Is Greece Back on Its Feet?

Jeff—Saturday

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 3^rd 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 DW.com), 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

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

A Tale of Two Hoods

By the time you read this there’s no telling what will be happening in Greece.  Europe and Greece are tossing brickbat accusations at each other from their respective parapets.  Somebody for sure is going to get hurt.  Just how badly no one quite knows.

But this isn’t about that. At least not directly.  It’s about something far more serious: A frontal assault on the very symbol of those placard carrying, rock and Molotov cocktail tossing, youthful demonstrators that haunted Greece’s central Parliament square back in pre-January 2015 election days.

I’m talking about the hoodie.  De rigueur wear for Greek youth on those rough and tumble social occasions, they’d pull them snuggly across their faces to mask features and protect their eyes and noses from the inevitable tear gas moments.

Where hast thou gone, oh hoodies? We hardly see ye any more.  Maybe you’re still out there, just no longer gaining attention from the media—a fate worse than death to demonstrators.

Come on now, Greeks, aren’t there some brave souls out there willing to pick up the hoodie banner—leaving aside the rocks and bottles please—and carry that noble tradition forward as a positive, constructive symbol of youthful exuberance?

Youth unemployment in Greece is twice the Great Depression exceeding levels of the country’s general unemployment, and hundreds of thousands of Greece’s brightest, determined young minds have flooded to other nations in search of opportunities for building careers.

I’ve long thought that if Greece hopes to realistically emerge anytime soon from the nightmare of an economy and government locked in perpetual crisis, it must find ways to inspire its young to remain in Greece and work toward making things better for their generation.

Imagine my surprise when I came upon this project…

It’s a “Kickstarter” campaign, organized by a Greece-based e-shop company called We Create Harmony (“WCH”).   They describe themselves as, “A team of young entrepreneurs passionate about Greek youth unemployment and supporting the professional development of our generation.  We founded our company to demonstrate the power of cooperation and the synergies that arise from working together.”

Wow, it checked off virtually every box on my “Let’s get Greece working in the right direction” wish list.  But what do those words actually mean in practice?  I looked deeper and learned WCH is a profit-making, fashion oriented business organized by Greek twenty-something year-olds marketing products in a way intended to maximize the return to its contributing designers, and donating 10% of receipts to good causes that benefit Greek youth in need. 

Among the good causes thus far receiving aid from WCH are a youth unemployment project aimed at encouraging digital marketing careers, a scholarship to Greece’s leading fashion school, a business coaching center dedicated to re-educating the unemployed, remote island schools in need of computers for underprivileged students, and other NGOs providing similar opportunities.

That all works for me.

But where’s the hoodie fit into all this?  If I’m so hyped up over recasting Greece’s national symbols, then what is WCH doing toward returning the hoodie to a place of constructive cultural prominence?

The answer to that question blew my socks off…giving me cold feet about making a pun on the subject.

Remember that Kickstarter campaign I mentioned?  Kickstarter is a global fundraising platform based in the US with the stated mission of helping to bring creative projects to life.  In the instance of WCH, it’s an effort to generate international interest in WCH’s products and eleemosynary purposes by offering up an environmentally respectful, quality driven product to serve as the symbol of its company’s goal of bringing harmony to the world…in six colors no less.

You guessed it; Harmony is representing its goals in a hoodie! If you want to read more about the hoodie here’s a link, and also one to a video on WCH by its creators.

Frankly, I’m just happy to learn there are young Greeks out there doing what’s necessary to restore the hoodie and their country’s good names.  Greece needs more of that. A lot more.

I must mention that this all came to my attention through Barbara, because her nephew is one of the moving forces behind WCH. But I promise you I’ve received neither a promise nor suggestion of anything in return for writing this post. Not even a light blue hoodie in size XL.

Jeff—Saturday

     

Parting is Not Sweet Sorrow.

This week I received a note from a Greek American who’d moved her business to Athens some years back.  “I’m not sure how much longer I’ll be staying in Greece.”

That shook me.  Greece was as much a part of her as breathing.  Her life, indeed her career was spent glorifying Greece to the world. But I can’t blame her.  She must make a living and although her prodigious public relations skills are in demand, not so much any more in Greece.  And even those with the most optimistic take on how long it will take for Greece’s economy to rebound put it outside any meaningful time frame for my friend.

Not current, but instructive

Greece’s young, facing nearly 60% unemployment, are indeed hardest hit, but it is the older workers—many of whom carry the load for family members under twenty-four—who seem most disheartened.  They see their peak earning years evaporating, their property threatened by a predatory tax structure (hopefully changing), and out of touch politicians acting like a bunch of Neros fiddling their own separate, selfish tunes while Rome burns down about them.  If they could leave, many probably would. Like my friend.

Anyone with skill, talent, ability, and a willingness to work hard, wants to be in a place where what they offer is appreciated and encouraged by the opportunity to succeed. Rightly or wrongly, few perceive that as available to them in Greece today.  Many are leaving a land they consider heaven on earth conscious that by so doing they’ll likely be resented by those who remain behind, and branded “not as Greek as us.” Just ask emigrants from past waves driven out of Greece by difficult economic times for tales of their receptions upon returning “home.”

Maybe things will be different this time. After all, many parents are telling their children to go elsewhere to make their fortunes, even while they choose to remain behind riding out the crisis.  I’m sure most hope that someday their children will return to Greece, bringing with them skills necessary to rebuild Greece as a modern competitive state.  Whether that happens depends upon on how those who do not leave chose to act.  If they see remaining in Greece as an opportunity to personally profit in the short term, rather than a time for improving the overall prospects for their country, then perhaps the pessimists’ take on Greece’s turnaround time is more accurate: It will be the generation of the great grandchildren of those now leaving Greece who first see better times return to their homeland.

This week I also received a letter from another friend, a life-long Athenian whom I deeply respect.  It summarizes what I believe to be the attitude of many: “We are moving on to dangerous times, full of uncertainty, unsafety, with no more guaranties for anything.”

As in all things Greek, there is a lesson in what my friend wrote for the world. 

God bless Greece.  God bless Boston.

Jeff—Saturday

... and Statistics

There is an old saying that there are “lies, damn lies, and statistics”.  There is also the chestnut about a politician using statistics “the way a drunk uses a street light – more for support than illumination”.  Of course the problem is not with the numbers (assuming they are accurate) but with their interpretation.  

One of my favorite examples is the story of the Fever trees.  This tree is actually a species of acacia with yellow pom-pom flowers and attractive greenish-yellow colored bark.  It got its name because in the days of the exploration of the hinterland of South Africa, it was noticed that people who camped under the trees often came down with a bad fever.  What’s more, sometimes their skin took on a yellowish tinge (caused by liver complications) which reminded people of the tree bark.  Once that connection was noticed, people started avoiding the trees and – although the fever still occurred – it did seem somewhat less prevalent.  Needless to say, the trees did not cause of the fever.  What was happening was that cause was being confused with effect.  Indeed there was a correlation: the trees love to grow along water courses.  The mosquitoes that carry the yellow fever virus also like to be near the water where they breed.  So the water was the connection.  People who camped near water – a sensible thing to do to have a ready supply – were as much at risk as those who camped under the shade of the trees.

This is a long introduction to what I really want to discuss.  The South African census of 2011 was released by Statistics South Africa last month.  The context is that we need to be careful about how we interpret the data.  I promise I won’t make this long!

Here are two deductions from the census data:  

1     1      If you are white, you are more than four times as likely to have a higher education qualification (i.e. post-secondary school) than if you are black, 

2     2  Nearly two-thirds of the people with higher education qualifications are black.

Here’s another pair (money translated to US dollars).

3   Over the ten years since the last census, white households increased their average income by $20,000 per annum, while blacks increased theirs by only $4,500,

4.       Over the ten years since the last census, black households have increased their income by 50% on average, while white income on average has stayed the same.

It seems to me that statements 1 and 3 might convince a casual reader that the government has done little to improve the lot of black people in South Africa, and has merely allowed itself to be co-opted by the wealthy white group.  On the other hand, statements 2 and 4 might convince the same casual reader that the government has done well and is strongly supporting black empowerment.

Yet these four statements are all supported by the census data. Here is the data:

• ·         36.5% of whites have a higher education qualification
• ·         8.3% of blacks have a higher education qualification
• ·         There are some 52 million people in South Africa and 80% of them are black. So using the bullet points above, 2 million blacks have higher education qualifications.  The total number of people with higher education is 3.6 million.

·         In the income figures, it depends on whether you take the real value of money into account.  Over the ten years, incomes would have had to grow at around 80% in order to keep up with inflation.  White incomes grew by about that amount so stayed flat in real terms.  Black incomes increased by 50% (in real terms) BUT they started from a very low base.  In real terms they grew from about $5,000 to $7,500.

There’s comfort in the census that a lot has been achieved, as the positive take on the above figures suggests.  Also 91% of households now have water on tap (80% in 1996) and 85% have access to electricity (58% in 1996).  The percentage of people in formal housing has also increased from 65% to 78%.  This last fact is much more dramatic when expressed in terms of the actual numbers of people: in 1996 26,4 million people had formal housing.  Now the number is 40 million. (And the number of people per household has decreased by 1 on average.)

Much has been done well.  So why the dreadful events at Marikana?  Here is another statistic. Something like 60% of working age people are employed in the formal or informal economies. About 50% of 20 to 30 year olds are employed. That’s a lot of unemployed people.  The government mooted a plan to subsidize the employment of new school leavers.  But the trade union movement blocked it.  The same movement that was shunned by the miners at Marikana.

Thanks for bearing with me.

Michael - Thursday