Saturday, January 27, 2018

Is Greece Back on Its Feet?


This threatens to be a sure-fire eye-glazer of a post, but it’s the #1 question I’ve been asked on tour.  I’m the last person to field that question if you’re seeking investment advice, yet it is encouraging that so many, in so many different parts of the US, care enough to ask it. 

By the way, my questioners aren’t Greeks. Perhaps that’s because Greeks already know the answer; are among those so polarized in their political views that they see the nation’s economic circumstances strictly through the prism of party loyalty; or are so worn down by it all that they don’t want to hear any more about it.

With that in mind, for purposes of reading this post I suggest following the longstanding advice of Warren Buffett, and “put aside personal politics when it comes to investment decisions.”

Let’s start with some of this week’s economic headlines on the Greek economy.

“Spanish, Greek bonds shine after ratings upgrades.”

“Approval of 3rd review and release of tranche to Greece expected in Brussels.”

“Greek current account deficit shrinks in November, tourism revenues rise.”

Looks promising, and certainly better than going in the opposite direction. So, let’s look at what the headlines mean, starting at the bottom and working up…which seems appropriate for the situation.

According to figures supplied by the Bank of Greece, in six of the past eleven months Greece did better with its account deficit than it did during comparable months the year before.  But, it’s a sawtooth type of graph, not straight-line growth, and improvement is credited almost entirely to a decrease in the balance of goods, raising the question of whether the shrinking deficit is because Greece sold more, or bought less.

Surrounding the impending “final” 6.7 billion-euro bailout tranche payment to Greece (5.7 in February and 1.0 in April) and official end of the bailout program in August, there is a lot of talk over whether this signals the beginning of the end or the end of the beginning to Greece’s fiscal crisis. New taxes, and budget cuts demanded by Greece’s foreign creditors have severely affected much of the country, and anxieties are running high over what’s next to come.  With elections in 2019 (if not sooner), there’s a plethora of suspicion (or a paucity of confidence, if you prefer) in government promises and projections on what the future holds.

On the subject of bonds owed to creditors—not to be confused with the sense of bondage many Greeks feel in service to foreign creditors—for the first time in two years, Greek bonds have kicked up a notch in their ratings! Hallelujah.  But before anyone starts passing out cigars, take note that Greece’s bonds are now rated ‘B’ according to S&P, while Spain—the other peripheral EU economy—was upped by Fitch to ‘A-” despite its Catalan crisis.  The news had yields for Greek short term and five-year bonds falling (going down shows confidence in the bonds), but yields on its long-term bonds actually went up slightly (yields on all of Spain’s bonds fell).  Most analysts agree that the future for Greece depends on how well it manages its exit from its bailout program. That’s the sort of imponderable answer I feel most comfortable leaving for the gods to sort out.  

So, what other relevant news is out there this week suggesting the true state of the Greek economy?  What caught my eye was an article analyzing unemployment figures recently released by the Greek government.  From the story’s headline, I think you’ll see the direction in which the article is headed, but assuming the reporter’s figures are correct (Anthee Carassava, reporting in, there’s a lot to reflect upon.

Here’s the headline, followed by relevant excerpts from the article: “Greeks stuck in lousy, part-time economy as government claims success.”

“Greece’s once record jobless rate of 27 percent may have dropped seven points since the start of the financial crisis, but nearly six in 10 people are stuck in a market dominated by part-time on-and-off jobs.”  [N.B. For those under 25-years-old, the youth unemployment rate hovers at 40%]

“But worst of all, the gigs have demanded full-time work for part-time terms of employment. ‘You’re hired for a weekly 15-hour Friday-to-Saturday job and before you know it, your boss is calling you in, forcing you to work Tuesdays, Wednesdays, and Thursdays without extra pay or time off.’”

“In Greece, state statistics released this week show a troubling trend: Six in 10 people are stuck in lousy, insecure part-time jobs.  While the trend first exceeded the startling 50-percent mark last year, experts expected the figure to quickly recede as the Greek economy, strangled by seven years of budget cuts and austerity reforms, grew by nearly 2 percent. But it hasn’t, spelling what experts now call ‘hollowed growth’ for a country struggling to claw out of the worst financial crisis ever to hit a European Member state.”

“In the startling statistics released this week, five in 10 Greek workers are owed an average of six paychecks by exploitative employers already paying part-time workers less than 500 [$600] a month.  Women, meantime receive 50 percent less.”

“With the government registering each person who works at least two hours a week as employed…private labor groups and think tanks put the real [jobless] figure around at least 25 percent.”  [N.B. To be fair, for US statistical unemployment rate purposes, one hour a week is considered employed, and the US rate is currently 4.1% (8.9% youth)]


Those figures—if accurate—are alarming.  But what I see as perhaps the greatest threat to Greece “getting to its feet” is reflected in the comment of a 26-year-old female college graduate interviewed for the article: “You can sit and hope Greece plays catch-up, or you can pack up and leave for a better future until then.”

I now have a question for my audience.  Does anyone disagree with the proposition that the greatest threat to a nation’s long-term growth and prosperity is the loss of its industrious and entrepreneurial young to other lands?  After all—and you can take it from me—it’s hard to get back up on your feet relying on creaky old knees.


Jeff’s Upcoming Events

My ninth Chief Inspector Andreas Kaldis novel, AN AEGEAN APRIL, published on January 2, 2018, and here are the remaining stops on the first stage of my book tour:

Friday, February 2 @ 7PM
Centuries & Sleuths (Forest Park)
Chicago, IL

Saturday, February 3 @ 12 PM
Once Upon A Crime

Minneapolis, MN


  1. Very well written, but very sad, column. No, things still don't look good for Greece, but I fear it won't be alone in the economic disaster ahead.

    BTW, the ending photo of the knees are the bee's knees, my friend.

  2. Thanks, EvKa. Yes, things are delicate and tricky in many parts of the world. It's as if everyone's plunging forward without even a glance at the rear view mirror for what's gaining momentum (again). By the way, my compliments on your choice of Vespidae. With the shorts, I was certain you were going for wasp's knees.