tag:blogger.com,1999:blog-8472000809052809952024-03-08T08:44:06.924-08:00Economic Insight GreeceVassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-847200080905280995.post-6895866825522874562012-06-15T01:07:00.001-07:002012-06-15T01:07:30.665-07:00Political sports in GreeceDuring my initial visits to Greece I was always impressed with the level of political activism. Everyone had an opinion and almost everyone supported a political party. Come election time the streets would be filled with people waving flags enthusiastically, topics would be debated and insults would fly. People sitting in the cafés would count the political points that their team made during some panel discussion. And they would debate the pros and cons of the political parties with the same enthusiasm as they would discuss the starting line-up of their favourite football team. As if politics was a sport. <br />
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And that is what it is in Greece - a sport.<br />
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In Australia the weekend would be devoted to actual sports. The TV stations would vie with each other to show different events. Switch to any channel and you could watch the tennis, Aussie rules football, golf, swimming or even lawn bowls. Now with the run-up to the Olympics I am sure its all Olympic fever, with different channels devoted to broadcasting different events to provide 100% - 24 hour coverage.<br />
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Here in Greece, aside from the Olympic torch ceremony, the Olympics is forgotten. At the moment of course yes people here are watching the EURO championship. But its only since Greece won in 2004 that Greeks paid the same interest in their national team that they would to their local soccer teams like Olympiakos or AEK.<br />
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The major sport however has always been politics. The weekend has even more talk shows with politicians talking from the morning - straight through to midnight. Want to watch a sporting event? Switch over to France's TV5 and watch their rugby, otherwise forget it.<br />
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The only sport to watch is politics. The problem with treating politics like a sport is that political discussion is reduced to political point scoring. Instead of discussing 'what' makes a good political leader it's reduced to numbers from polls, who scored the most in a poll of who is the better leader.<br />
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To get the most points is simple - Say whatever you want to get the points. The criminal action is that no one, especially Greek journalists ever challenges them on how they will implement their promises, do any fact checks or follow up on past promises. One TV station SKAI is pretending to evolve, they asked SYRIZA how they would pay to implement their promises such as hiring 150,000 new public servants, the response was - "We're not saying because other parties will steal our ideas." How very mature. I say pretending to evolve because just asking the question is not enough, a real journalist has to follow up. So when they ask the same question to New Democracy and they respond "we will implement wide ranging measures", a journalist has to follow up and ask "What specific measures" and "How much much from each measure - and who has costed it" etc... and then fact-check it from an independent source.<br />
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Of course this is all new to Greek journalists. One of the measures implemented as a result of the much hated Memorandum - Which all parties blame as the source of all Greece's ills and present situation - is that Greece actually produce a central budget, with forecasts and reviews. Instead of having each Ministry handle its own money and spend it on where it wanted without any oversight, and just simply spend. So i will forgive them not knowing.<br />
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As a result of this realisation the façade of "political awareness" has worn off, and not just for me, but for many people. Even though voting is mandatory, in the last election around 30% of eligible voters did not turn up to vote. But for many who used to believe in the façade it has turned to disgust with the politicians and their parties. Quite a few politicians have switched sides, PASOK politicians are jumping ship like rats of a sinking boat and are trying to get on-board the far left party SYRIZA. They of course claim that they are doing so out of personal conscience. But if that was the case - they would stay in their party and change it from the inside, not leave because they fear losing their seat. And the same could be said of the other politicians leaving parties like LAOS to go to ND.<br />
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And just like in sports, these are treated like sports player transfers. The "numbers" that could be gained as a result of this star transfer.<br />
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Talk of ideology or even a plan for Greece - forget it.<br />
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This is why i see no ray of hope in these up-coming elections. There is no in depth discussion of what really needs to be done. No balancing of the pros and cons. Instead its all talk of appeasement.<br />
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SYRIZA talks big and makes promises - but at the moment the leadership is shitting themselves. They might actually win and that's something that they don't want. Because they know that there is no way that they can actually deliver on anything that they promised. Which is why in the dying days they are fuelling fears saying that "We are no euro fetishists" hoping to scare some voters away from them. In opposition and in control of the Unions they know that they can wield much more power without any responsibility.<br />
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New Democracy on the other hand. Wants to show itself to be responsible, and that it will take leadership which its base demands it take. But you can see it in their eyes... If we win, lets just delay things and hopefully something will happen, like winning the Spanish lottery and we won't have to make any decisions, after all that is what PASOK did and look at where they are now.... oh shit!<br />
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<br />Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-2291658555685792222012-04-04T00:32:00.000-07:002012-04-04T00:32:27.881-07:00Man shoots himself in the head in public square: Athens, GreeceGreece is in a state of shock this morning when it heard the news that an elderly man walked into Athens' Syntagma square - the heart of Athens, sat down on a park bench and calmly drew a gun shooting himself in the head.<br />
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Syntagma square situated in front of Parliament House has also been the site of all the protests against the IMF and the Memorandum of Understanding that many see as the source of Greece's current problems. All this a mere hundered meters from the Ministry of Finance, and the Ministry of Development, Competitiveness & Shipping. I can't help but remember that the employees of the Finance Ministry recently rejected the latest PSI agreement which the government insisted would help Greece (only because they couldn't be bothered to do something earlier) so that they can save their extraordinary exhorbitant pension scheme (which is guaranteed by the government anyway) - while low income (read non public sector) pensioners were the first to have their pensions slashed.<br />
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Stepping back from the tragedy i cannot say that i am shocked. Living in Athens for as long as i have and having seen what i have seen - this was to be expected. In fact Greece is lucky that it hasn't happened sooner.<br />
At a recent Health Conference organised by Boussias, health care providers from all around Europe gave solutions to Greece's problems in healthcare as well as sounding a warning for potential problems that arise from a crisis. Worldwide, whenever their is a recession suicides have increased. Except in Greece (based on stats up till 2011). Suicides have remained fairly stable and have not shot up as they have done in other countries. Where Greece is similar is less traffic related deaths as the price of petrol increases (close to 2 euros now) and increases to the price of alcohol.<br />
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This tragic incident may be the warning bell that the crisis is only really now starting to hit Greeks. Up until now the family safety nets have saved many Greeks hitting rock bottom, but now their savings are nearly empty. Revised tax laws are taxing unemployed families, with no source of income, merely because they are able to pay the rent. Many unemployed are divulging themselves of their cars to save themselves being taxed an assumed income based on the worth of the car. (Your car is a 1.6 litre and valued at 6000 euros therefore to maintain that car you have a valued worth of x amount - pay more tax in addition to road tax, license fees and insurance. But lets face it for every job that requires a car there are 800 people applying for it, better to give up and save the money for food.) So many are also choosing to live on the streets to avoid more tax.<br />
What was also revealed at the conference was a rise in HIV rates amongst drug users. Health care volunteers who go out on the streets told me that many have purposely shared needles with a known carrier so that they could receive disability pension and receive healthcare. However in 2010 there were reports that as a result of lack of beds for HIV carriers, hospitals would re-categorise them to deny them care.<br />
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With politicians refusing to act and intent on looking to the past to lay the blame on someone, the situation in Greece will get worse. This suicide, in so public and so meaningful a place can be interpreted as a message to these politicians to wake up.<br />
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While politicians bicker - people and the very country is dying.<br />
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This article also appears <a href="http://www.economia.gr/index.php?dispatch=pages.view&page_id=60">here </a>Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-12319039112166319382012-02-21T02:07:00.000-08:002012-02-21T02:07:40.856-08:00"Greece Should default on its debt and leave the Euro" - DebateNouriel Roubini has arrived in Greece to take part in a debate tonight where the question will be asked "Greece Should default on its debt and leave the Euro".<br />
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This statement has been on the lips of many economists and politicians since the beginning of the crisis. It has brought together Euroskeptics and Euro-Unionists. That Greece must leave to save the Euro and that Greece must leave to end the Euro experiment. Its enough to throw ones hands up into the air, sigh and go out for a drink - if only they hadn't raised VAT so high denying us of this small pleasure.<br />
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Debating for the affirmative will be well known economic celebrity Nouriel Roubini and Costas Lapavitsas.<br />
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Debating for the negative will be Denis Mac Shane and local economics truth teller, Miranda Xafa.<br />
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The debate moderator will be Zeinab Badawi of the BBC.<br />
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Though a Marxist-Leninist, by all accounts Costas Lapavitsas is someone that you can talk to and is open to dialogue so he should be interesting to listen to. Of course the communist party here in Greece is all for Greece leaving the Euro and that Greece should default, and withdraw from the capitalist system and has praised the North Korean utopia.<br />
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Miranda Xafa worked in the IMF during its most turbulent times from 1980 to 1990 and again in 2004 to 2009. She is well known for her blunt talk and saying the truth. In February 2011 she caused an uproar when she stated that "In order to get the country out of the Memorandum, the government and opposition should leave the doubletalk and come to a national agreement to end the crisis." Months later....<br />
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So the debate should be interesting to follow. If you won't be able to make it, <a href="http://www.economia.gr/index.php?dispatch=pages.view&page_id=2123">Business File</a> will be there and hope to report back on the events.Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-85694331388880995862012-02-17T06:52:00.002-08:002012-02-17T06:52:44.851-08:00Greece horoscope in the Year of the Dragon2012 heralds the Year of the Dragon in Chinese astrology, the most auspicious of all animals, making this a year of momentous occurrences and good fortune, (except for those born in the year of the Dragon who will see a tough year ahead). This however does not necessarily equal good financial fortune, that is more commonly associated with the year of the Pig which passed us by in 2007, and we all remember what followed in 2008.<br />
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So what does 2012 hold for Greece, where the markets are looking positively bearish - if we are to continue with the animal analogies. Well, according to Chinese astrologers, Greece certainly has a lot more hardship and tough decisions ahead of it. According to one Feng Shui practitioner, Greece as well as its southern neighbours such as Italy and Turkey will see an initial slump in its markets in the first half of the year, only to see these slumps become even stronger as the year wears on. Analysts are already projecting that eurozone economies will see negative growth this year with the region contracting by about 0.7 per cent. And while many local pundits are publicising the on-going saga that are the PSI+ negotiations as a cure all to Greece's sovereign debt problem, we know that this is far from the truth. Indeed just recently Angel Gurria, head of the OECD, has stated that, “After we have overcome this debt hurdle there will come the more difficult question of having sustainable, sustained, growth over the medium and the long term and that requires a very serious structural transformation of the Greek economy, of the Greek administration.” She also went on to add that Greece could do a lot more with regard to privatisations and structural changes and that tax collection needed urgent reform.<br />
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The same negative outlook in the Year of the Dragon cannot be said for the rest of Europe however. Germany, England, and France are singled out and slated for a better performance, even their banking and insurance sector will amazingly see itself stabilise, while real estate in England will once again boom. If last year's reports are to be believed, that Greek money was fleeing the country and being invested in London's west end, there could be some nugget of truth in this little prediction.<br />
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Overall however astrologers remain optimistic on the fate of the Euro with predictions concurring that the Euro will remain intact, weaker against the Pound and the US Dollar, but intact nonetheless.<br />
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2012 is also the year for innovation and innovative businesses ideas, according to another astrologer "We will see many new technology trends and more people will become comfortable using technology in their lifestyles." If this is true, this is good news for Greece's innovators and a good time as any to implement the innovative changes that are so desperately needed in Greece's public sector to achieve reform and transparency. Innovation can also serve to help boost Greece's private sector and improve its global competitiveness as it searches for new markets abroad.<br />
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This year will also the year for love and passion and will be full of romance and justice. Justice in that lies will be revealed, so unfaithful lovers take note. Is this perhaps a call for Greece to be more faithful to its promises that it made to its European partners? For the most part it has been revealed that many reforms promised have not been carried out. And if Greece is to remain a trusted partner, and to finally take its future in its hands these reforms must be carried out. There is no denying that it will be a tough road ahead to achieving debt sustainability by 2020, but if there is a will there is a way.<br />
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And what astrological sign will it be then I hear you ask, why 2019 till January 2020 will be the year of the Pig and good financial fortune.<br />
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Happy Lunar New Year!Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-51183837033075754072011-11-09T01:18:00.000-08:002011-11-09T01:18:04.049-08:00Papademos rejected as PM - Greece on track for drachmaToday i woke up and not only has Greece yet to decide on an interim Prime Minister but that the front runner was steam rollered. <br />
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The obvious choice of Papademos was vetoed at the last minute by current deputy PM and Finance minister Eleftherios Venizelos. (He denies it but sources close to him confirm it.)<br />
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Papademos was insisting that the interim PM not only sign cheques and get the loans, but stay on to actually implement the reforms that accompany the money tranches that are being sent here to Greece to bolster the corrupt public servant based economy. <br />
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He was also rejected because there was a fear that he would actually succeed in carrying out the reforms. "Him" (and i quote the source again) "a mere technocrat actually doing the job when he isn't even trained as a politician." <br />
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(Yes - people here think that a politician is a career that one can actually train for)<br />
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This concept - implementing reforms - is anathema to the political system. They have based their whole political careers at playing 'the big man in town' dispensing favours and jobs to those whom they deem worthy enough or just want to sleep with. This is how Greece's public sector was built. Its not uncommon to find accountants in the tax office who don't know accountancy, but only got the job because they turned up to political rallies. If reforms are carried out - where will they work? All they know how to do is to go out on the streets and protest. There is another job that also demands that the worker goes out onto the streets which they are also accustomed to, but the hours are a lot later and longer.<br />
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The corrupt political system is once again digging their heels in and those on the left and the right are jubilant at the prospect of returning to the drachma. What left or right. The blancmange of political parties under the rainbow are ecstatic!<br />
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No longer will they have oversight as to where and how they spend money. In the drachma they can throw as much money as they want around. The economic situation will be so bad that people will sell their sons and daughters to a politician just so they can survive - just like they used to before Greece entered the Euro. And in the drachma, politicians can once again make people millionaires! Here have a million drachma - so what - it will only be worth 40 Euro.<br />
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But remember that. All the politicians and the political parties remember the good old days of the drachma - it was not that long ago. <br />
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Which was one of the 'good' things of the euro. It started to accustom a whole nation that there was another way to live their lives without this corruptocracy. Unfortunately the other reforms that were needed to accompany closer integration - such as reforming the Justice system etc were not implemented, not did the EU do anything about - other then sending a letter and posting it on a website to voice their disapproval.<br />
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So here i am. A graduate in economic development, having worked on EU projects promoting innovation in the developing regions of Europe and the world, having helped promote Greek businesses abroad, watching my own country being deliberately led into economic ruin because of a few politicians. I see the chasm opening up before me. I know that two years ago i opposed the bailout saying that things have to get worse before they can get better - but i never advocated a removal from the euro. Under the drachma things will be worse, but the bad practices will be reborn again - something that under the euro were slowly being done away with.Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-11758006082708362932011-08-29T02:33:00.000-07:002011-08-29T03:28:04.246-07:00...but how did Greece get itself into the financial mess?A lot has been said about the financial crisis in Greece in recent months, speculation about the future, but little about how Greece got itself into the position its now in. A lot of what has been said has been inflamatory and in some cases down right racist. <br />
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Which is why i was pleased to read an article on <a href="http://www.economia.gr/index.php">Economia </a> titled <a href="http://www.economia.gr/index.php?dispatch=pages.view&page_id=1541">The Greek deficit and debt crisis: an end or a beginning? </a>written by the esteemed foreign correspondant for the Economist Robert McDonald. <br />
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The first part of a series, Mr McDonald traces the root of the crisis back to the burgeoning public sector debt of the 80s and explains the various attempts at economic reform that have taken place since then.<br />
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The following is an excerpt from the article.<br />
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<b>At this juncture it is worth a brief historical review to see how Greece arrived at the present impasse.</b> The country has, since WWII, been aid-dependent. In the early days – during the Civil War of the late 1940s and the Cold War of the 1950s, 60s and 70s -- this was military aid provided by the United States but it freed national resources for domestic development programmes. <br />
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Since Greece’s entry into the European Economic Community, in 1981, Europe has taken over where America left off with various civilian aid programmes. Through the Integrated Mediterranean Programmes and three Community Support Frameworks, Greece has received to date some €55bn in structural fund aid and, under the fourth community support framework, Greece stands to receive a further €24bn by 2015. That is to say, by the middle of this decade Greece should have received nearly €80bn in development aid from the EU.<br />
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Despite such assistance, successive Greek governments have continued to run up massive debts -- particularly under the socialist governments of the 1980s under the Panhellenic Socialist Movement (Pasok) headed by the party’s founder Andreas Papandreou (the late father of the current prime minister). <br />
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A fact on which the present government tends not to dwell is that in 1980, the year before the socialists first came to office, the Greek debt to GDP ratio stood at just 39%. Nine years later, when Pasok was voted from office, the debt stood at 104% of GDP. The level has never since fallen below 100%. <br />
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The servicing of this debt has been a huge drain on budget resources cutting deeply into the potential for development investment. So long as the economy was growing, the cost was sustainable, albeit with difficulty. Today, interest payments absorb one in every four euros of net ordinary budget revenues and there is a primary deficit. <br />
The primary balance is the budget balance less interest payments. Once there is a primary surplus the government will be in a position to begin to pay back some of the debt. As it is, the aggregate level keeps mounting. <br />
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Ordinarily the government would be able to keep ticking over by borrowing small amounts to cover new debt and large amounts to roll over old debt as it matures. But, in present circumstances, the cost of doing this is prohibitive and, because of recent changes in EU accounting procedures, the aggregate debt level has been mounting rapidly. It is officially forecast to reach nearly 160% of GDP by next year. That’s a little under €30,000 in debt for every man, woman and child in the country.<br />
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The present recourse to the European Union is not the first time that Greece has been helped by Brussels with loans as well as with aid. In 1985, the public sector borrowing requirement had risen to 17.9% of GDP and national reserves had dwindled to the equivalent of just five weeks of imports. The government could only obtain expensive, medium-term credit and so turned to the Community for a cheaper loan. It was granted Ecu1.75bn but under the strict condition that it should reduce the public sector borrowing requirement and cut the current account deficit to a level that would be sustainable by non-debt inflows of foreign capital. <br />
The economy and finance minister of the day was Costas Simitis, a reformer who in the mid-1990s succeeded Andreas Papandreou as prime minister. Simitis implemented policies which met the Community’s conditions through a15% devaluation of the drachma and an incomes policy that produced a real reduction in the earnings of salaried employees of 11% over two years. Simitis wanted to extend such measures for several more years to try to restore skewed economic fundamentals. However, Andreas Papandreou, with an eye to the possibility of early elections, forced Simitis to resign and appointed a more tractable successor who oversaw a return to laxity. <br />
The conservative New Democracy government elected in 1990 found itself confronted with an even higher public sector borrowing requirement equivalent to 21% of GDP. It too turned to Brussels for assistance. It was granted an Ecu2.2bn loan facility in exchange for a rigorous consolidation programme which included many proposals that sound familiar today such as, for example, a) a 10% reduction in public sector employment, b) caps on public sector wages and c) a halving in subsidies for public sector enterprises. This was to be coupled with an extensive programme of privatisation. <br />
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The EEC loan was to be disbursed in three tranches: the first of Ecu1bn and a second and third -- each of Ecu 600mn. Release of the latter two was contingent on implementation of the consolidation programme. At the end of the first year, the government was quietly advised by Brussels that its performance had been so abysmal that, if it applied for the second tranche, its application would be rejected. The government did not apply and instead tried to muddle through with domestic programmes until it fell in an early election in 1993. <br />
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In 1992, the ND government had signed up to the Treaty of Maastricht which transformed the European Economic Community into the European Union and set the framework for a common currency with a unitary monetary policy to be administered by a European Central Bank (ECB). Those countries who wished – and were able – to subscribe to conditions laid down in the Economic and Monetary Union (EMU) were eventually to be allowed to deploy the Euro. <br />
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The criteria for the EMU included basic rules that deficits should be no more than 3% of GDP and debt should be equivalent to, or headed towards, 60% of GDP. In addition, there were other criteria related to exchange rate stability, inflation, and long term interest rates. In 1998, when the European Council decided which countries were entitled to become members, Greece was the only one of the twelve that wished to join, that did not qualify. The Greek deficit stood at 4.6% of GDP and its debt at 108.5% of GDP while its inflation rate was more than double the reference rate and its long-term interest rates were nearly 2 percentage points higher than the reference rate as well as being unstable. <br />
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The Pasok government of the day – by this time headed by Costas Simitis – devoted all its political energies for the years 1999 and 2000 to meeting the criteria to join the Economic and Monetary Union. To do this it used accounting practices which it claimed were sanctioned by Eurostat. These reduced the estimated general government budget deficit for 2000 to less than 1% of GDP (0.8%) and brought down the general government debt to 104% of GDP. Inflation was squeezed through a series of administrative measures and interest rates fell below the reference level. In March 2000 Greece was declared to have met the membership targets and on January 1, 2001 it became the 12th member of the EMU. <br />
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Member states of the Economic and Monetary Union are required each year to present a so-called Stability and Growth Programme to the European Commission detailing the policies that they will follow in the medium term in order to continue to adhere to EMU membership criteria. <br />
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For three years, the country produced programmes which appeared to show that it was abiding by the rules. I say appeared, however, because when the New Democracy party was restored to government in March 2004 it undertook what it styled a “fiscal audit” which claimed that Pasok had only achieved the target numbers through creative accounting. Among other things, ND contended that the socialists had kept down deficits by keeping off-balance-sheet many items of expenditure. By ND’s calculations, the 2004 deficit, which had been officially forecast to be 1.2% of GDP, was actually 3.2% of GDP and debt levels, which were supposedly contracting, were actually on the rise. <br />
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The full text including annotations can be read <a href="http://www.economia.gr/index.php?dispatch=pages.view&page_id=1541">here</a>Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-34830879355309093012011-08-02T00:07:00.000-07:002011-08-02T00:09:06.460-07:00Invest in Greece - Entering a new eraThere are two ways for Greece to get out of the crisis. One is to reduce the debt burden, the other is to increase growth, however this is not an either / or choice and the country must chase both. As i have mentioned before, the private sector cannot continuously look to the government for cash, therefore the importance of Foreign Direct Investment becomes even more important in encouraging growth. <br />
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As Mr Syngros, Executive Chairman at <b>Invest in Greece</b> points out, recent changes in the Greek legislation pave the way for economic growth in Greece.<br />
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Following is an excerpt... <br />
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<b>June has been</b> a trying and tumultuous month for Greece and the Greek government which, faced with a difficult agenda, succeeded in parliament by winning a crucial vote of confidence, passing a needed austerity package coupled with an aggressive privatisation plan, and a voting for its implementation. This far-reaching vote paves the way for Greece to continue with a necessary and vast structural reform programme that will redefine economic development in a country that has experienced bureaucratic inefficiencies, opacity, a lax taxation regime, excessive public spending and a bloated public sector.<br />
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Today, Greece has the unique opportunity to truly enter a new era that must replace misguided policies of the past and<b> establish a friendly business and social climate that eliminates waste, fosters sustainable growth and, most important, promotes investment opportunities</b> that the global business community should welcome.<br />
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One of the key components of the new growth model is the rational and productive use of state assets that will become available to the private sector. State-run companies, utilities, national infrastructure facilities such as ports and airports, vast tracts of real estate, and other assets will all be privatised to create win-win results: revenue enhancement for the Greek state and highly attractive investment opportunities for the private sector, all serving the public good.<br />
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In addition, <b>sectors of investment such as tourism infrastructure, RES, environmental sciences and waste management, biotechnology, food and beverage and ICT</b> continue to offer superb investment opportunities. Our Fast Track programme is attracting widespread investor interest.<br />
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Read the whole article <a href="http://www.economia.gr/index.php?dispatch=pages.view&page_id=1531">here</a>Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-10165810059622915212011-07-27T00:11:00.000-07:002011-07-27T13:23:29.533-07:00Rescue package for Greece - How about a Greek one?By now of course you know of the rescue package that has been created for Greece. Though large, there is still a lot of work that needs to be done and Greece cannot breathe easy. Many changes - <i>structural</i> ones still need to be done. <br />
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While Europe dithered and bickered, economists, policy-makers and dinner ladies all came up with their own solutions. Mr Economides from the Stern Business School New York, highlighted 7 key aspects that a rescue package should cover. He writes...<br />
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"A national strategy for Greek sovereign debt needs to achieve the following:<br />
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1. Convert present debt to long term debt to avoid a default in the next two years. No matter how successful the reforms are, Greece will default if it does not convert its short term debt to long term debt.<br />
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2. Reduce the size of the total Greek debt. To pay the total amount of debt, Greece needs very fast sustained growth year after year over a fifteen years – not impossible but very unlikely. Otherwise, Greece requires a significant reduction of the total debt burden and has to focus on the way that this can be done best in the national interest.<br />
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3. Keep Greek banks afloat, liquid, and with sufficient trust to them. Greek banks have been subject to a prolonged bank run for over a year, as depositors have withdrawn large amounts. Every day that the debt problem is not solved, there is a chance that the bank run will become acute with truly disastrous consequences for the banks and the Greek economy. Such events may be triggered by the idiotic remarks of prominent Greek politicians that Greece is leaving the Euro, a Spiegel story, or practically any rumor in the Greek or foreign media or the Internet. The danger to Greek banks alone is sufficient to require the immediate solution of the Greek debt problem.<br />
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4. Improve the quality of Greek debt to be able to achieve lower interest rates. The present market rates for Greek sovereign debt, from 11% to 26%, are prohibitive for Greece. Greece cannot afford to borrow at interest rates above 4-5%. It will achieve these interest rates only if it increases the quality of the bonds. That can be done by either by buying high quality liquid collateral such as Eurobonds or by a guarantee from the European Stability Mechanism (ESM).<br />
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5. Be based on the true reality of the situation and should not expect Greece or its partners to do the impossible. In their attempt to please voters, politicians in Greece and the EU with very short horizons have often agreed on terms that are unfeasible. For example, the first aid agreement said that Greece would come back to the financial markets in 2012, even though no one believed this to be feasible.<br />
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6. Should be a comprehensive solution and not an attempt to kick the can further down the road.<br />
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7. It would be useful but not absolutely necessary for any refinancing not to create a 'credit event' that would lead the rating agencies to declare Greece in default."<br />
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His full article can be read <a href="http://www.economia.gr/index.php?dispatch=pages.view&page_id=1505">here</a>Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-38463180635566590472011-07-26T03:29:00.000-07:002011-07-26T03:42:41.533-07:00Stiglitz - Still not good enough to work in GreeceRight now, Greece is going through some tumultuous events and the decisions being made now will have important ramifications for generations to come. <br />
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For now however I would like to talk about Stiglitz and his presentation. Actually I want to write on the irony of his talk. Over 200 people attended his poorly publicised talk. Only a couple of politicians turned up, one of whom Stefanos Manos is a former politician. So the front rows of around 50 seats were empty as the invited politicians didn’t show up, obviously scared to show their face in public or be seen listening to - what the communists and far left call - “That Jewish Economist”, in a tone that makes one fear for public safety. In the audience there were those who challenged him on a couple of his economic points – and rightly so, but on the whole everyone enjoyed his talk and it was not raided by a Student Union demonstration happening down the road.<br />
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The irony lay in the fact that it occurred in a country where he is technically not allowed to work as an economist or university lecturer or is even recognised as an English speaker.<br />
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Stiglitz cannot work as an economist because he never completed his 'guild' like training at a Greek University. Only those who graduated economics from a Greek University are recognised. To have his degree recognised as good enough, he has to prove his university exists which may include translating a university handbook into Greek at a price of 1.5 euros a page. Once proven - he can then proceed to get his Degree recognised. If he is lucky he can have it recognised in 2-5 years, and involve ancillary costs of up to 18 000 euros. Then he has to wait from the Economists guild to invite him as a member, once a member he can set up his shingle and head off to work. <br />
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However it is now slightly easier. One of the new ‘Austerity Measures’ passed by parliament recently – which was one of the reasons we saw the terrific riots happening down in the centre - was the 'Opening up of professions.' The Greek work landscape is littered with closed professions. Reading the list of 136 professions that were opened it - it is no surprise that unemployment is where it is - or the number of luxury cars that still roam the streets. A list can be found <a href="http://www.antinews.gr/2011/07/01/110029/">here </a>in Greek. These professions include dentistry technicians, tour guides, hairdresser and of course - economists. Not included in the list are truck drivers, lawyers and pharmacies - three of the most powerful lobby groups that still remain closed to competition.<br />
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Closed professions in Greece are a result of a 'guild' like recognition system and a restriction of licenses to operate. Licenses to operate trucks were given out during the Military Dictatorship in the early 70s and when PASOK came to power in early 80s - and never again. These can be sold or inherited - hence the signs outside pharmacies saying Inherited Pharmacy (Pharmacies are also guaranteed 33% profit margins by the government and lack of competition means they can charge higher prices on certain goods compared to the rest of Europe).<br />
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Ostensibly the new legislation will make it easier to become a taxi driver, run a currency exchange business, or a beauty shop. However as a student of Economic Development and History i am not praising the legislation just yet. Some of you may have heard of a Japanese expression "Turning it in the belly". During Allied Occupation the Allies - read USA - encouraged opening up of trade and changes to the legal system. The Japanese bureaucrats followed these changes to the letter of the law, but implemented other changes to make the law meaningless. One famous example was allowing American baseball bats to be sold. This they allowed no problem - they just implemented an administrative decision to check that all bats imported were made of wood, and so all bats imported had a hole drilled right through to ensure that they were wooden. Similar stories occurred with tyres (Japanese snow was different to American snow) and other goods. <br />
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Which is why I - and most of my friends are cheering the 'opening up of professions' just yet. We wait to see what administrative barriers exist to see if Greek bureaucracy will 'turn it in the belly'. <br />
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So until then, Mr Stiglitz - come and talk to Greece and (if rumours are true) advise Greece, but know that you're not good enough to work here.Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com2tag:blogger.com,1999:blog-847200080905280995.post-9079849618553870032011-07-20T02:59:00.001-07:002011-07-22T03:56:46.852-07:00Initiatives for development from Mr Azariadis and Mr IoannidesLets turn our attention to yesterdays enthralling discussion organised by AXIOTIS - which is a scientific, non-profit organisation dedicated to dialogue and promoting the principles of meritocracy, transparency and the modernisation of public administration, the business sector and civil society.<br />
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Speaking at the event was Costas Azariadis, from Washington University, St Louis, and John Ioannides, Tufts University, Boston, both of whom spoke on the much talked about subject of development. Mr Azariades’ talk was titled “A country seeking work.” He reminded those gathered that Greece has 3.2 million souls working in the private sector, 1.1 million in the public sector and 1.8 million pensioners. In other words One in two is waiting on the state. However, Greece has 1/3 of the Mediterranean coastline which is underdeveloped when it comes to private capital. What this means post Memorandum is that we may see a boom and a shift towards extensive infrastructure development with private financing. Along with opening up of the education system to private initiative, this could jump-start the economy. <br />
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For the rest of the article click <a href="http://www.economia.gr/index.php?dispatch=pages.view&page_id=1502">here</a>Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-31671992626008108832011-07-18T11:38:00.000-07:002011-07-18T11:38:32.860-07:00Joseph Stiglitz in AthensFor those of you residing in Athens, you may like to know that Joseph Stiglitz will be in town speaking on the subject 'Eurozone's debt crisis and possible solutions'. <br />
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This event will be held at the National Bank Auditorium, Aiolou 82-84 this Wednesday July 20 at 19:00.Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-63223248193772014032011-07-13T05:13:00.000-07:002011-07-13T05:20:15.434-07:00Up and running again...Yes this blog is getting back on its feet.<br /><br />Its been a hectic period - full of ups and downs, both for the nation and personally.<br /><br />So in order to sate your thirst for information, here is an insight from one of Greece's preeminant thinkers, Mr Papagiannidis.<br /><br />Greek politicians, may they live long, are an especially short-sighted race. As remarkable as they are short-sighted. (Correction: maybe not 'Greeks' in general, but perhaps better defined as Greek residents.)<br /><br />And as a result of their shortsightedness - deeply self-destructive! Look at how they cried out in response to the capital flight in personal deposits. Let's look at examples of the impact of wild enthusiasm on the one hand, and of pragmatism on the other. The wild enthusiasm: In comes Theodoros Pangalos sounding alarm bells that the medium term financial plan would not pass into legislature, he describes a situation wherein Greece returns to the drachma, sending people running to the banks to withdraw their money, and the only thing that can stand in their way are the tanks and the armed forces.<br /><br />Leaving aside the fact that Theo has most probably not seen a soldier, or any kind of military figure up close (hence his notion that they would be protecting beleaguered banks), lets also ignore the fact that the interview was given to Spanish newspaper (hence limited risk that it would be read by the natives), but given his statements, what is one to think, and what did he think would be the outcome of his statements. The exuberant and quick tempered Theo invited the people to withdraw their deposits and send them abroad, hide them under the bed, buy gold sovereigns, throw them down a well, put them in a bag and head of to Albania or Turkey, do anything to save them.<br /><br />The rest of the article can be read <a href="http://www.economia.gr/index.php?dispatch=pages.view&page_id=1496">here</a>.Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-18107710741313499722011-07-06T04:09:00.001-07:002011-07-06T04:09:32.067-07:00will be coming back soon...Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com0tag:blogger.com,1999:blog-847200080905280995.post-5424896007039247482010-03-01T21:53:00.000-08:002010-03-02T11:53:38.171-08:00Greek economy: Diagnosis schizoidAccording to economists it takes 5 years for a country, any country to get out of a recession. What about Greece though. It never follows any sort of economic trend. Last year during the height of the GFC - Global Financial Crisis, Greece imported more luxury Mercedes-Benz automobiles than any other European country.<br /><br />This is because there is more than one 'economy' operating in Greece.<br />There is the black economy which according to some estimates is as large as 40% of the total economy.<br />This economy not only includes those catchy sounding professions as Pimps, human desperation traders and drug dealers, but it also includes lawyers, doctors, taxi drivers, petrol station and car park owners. These professions are notorious in Greece for not paying taxes and working 'off the books'. Here in Greece its just common knowledge.<br /><br />The second economy is the Public Sector. 40% of the national budget gets sucked into this black abyss. These people do pay taxes. However they are not taxed on their fringe benefits, benefits that is more than their initial wage. They get higher pensions and their pension funds have never been looted by any government. They have access to free child care the envy of any first world country. Some civil servants can get a fixed home loan at 3%. In the last nine months of the previous administration many civil servants booked 90 hours overtime a month - on days they didn't even turn up to work. Try that anywhere else.<br />More tragic however is that bright minds get attracted to work here. Sure its dull and boring in the civil service, but 6 hour work days plus the benefits - where else can you get that.<br />This has left the third economy weak and anemic.<br /><br />The third economy is the economy that those abroad understand and live in. People selling their goods and services on the dirty market. It is not a free market in Greece. There are restrictions as to who can be employed as what and if so how many hours they can work at what compensation rate. For example, though previously employed as a writer at a large company, i was never officially one, instead i was hired as a mere office employee. If i was a writer the government demands that i be paid extra money and that i work for no longer than 40 minutes in front of a screen etc... While well intended - these do more to hinder the 'free market' than support it. And looking at all the building sites with workers with no safety helmets, more has to be done enforcing laws than merely writing them.<br /><br />Many professions are closed shop, such as movers and journalists. Red tape can kill small businesses. If you are self employed in Greece - factor in at least 35 days a year that will be lost to red tape.<br /><br />Despite this there are some companies that are doing well. These include the Mastiha cooperative that is investing in their niche product <a href="http://en.wikipedia.org/wiki/Mastichato">Mastiha</a>. <a href="http://www.korres.com/CountrySelect.aspx">Korres </a>which is selling worldwide. Intralot which is one of three companies that competes in the world that provide lottery systems. Coca-Cola 3E, a local franchise, that through local hard work and entrepreneurial spirit is now the second largest bottler in the world after Atlanta and operations across the Middle East and Eastern Europe. These are just a few companies - that despite the roadblocks that the other two economies place in their way have managed to do well.<br /><br />If Greece is to get out of this recession - it is to this third economy that Greece must look towards as being the engine of growth. No more must it coddle the public sector, a sector which sucks the fire out of the real economy. No more can it turn a blind eye to the black economy, which tears down any progress made in the real economy.<br /><br />The more we wait however, the more anxious we become.Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com2tag:blogger.com,1999:blog-847200080905280995.post-5081593838355129632010-03-01T00:58:00.000-08:002010-03-01T00:59:11.402-08:00Greece - the addict of EuropeGreek statistics. Those two words are now synonymous with false bookkeeping, and in a way epitomises the state of affairs in the Balkans. The past year has seen the Greek economy and its reputation hit rock bottom.<br /><br />But how did Greece in particular reach this state. In February of 2009 the then Karamanlis government and Economy and Finance Minister Yiannis Papathanassiou, announced that the budget deficit in 2010 would be 'reduced' to<a href="http://www.ekathimerini.com/4dcgi/_w_articles_economy_1_26/02/2009_105043"> 3.2 percent of gross domestic product (GDP) from a targeted 3.7 percent in 2009</a>. One change of government later the deficit was revealed to be the largest in the euro-zone and projections predict that the <a href="http://seekingalpha.com/article/173622-greek-bonds-continue-to-struggle-under-weak-aegean-economy">deficit will reach 13.7% in 2010</a>.<br /><br />This revelation has sent shockwaves across some markets and economists across the euro-zone and the world, and has even become a talking point for many politicians in the EU. However when one looks at the statistics and the state of affairs in Greece dispassionately, what is shocking is the amount of pretense that went on when the government first announced the 3.2 percent deficit, a figure market analysts knew would never be reached. One newswire, Bloomberg, would frequently reject the governments own Budget statement because the accounting didn't add up. Analysts and governments the world over knew that something was wrong, but those with the power to speak up, did not.<br /><br />Now in 2010, the Greek government is sending reassurances to its EU partners and economic teams from the IMF will further investigate. Concern still remains that the pretense will continue in an effort to prevent a further collapse of the Greek economy.<br /><br />In this way, Greece's partners and financial supporters are acting as its enablers, supporting Greece's addiction.<br /><br /><span style="font-weight: bold;">Because that's what Greece is - an addict. And even worse than that, an addict living in oblivion.</span><br /><br />The first lesson in economic development is, never enter a community if you have not been asked to enter. Looking across the world there are many areas that the more developed economies can assist lesser developed countries. Experience however has taught practitioners that success in any development program lies in <span style="font-style: italic;">the willing participation</span> of the locals. If they don't support it, sustainability will never be attained and gone is any chance of change.<br /><br />The same is true of drug addicts. No matter how many times family and friends help,<span style="font-style: italic;"> if the addict doesn't want to change, they never will</span>. And in many cases the addict has to really hit rock bottom before they themselves realise that they need to change.<br /><br />And that's what Greece is. An addict who has gone through decades of promising change, and while some change has occured, it has been glacial. However structural problems still exist.<br /><br />Corruption is still rampant and is a way of life - akin to breathing.<br /><br /><a href="http://en.wikipedia.org/wiki/Political_machine">Clientalist </a>politics (political patronage) is the way of survival here and has been for most of the last century. In many ways its political structure shares more with the <a href="http://www.springerlink.com/content/jn4tbrjkw6w8ucev/">Philippines </a>than it does its northern neighbours in Sweden.<br /><br />Crony Capitalism is the only form of capitalism. Small companies are created overnight, are awarded government or EU subsidies, then vanish into the ether. Other large companies own media outlets to apply political pressure so that contracts are awarded to them instead of Greece's nascent entrepreneurs.<br /><br />These problems have been around for decades and Greece's partners in the EU have known about them for just as long, and in many instances, have benefited from them. Because of the power structure here in Greece, the politically disadvantaged have long wished that 'Those efficient Germans' come in and run Greece's economy. Meanwhile they go cap in hand to some political bigwig, cap in hand, to get a job to feed their family.<br /><br />Now however is not the time for accusations and false pride. Greece must realise that now is the time for change, and their partners in Europe must keep up the pressure and demand that changes be made now while the whole world is watching and not later.<br /><br />Yes things are bad in Greece, and things will get worse. My only hope is that Greece realises the magnitude of the problem and understand that the problems are home grown. Only then will Greece and it people wake up and actively begin to throw off its shackles of economic beggary.<br /><br />Today the European Commissioner for Economic and Monetary affairs must keep up the pressure on Greece and demand that measures be implemented immediately.Vassili - Mikehttp://www.blogger.com/profile/05224696466430325560noreply@blogger.com3