had been €47 billion (2008). Then, Greece imported about 3 times as much as it exported. Today, Greece imports 'only' twice as much as it exports. The trade deficit is currently about €36 billion.

On the other hand, Greece has a very positive balance (€23 billion) with services (mostly due to tourism) which brings the total current account deficit to about €15 billion. That represents about 7% of GDP, which is not as high as the 15% before the crisis (2008) but certainly much higher than the 3% which the ECB considers as an informal warning signal.

Greece and the US have something in common: high trade deficits, positive services balances, overall very high current account deficits. A current account deficit is, accountingwise, a transfer of domestic assets into foreign ownership; a transfer of national net worth from Greece to the rest of the world. Donald Trump has invented the term "being ripped-off by the rest of the world" for this situation. This is obviously a paranoiac interpretation of the situation. The simple explanation is: the Greek economy depends so much on imports because of insufficient domestic production/supply. And it does not generate sufficient external revenue (exports, services) to pay for those imports. Thus, Greece has to borrow offshore to finance the current account deficit.

The US, too, needs to borrow huge amounts offshore to finance their current account deficit. In consequence, the US is nowadays the world's largest debtor with net external liabilities of about $26 trillion.

Within a month of starting this blog, I published an article comparing the Greek and American economies ("Greece - A Comparison with the USA"). One aspect seems indisputable: very high, structural and one-sided current account balances cannot go on forever. Warren Buffett once said: "Everything that can't go on forever will end". For Greece it ended with a sudden stop in early 2010. Given the seemingly endless wealth of the USA, one would be inclined to think that the US can go on forever carrying huge current account deficits. Alas! Donald Trump has decided to bring them to an end.