Tuesday, August 20, 2013

Leaving Austria and Returning to Greece

On the eve of our return to Greece, I am reflecting on the experiences I have had in Austria in the last 2-1/2 months.

Off the bat, if there is indeed a Eurozone crisis somewhere out there, it has not yet entered the minds and hearts of everyday Austrians. If there are debates elsewhere about how the Eurozone could survive, they certainly haven't crossed the border to Austria. Those who have an opinion about the Eurozone crisis consider it as a self-contained problem of 'those countries in the South' and they generally feel that 'we shouldn't send any more money there'. An Economics professor from Vienna asked in an interview 'why should we care about the Greeks?' and if there was any reaction to that comment, it escaped my attention.

Austria has nationalized 3 second-tier banks in the last few years, all banks which no one would miss if they no longer existed today. Resolving those banks would have resulted in a significant structural improvement in the Austrian banking sector (overbanked!). But that would have required tough political decisions. When all is said and done, the cost to Austrian tax payers will be somewhere between 15-20 BEUR (compared with an annual budget of about 75 BEUR). The South should hope that the banking union gets delayed because, otherwise, they may have to finance part of that damage. And what does the Austrian tax payer say to that? Not much. 'Happy is he who forgets', says an Austrian operetta.

The second largest city (Linz) is in a battle with a Viennese bank (owned by NY financiers) over 500 MEUR losses stemming from a derivative deal which had gone sour. And the reaction of the Finance Minister? 'The tax payers will have to pay either way. Either by bailing out the city or by bailing out the bank'. Now that is what I call pragmatic!

The state of Salzburg was not quite as reckless. Their losses from derivative speculations were only about 400 MEUR. The interesting thing is that no one has yet figured out where those losses show up (or will show up in the future). My guess? Tax payers, of course.

A national election is coming up. One week after the German election. Quite possibly, Austrians will wait to see how the Germans voted and then vote the same way. The Austrian equivalent of ND/PASOK is ÖVP/SPÖ. Every Austrian government since 1945 has included one of these two parties and much, if not most of the time they both ruled together in a Grand Coalition. Despite all that, the Social Democrats are campaigning for 'more social justice' and the Conservatives are campaigning for 'more free enterprise'. As though neither of them had ever been in government.

The election campaign is literally boring. How could it be otherwise? There will be the same Grand Coalition after the election as there was/is before. The only open question is whether the Chancellor will be a 'Black' or a 'Red'. Whichever way it turns out, it won't make all that much difference because both parties have learned over the decades that it is much smarter to work together at the expense of the country instead of competing with each other for the benefit of the country.

What are the big news? Well, there are at least half a dozen of major political scandals which are keeping the courts busy. The issues involved are mind-boggling cases of corruption, bribery, theft, etc. But since both parties have their fair share of the scandals, neither of them has a keen interest in getting to the bottom of all of this.

The teachers' union has attended 33 rounds of negotiations with the government so far. At issue is, among others, the extension of working hours from 20 to 22 hours per week. Both, ÖVP/SPÖ finally plucked up their courage and announced that they planned to go ahead with the new law even without the union's consent. The unions are warning that a Civil War could break out...

It's going to be hard for Greece to top the experiences which I had in Austria in the last 2-1/2 months but I have all the confidence that Greece will...

1 comment:

  1. Two observations.

    Life would be a lot easier for Greece - and the Eurozone - if Treasury bonds were at 5%.

    With 85 billion issued every month, the markets would be piling in. They would be getting a stable and secure AAA rated bond at only 5% - and they wouldn't have to play the European markets to scratch a living.

    Everybody would be happy.

    I have a suggestion for the Austrian teachers' unions. Or is there only one ;-) It is this: do your work and show that you care for your kids only do not mark any state exams or deal with state affairs. This comes as a response to the train drivers' strike in Norway in the early 80s. Everybody went to work as usual. Including the railway staff.

    But they didn't check the tickets that day.

    So think of a way that a strike hurts the people it's intended to hurt. That way you'll get support and you'll not have the guilt of not teaching those who need it most.