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Happy Easter!
We do not need to know that this is Holy week to be aware of the big "hole" in Greece’s finances!
Last week we attended a conference called "Greece and the Economic Crisis: Analysis and Discussion" at the McGill Faculty Club. The speakers included:
- Mr. Nikos Poulopoulos, of McGill University, on "Past: Founding a nation or funding a nation: the ambiguous Greek debt"
- Dr. Stylianos Perrakis, of Concordia University, on "Present: Financial and Economic roots of the Greek Crisis: why 2009-2010 is not like the 1980s"
- Dr. Demetrios Vakratsas, of McGill University, on "Future: Making Greece a competitive nation"
- and Mr. Spyros Kotsovilis, of McGill University, who gave a few concluding remarks.
A lot of interesting conclusions were made during the discussion, one of which was from Dr. Perrakis, who pointed out that "Greece has been living beyond its means for a very long time", and that its currency devaluation throughout history (1981-2000s) was an indicator that the "[economic] imbalances are not being fixed and the country keeps living beyond its means". (To see a copy of his full speech, click here)
The reality is that Greece has a consumer debt hangover. Just as you cannot spend more on yoga lessons, vacations and restaurant meals than you are bringing in with revenue, in the long haul, neither can a government (although the USA is trying to prove otherwise but that is a topic for another day).
The Greek economy is a relatively small one, which is good if you can line up assistance, but bad if you subscribe to the “too big to fail” syndrome. In other words, Greece could default and the be banished from the European Union so that the Euro could survive (or so the European powers brokers, lead by Germany, have decided). As we write, a solution to avoid financial calamity appears to be in the cards, suggesting a Euro version of the IMF. But, it remains to be seen if this is a long term viable solution.
For instance, we have seen IMF dictate “solutions” in the past that focuses on balanced budgets via costs reduction. “Cut spending!!”, many would scream. But is that really the right solution?
These are difficult times. Easy solutions are not abundant. But here are some thoughts:
· increase productivity, which means doing away with bureaucracy and other impediments to business;
· take advantage of Greece’s strategic location between the West and the Orient, as in Middle East, and the Orthodox communities throughout Eastern Europe;
· take advantage of the Greek Diaspora in Canada, Australia, United States and elsewhere, to encourage investment in productive, sustainable investment in Greek tourism, education and cultural activities;
· clean up the financial picture, so that as revenues grow, they are used to bring spending into parity with revenue, and eventually into surplus!
· market Hellas to the rest of the world as the “Cool Brand” that it was, it is, and it should become again….
Simplistic? Why not? Often the best solutions are the simple one.
P.S. Do not forget that Thursday is April 1 (or April Fools day)….keep it fun folks…but remember that it is also the day the designated parking goes into affect on much of Montreal….and that is no joke.
Happy Easter and have a safe holiday with your friends and families!!!
Καλό Πάσχα!!!
Copyright © Andion Financial 2010From the desk of Andre M.
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