Sunday, February 19, 2012

Austerity? Perhaps...Cheap? For sure!

Flash-back to early 2009. We had just found a beautiful apartment at the outskirts of Thessaloniki and had to furnish it and bring it into shape. In a short time, we got to know all sorts of Greek prices: prices of furniture, household applicances, etc.; cost of hourly wages (of Albanians; one couldn't get a Greek technician); cost of shopping at Gran Masoutis; cost of entertainment at the Cosmos Mediterranean; cost of inviting the greater family to a Sunday lunch at a Nea Krini restaurant; etc.

We still lived in Munich at the time and, consequently, I was comparing everything to Munich prices (Munich is one of the more expensive places in Germany). I asked the relatives/friends of my Greek wife: "How in the world can Greeks afford these prices?"

Lehman had gone under a few months ago. Eastern Europe was feared to fall and rescue plans were being talked about. Nobody talked about Greece and the Southern Periphery. Except one person.

Dr. Michael Huether, Head of the respected Institut der deutschen Wirtschaft in Cologne, gave a talk at a private gathering of bankers and businessmen. His focus was on Eastern Europe and how the risks emanating from there could/should be contained. And, sort of in passing, he made the following comment:

"And, make no mistake, once we have a rescue program for Eastern Europe, we will definitely also need a rescue program for the Southern Periphery".

What? A rescue program for the Southern Periphery? Does this man know how well things are going in, say, Greece? Most banking systems were struggling with the consequenes of bubbles; sub-prime, real estate or otherwise. The Greek banking system did not seem to be involved in any of those bubbles.

And yet - every time we returned to Greece that year, I was simply shocked by the high price level there. When, towards the end of 2009, it became clear that Greece was headed for trouble, too, I kept repeating the same phrase over and over again to everyone who wanted to hear it or not, namely:

"Greece will only have a chance again when she becomes cheap!"

My Greek wife, of course, thought otherwise. She was certain that Greeks had discovered the perfect way of living. Until one day when we were having lunch at a small sea-side taverna in Chalkidiki.

The owner, a Greek born and raised in Germany, had quickly classified us as cheap tourists because my wife studied the prices in the menu. When she saw that a tomato salad went for 8 Euros, she - still politely - criticized the owner for charging such a price. I guess she was expecting him to apologize for that and that he would make a special price for her as a Greek. Instead, he told her - in German and in rather arrogant fashion - that this was the price he charged; period. My wife's emotions rose but she was still controlled when she said that she would pay half that price in Munich. The owner pointed to the beach and the blue sea and asked arrogantly, again in German, whether she would get that view in Munich. And if she wanted that view, then she would have to pay for it or else go back to Munich.

At that point my wife started shouting at him in Greek...


  1. I live in a medium city and prices on basic items are unbelievable, but prices on things like furnishings aren't bad. I know this because we moved here last summer and furnished our entire home from nothing - we arrived with the clothes on our backs, literally. We took advantage of the August sales and furnished the entire place, fully and beautifully decorated, for about 5000 euros. The only things we didn't buy were a refrigerator and stove/oven because they were already here. So I do not think prices on luxury goods are that high here. What kills us is the price of milk, wheat, eggs, sugar, dried beans, aspirin, electricity, gasoline, etc. Clothing and shoes, as I understand it, are also cheap - I haven't bought any in years so I don't really pay attention. We also haven't eaten at a taverna or had coffee in a cafe in close to a year so I couldn't tell you anything about prices there. Our friends who have money to go out to eat say that the prices are down, despite the VAT increase. The only things we buy are electricity, water/sewer, heat, food, and gasoline - and ALL of those except water/sewer are ridiculously and painfully expensive. After my husband's salary was halved, now we can't afford some of those things. His salary covers our rent and utilities. We eat the food that is in our kitchen already, and we walk everywhere. I'm pretty sure this is the case for a LOT of other people here. It sure doesn't look like it though - cafes and restaurants are packed daily, traffic is no better than it was, the supermarket ALWAYS has empty shelves (lots and lots of empty shelves...). Compared to 2009, I'd say the prices on everything except the things we actually buy have probably gone down. The prices on the things we need have doubled in many cases.

  2. (and just in case you're wondering, I did get your point, I was just adding about current price trends hehe.)