Saturday, November 15, 2014

Greece's Return to Growth

In October 2011, that is over 3 years ago, I wrote an article titled "Good news! Greece will grow again!" I was being sarcastic because Horst Reichenbach of the EU Task Force had predicted that Greece would return to growth in... 2014. My question was: "Another at least 2 years of economic decline? Put differently: another at least 24 months of a development which has already tested social peace quite noticeably every month?" My implication was that this couldn't possibly end well.

Well, Reichenbach was right and I was wrong; fortunately!

It now definitely looks like the Greek economy will close 2014 with a positive sign in front of GDP development. And Greek society, despite all the hardships, has not revolted. Not yet, that is.

Since Reichenbach seems to be a rather good forecaster, I quote one of the forecasts which he made at a recent LSE discussion group when he referred to the current social hardships in Greece: "This is really a dramatic situation in which the activities of extreme parties can prosper by offering part of the solutions to these problems and if Greece is not, as a state, and in solidarity with Europe, is not able to address these problems head-on, there will be a very difficult situation".

We now know that the next 3 months will determine the future of Greece. Or so everyone seems to be saying. Which reminds me that I have heard several times in the past that Greece's national fate would be determined 'in the next few months'. So far, the national fate has miraculously survived all those fears. So if I had to bet money, I would extrapolate from the past and predict that the national fate will not be decided in the next 3 months. Hopefully not!


  1. When is the Eurozone's fate gonna be determined?

    I'm betting on Marine Le Pen's upcoming victory in 2017, though Britain's exit from the EU is also promising.

  2. For me that miracle has come to an end for several reasons:

    a) The government can not politically survive when continuing to accept the rules of the troika, and the troika can not change because otherwise too many countries in the EU will oppose.

    b) This will lead to even more political instability and either paralyze the government or end in a revolution.

    c) 2015 most probably will again show need for more money and most northern country can not do that for various reasons.

    d) The number of people suffering in Greece has reached a level that is unsupportable.

    e) The debt avalanche will gain momentum and can no longer be 'restructured' unless there is a default that forces all participants.


  3. Dear All,

    Greece in tatters does no good for anyone. EU, America, Global economy and Greece itself. Growth will continue and the reform will continue. It will simply be done with new managment. Do you actually believe Syriza when they win will throw everything back in the faces of the Troika or Eu? No. I believe that Syriza has already come into agreement with their eu counter parties and simple putting on the theatrical act that they need to do. Samaras and Venizelos are just pissed off because the kissed Merkel's *** so much they thought that she and eu would leave him power alittle longer. They did their job and now its time for them to go home. They have the title of we saved greece and brought it back from death from papaandreous

    Power is a very addicting candy. Yes we will have election, yes we will have the retarded and boring propaganda machine of Greece and International media hype this up to a huge story to "scare the votes" into one or another direction. It will be a very funny act to watch with Syriza coming in 1st with maybe the need to have a 2nd paty to help them form a government. .... dust in the wind. They will then immediately have meetings with troika and counter parties in the eu. Especualy with Mrs. Merkel. I am even betting a debt reduction will occur and prove a huge victory for Syriza and a noose around our necks will be relieved a bit to throw smoke in all our eyes. Yes this will all happen but reforms will continue and change will continue. (anything that is "bad tasting" will be blamed on the previous governement) These things have been already planned. Politicians are not politicians anymore. They are actors who have real advisors telling them what they should do. It is like the movies really. You have the "star" acting and in the movie you believe "wow" he is good, but there is a director telling him what to do.

    This election is nothing more than a relay race. Papandreous pass to papadimos from their to Samaras and from their to Tsipras. The issue is not dropping the botton at the exchange, the rest is just running.

    The economy will grow and continue.