Seeing the situation in Greece up close
I recently had a business meeting in Frankfurt, Germany. The meeting started on a Tuesday and I planned to set up on Monday. I usually allow a day or two for jet lag. This trip, I decided I would do my jet lag recovery in the land of my ancestors, Greece.
My reasons for including Greece on the trip were twofold. First, I wanted to see some of my cousins. We are all getting older and some of them are in their 80s. Age and health means that we may not have a lot of opportunities to visit again. The second reason was I wanted to see the Greek situation firsthand. And I wanted to hear what the relatives had to say.
My first visit to Greece was in the 1950s. I was 6 years old and we stayed for five months. I have been to Greece another seven times over the years. So I have a sense of how the economy has changed.
Greece was devastated by World War II. It endured five years of an occupation that was intentionally cruel because the country had initially resisted. What many don’t realize is that from the war’s end in 1945 until late 1949, Greece was embroiled in a civil war and a fight against communism. Brother against brother. That nine-year stretch of war hit the country hard, and left it at a disadvantage compared to many other European countries. A country that was somewhat poor to begin with had a longer climb in front of it.
Slowly it worked its way back and up. My previous visits revealed a country with a lot of pride about becoming part of the European Union, adopting the euro, and landing the Olympics. It had new highways, buildings, airports, the best subway system in Europe, upgraded museums, etc. And the workers enjoyed the “benefits” of European socialism – early retirement, tough work rules, unlimited health care, and restricted competition.
The government spent more than it took in while racing to be part of the EU.
The result was overspending on programs and benefits. Nobody had the will to stop the good times. If you want to see what America might look like if it doesn’t get control of its spending, go to Greece.
I first observed the results of Greece’s economic policies on the way to Athens from the modern but underused airport. I would say that one out of three or four stores was empty. For rent. Or sale. Many of the shops that were occupied were only occupied because the merchant owned the building, and if he closed the store, three things would happen: No one else would rent the empty shop, he would have inventory that he could no longer sell, and he wouldn’t be able to find a job elsewhere. Better to keep it open in case someone bought something.
My cab driver said that the best job in Athens is driving a cab. They all own their cabs, and if you get a fare, you eat. If you get a few fares, you are better off than most. My fare from the airport was going to be around $60, so my driver was having a great day, even with the high price of gas.
I visited a cousin whose wife is an artist. His son now runs the gallery that they owned, but nobody buys art during a severe financial crisis. They keep the store open hoping for the occasional customer. He is retired and on a pension. He owns the building the store is in, and there are a couple of other tenants. That provides a decent income, but they have a vacant store so they know that nobody will rent the gallery store if they close.
His son-in-law said, “I am glad my father-in-law lived during the occupation and war. He is teaching us how to live on a poverty level.”
Another cousin’s wife and daughter are also artists. The daughter wanted to know where they should emigrate to in order to find work.
A visit to another cousin was equally enlightening. He owns a three-story modern office building. I would estimate that it’s around 20,000 to 25,000 square feet. His tenant hasn’t paid his rent for five months. His choices are limited. He doesn’t know what to do.
Another cousin’s son sells to the government and other organizations. I won’t disclose the type of business. He went over a year with the national government not paying him. Could your business survive if your major client didn’t pay you for well over a year? He was fortunate in that his staffers were willing to endure the struggle with him. Perhaps it was because they had no other alternatives.
I spent some time with a different cousin who had worked in the financial world. The spouse had as well. They are both retired, living on their pensions and real estate income. Financially adept and bright, they don’t know where to keep their money. Which bank? What currency? Sound familiar?
The relatives who work for the government live in fear of layoffs, as do those in the private sector. The bloated government sector (40% of employees work for the government) is inefficient, and in many cases corrupt. Want something done? Make sure you bring an envelope with a little gratuity. Suppose the tax man questions your return and finds you owe a bundle. Give him a third, pay a third, and the final third disappears.
The entrepreneurial spirit in Greece has been killed by excessive bureaucracy and regulation. Virtually every department of government needs to give a stamp of approval – and this creates more jobs for those departments. So when Greek immigrants come to the United States, Australia, and Canada, they end up being very successful entrepreneurs. They can fast track their dreams without going through so much red tape and jumping through so many hoops.
A cousin’s son-in-law said, “We thought we had the world at our doorstep. The EU, protective tariffs, the Olympics, great-paying jobs, early retirement. Banks offered mortgages for anything you wanted to buy.”
As in the rest of Europe, many people had not previously used credit cards. They really became popular in the last 15 years. But more recently, you had lots of opportunities to get credit from the card companies. Only 18 years old? No problem. Run over your credit limit? No problem, here’s another card. Sound familiar?
Need workers for your business? Lots of illegal aliens were knocking on doors. In some respect, the people of Greece forgot how to really roll up their sleeves and work. Why not figure out an angle and let the illegal from Albania, Afghanistan, Pakistan, Sudan, or Somalia do the hard stuff? Sound familiar?
The blame falls on government – both liberals and conservatives. They kept promising everything and pushing the payment down the road so they could get re-elected. Like many in our government, they bought peace with the people knowing that they wouldn’t have to solve the problem. The issue is that nobody solved the problem until it was way too late. Sound familiar?
I left Greece saddened after seeing people who loved to laugh and dance now unable to smile. Depression is on the face of everyone.
Meanwhile, in Spain, the people were rioting because they discovered that, in addition to their national government being in financial stress, the local and state governments combined owed more than the national government – a hidden reality that had been achieved by manipulating the books. It was only revealed when the drug companies complained that they had not been paid by the hospitals for over a year.
In Switzerland, the government ruled that the banks had to get out of other financial areas and build their reserves, which are too low.
I flew into Frankfurt, which looked so prosperous. Stores were busy, and restaurants were crowded. This is what Greece wanted to be. I talked to a cab driver who said, “See all these skyscrapers? They are building 20 more high-rises. Problem is that the ones that are already built are empty.” Sound familiar?
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