Greece is going aglimmering.


I’ve been planning trip to Greece for months. Back in January, I decided to wait until the Greek monetary crisis was closer to resolution. Finally in May, I made reservations for September. I even posted my plans here.

Well, today it may be all going glimmering. The Greeks have apparently voted NO to the EU deal.

Greece has overwhelmingly rejected Europe’s latest bailout package, plunging the country’s future in the Eurozone into jeopardy.

With most of the votes counted in a referendum that will shape the future of the continent, the ‘No’ campaign has a staggering 61 per cent of the vote – 22 points ahead.
German Chancellor Angela Merkel and French President Francois Hollande called for an EU crisis summit to find a ‘solution’ for Greece, with leaders set to meet in Brussels on Tuesday.
Thousands of anti-austerity voters took to the streets in celebration as the leader of the pro-EU ‘Yes’ campaign resigned, with an official announcement of the final result imminent.
But German politicians warned of ‘disaster’ as they accused Greek Prime Minister Alexis Tsipras of ‘tearing down bridges’ between Greece and Europe.

Now what ?

Our reservations are not until September but this is probably going to blow up the trip.

The Wall Street Journal is not happy.

Mr. Tsipras might soon find it difficult to deliver on his promise to secure a more lenient bailout deal from Europe, where other governments, led by Germany, are in no mood to offer Greece more generous terms.

The country’s government faces a race to secure financing before a major bond held by the European Central Bank falls due on July 20. Default could precipitate an escalation of Greece’s already severe financial and economic paralysis.

Personally, I think the Greeks are better off out of the EU. The IMF terms were the usual combination of austerity and high taxes. Greece can’t collect the taxes it tries to levy now. Tax evasion is close to 50%. The population is in rebellion. The reaction is divided along economic lines.

“Any person who is able to think for themselves will vote ‘no.’ I did,” said Anna Stavrouli, a 46-year-old public-sector employee after casting her vote in the working-class Athens neighborhood of Dafni. “It is time to stand up and defend ourselves.”

“My vote was a loud ‘yes,’ ” said 33-year-old graphic designer Georgia Hatzisava. “I have worked hard to build up a business and now it could collapse.”

The business owner feels differently.

How would Greece survive out of the Euro zone ? Maybe this is a suggestion.

Greece might be able to cling on to the euro even amid this horror scenario. It could issue IOUs — effectively a parallel currency to the euro — to pay wages and other domestic commitments, allowing the government to use scarce euros to meets its international interest payments.

These “I Owe You” notes have been used in the past to help governments get over a temporary shortage of cash, for example by California in 2009.

No more euros

But at some point, those notes would need to be converted to cash — and that’s when Athens may have to abandon the euro and print its own money.

Analysts at Moody’s say Greece would only drop the euro and issue its own currency if there was absolutely no other alternative.

It is likely the new currency would quickly lose its value. While that would be painful at first, it could eventually help Greece back on its feet. A cheaper currency would make Greece more competitive and attractive for investors and tourists.

They would probably have to go back to the Drachma, the pre-Euro currency. It would be inflated but the Greeks might be able to survive on tourism and olive oil, about their only two products. Greek medicine is pretty good and they are pretty far east. Maybe medical tourism might help.

In Thessaloniki, Greece’s second-biggest city, full cafes and tourists braving the heat gave the impression of a normal Sunday. But that was belied by the long queues at ATMs and at schools where polling stations were operating throughout the day.

“I voted ‘yes’ because I want to be in Europe,” said veterinarian Athina Konduri, as she left a polling station in a graffiti-covered school. “If ‘no’ wins I am afraid the crisis will deepen. We will go back to the drachma and that is a very bad idea.”

Thessaloniki is on our itinerary but the trip is very shaky right now. And does Greece have something to teach us ?

Some people think so.

Our government is far smaller than Greece’s today. Federal spending is just 20.5% of GDP. But, according to the Congressional Budget Office’s alternative fiscal scenario, that could rise to almost 34% by mid-century. Factoring in state and local government spending, which already accounts for roughly 14.4% of GDP, total government expenditure in the US could reach 48% to 50% in 2050, roughly Greek levels.
As government grows, the private sector contracts. Greece has one of the most inhospitable business climates in Europe, ranking 84th in the world in the most recent Economic Freedom of the World Index. Meanwhile, as the United States continues to increase taxes and regulations, we have fallen from the second highest economic freedom ranking just 15 years ago to 12th place.

Thank you, Obama.

32 thoughts on “Greece is going aglimmering.”

  1. I’m so sorry, Mike – the many historical sites were and are absolutely awesome. I will have to post one of my long reminiscences here of living there in the early 1980s. I felt at the time that I was so fortunate to have lived there for almost three years — all these marvelous places were a short bus ride, or drive away! Ancient and modern Greece were my own personal oyster! As it is turning out these days, I might even have been more fortunate than I knew at the time.

    There was some kind of EBS squadron confab, round and about 1987 or so, which some genius at squadron-level decided that should be in Athens in January, instead of Ramstein AB, as per the usual. A fair number of us had been previously been assigned to either Hellinikon, Nea Makri or our base at Iraklion, Crete. For me, it was a nice sort of homecoming. I connected with my old next-door neighbors and landlord … and on one lunch-break in the conference, a group of us went out to a seaside restaurant within walking distance of the Apollon Palace Hotel in Glyphada, a high-rise sea-front hotel which had been contracted to be the NCO/O’club, transient housing, conference center, base pool and lord knows what else.

    We sat, I think, at a table in the terrace overlooking the sea – the food was excellent, the view was marvelous, there was Greek folk-music on the stereo loudspeakers — but not so loud that it was intrusive — and we all agreed … why would anyone settle for a Stateside tour, when we could have this?

  2. They can print euros. As euro members they have a euro printing press. It would doubtless prove a short term expedient, but if things are desperate ……

    Hell, these people organised a referendum in about a week, carried it off with aplomb, and had counted the votes by nine in the evening. No hanging chads in the Peloponnese.

  3. I was in Athens when they were about to do the 2004 Olympics and thought there was no way they could pull it off. They did so maybe they will pull this off.

    Our plane tickets and some hotel bills are paid so, if things settle down, we will probably still go. Still, I am too old to be an adventurer.

  4. “your trip might be the bargain of a lifetime.”

    It might be. The plane tickets and some of the hotels are paid for and will probably be forfeit if we don’t go. I might renegotiate a bit if we still go.

  5. I wouldn’t worry about the US turning into Greece. It has its own currency and its own banking system.

    I worry about the US turning into Wiemar Germany.

    I am also concerned that no politician, Democrat or Republican, has the guts or even the understanding to try to wrestle the system under control.

  6. “I worry about the US turning into Wiemar Germany.”

    I am too. Some body at Powerline asked what this year is comparable to.

    “I can’t decide if the world has a 1929 or 1939 feel to it right now.”

    “Paul Gregory Maybe all three. 1913 because the world we know is coming to an end. 1929 because trees do not climb to the sky. and 1939 because we are facing the consequences of a feckless policy by politicians.”

    Pretty much my feeling.

  7. >>I am also concerned that no politician, Democrat or Republican, has the guts or even the understanding to try to wrestle the system under control.

    I wouldn’t say none, but the number is small. Carly Fiorina sees the problems. Romney saw them fairly clearly, but was totally unwilling to get into the brawl and win.

  8. I will add Sarah Palin sees them clearly. But she’s a dumb chillbilly, what can she know? The pattern I see is that the professional political class are fine with the status quo. Why shouldn’t they be, they’re wealthy and powerful and want to keep it that way. It’s the people out there in America trying to hold the whole structure up that are most articulate in defining what what needs to be done.

  9. Plan to go. No matter what happens, they’ll be very interested in dollars. Harry Lime opportunities. If it is truly dangerous, write it off, but if you want to go, go.

  10. “If it is truly dangerous, write it off, but if you want to go, go.”

    I’m still watching. If my wife is healthy, always a question, we might go. At worst, we could go to London.

    The biggest item that is non-refundable is air fare. I would still like to go if the place is peaceful.

  11. My brother in law is from Greece. He and I are both power engineers and I asked him once if he saw any opportunities in Greece. His reply was that he had worked hard to get out of “that f-ing place” and saw nothing but corruption. He noted that the Greek shipping billionaires were constantly under pressure to build new ships in Greek Yards. They refused noting that they would be held hostage by the local unions and politicians. The strong communist presence that produced the reactionary military government in the 1970’s is clearly present today. They never go away it seems.

    But the problem is endemic to the Euro. The strict public budget requirements were routinely ignored by France, Italy and Spain. The fact that Greece went south American on them was merely a sideshow.

  12. “The strict public budget requirements were routinely ignored by France, Italy and Spain.” The first country to break the eurozone requirements was …. wait for it …. Germany.

  13. “saw nothing but corruption.”

    I’ve seen the same reaction from people in Spain. I was in Spain in 2010 and liked it a lot.

    My daughter lived there for a year and loved it. I think Greece is less viable as an economy than Spain but the left wing government just about ran Spain into the ground.

    I like France a lot and have been there many times but they are infected with communism seriously. They need another De Gaulle.

  14. “Harry Lime opportunities” Good Lord…but of course, there are those adept at the art of hustle, engaged in just that as we type, I’d imagine. I wonder how the immigration component is affecting the country, and how their neighbors to the East and Northeast might exploit the chaos?

  15. It’s truly amazing how surprised, and then resistant, so many people are to the fact that economic laws are real, and that they actually do result in the very real negative consequences that all the “uncool” types predict.

    One of the unfortunate things about the way ideas work is that, generally, they take a fairly long time to play out as they move through a culture. But in the case of collectivist ideas, we’ve already had a century of experimentation with numerous forms of their economic and social schemes, so the track record is pretty clear.

    What is also utterly clear is that commitment to the collective ideal requires an ability to refuse reality so completely that no evidence, no historical record, no consequences, no matter how disastrous, can cause a true believer to step back and honestly reassess their beliefs, except in rare cases.

    This religious level commitment to the true faith is in large part the energy source behind the ability of collectivists to repeatedly renew their devotion to the coming utopia, no matter how many times and ways the cultural “rapture” they long for fails to arrive.

    Regardless of the poverty and chaos their policies bring about, it is always the fault of someone else, never their ideas and programs.

    Those of us observing this painful spectacle keep asking, “when are they going to see, and put into effect, some realistic policies to remedy these problems?”

    They can’t, and they won’t. It would require them to re-examine, and reject, most of what they have believed for all their lives. And that is a terror more deep and dark than any mere cultural collapse, or economic meltdown.

  16. One of my Greek acquaintances was a very pro-American shopkeeper in the old downtown district – he had a small retail and wholesale business, selling fabric suitable for children’s clothes, which is how I came to be acquainted. (I sewed all my daughter’s clothes, at that point, and so the fabrics from his place were perfect.) He distrusted the Papandreou government most intensely. People who had a small business like his operated under difficulties – such as a staggeringly incompetent bureaucracy. One illustration – those cars driven by people assigned to the Hellenikon base were supposed, eventually to get CD (diplomatic) license plates for their privately owned vehicles. But it took so long to actually receive those plates – longer than the two year tour that most American personnel actually served – that most of us went with very identifiable AFG (Armed Forces Greece) plates on our cars, which could lead to all kinds of trouble and harassment. I was so grateful to get to Spain and get Spanish plates for my car – and not be so much of a target.

    Another example – telephones. It took forever to get a telephone number, land-line and a telephone itself! for a private residence. I lived on the middle floor of a three-level apartment building. My landlord and his family lived on the ground floor, my landlord’s sister-in-law and her family lived on the top floor. There was a single land line and a single telephone for those two apartments. They passed the telephone back and forth, when necessary — in a plastic market bag at the end of a long piece of rope. I don’t know how many times I heard Yiota and Panayotis calling between apartments, and then seeing the telephone inch up or down past my kitchen window.

    And finally — it seemed that EVERYONE wanted a government job, and lavish benefits but absolutely no one wanted to pay a drachma more in taxes – I think that evading taxes was almost the national sport in Greece, so the central government was all the more grasping about it when they could actually nail someone to the wall and force them to pay out. When I was leaving Greece, I had to pay almost $100 in tax on a car stereo system in the car that I bought from a pal while I was there. The original stereo system had been replaced at some point by an after-market one, and where had the original one gone, hey? No evidence of sale in my tax folder, so I must have sold it to a local. Talk about a low social-trust society… and yes, I was po’ed about that for some time.

  17. I have been told that the rapid adoption of cell phone technology was largely a result of the poor land line service and the bribery rampant in that area. You were probably there before the cell phone revolution.

    I really feel or the people doing business in Greece and wonder how the hotels on the islands will do. Much of their business was from Athenians who rushed to the ferries every Friday to go to an island.

    I’m still watching the news and, if my wife is healthy, we might divert to another final destination if things look bad. I’ve had this trip planned for ten years.

  18. My family was talking about Greece tonight. My mother was saying that even credit cards are no good for tourists? That I don’t understand as the holder’s own bank pays the bill, unless the Greek bank that is the intermediary holds on to the money and won’t pay the merchant.

    I would say if you are still planning to go bring lots of cash. If my reasoning behind the credit cards is valid (just thought up as I am typing) then even traveler’s checks wouldn’t work, as the banks would hold on to that money and not release it to the merchant’s account.

    Sounds like a huge mess in the winds.

    When you get people used to freebies hard to tell them to quit

  19. I guess I lost a comment responding. Trap Advisor has a thread on the Greek crisis and says that Travelers checks may not be honored. I don;t know why as AMEX is the source of funds but maybe they use banks as intermediates.

    Stratfor has a piece on the crisis and seems to agree with me that Greece is better out of the Euro.

    Greece has three alternative sources of money. The first is Russia. The Greeks and the Russians have had a relationship going back to at least the 1970s. It was quite irritating for the United States and Europe. It was quite real. Now the Russians are looking for leverage to use against the Europeans and Americans. The Russians are having hard times but not as hard as a couple of months ago, and Greece is a strategic prize. The Greeks and the Russians have talked and the results of the talks are murky. The BRICS (Brazil, Russia, India, China and South Africa) summit began July 6 in Russia, and the Greeks are sitting in as observers — and possibly angling for some sort of deal. Publicly, Russia has said it will not give a direct loan to Greece but will take advantage of the crisis to acquire hard assets in Greece and a commitment on the Turkish Stream pipeline project. However, bailing out Greece would give Russia a golden opportunity to put a spoke in NATO operations and reassert itself somewhere other than Ukraine. In Central Europe, the view is that Russia and Greece have had an understanding for several months about a bailout, which could be why the Greeks have acted with such bravado.

    We’ll see. I am still watching.

  20. Wow ! Germany has blinked and Greece will get bailed out.

    This is the first time Europe’s institutions have acknowledged clearly that Greece’s public debt – 180pc of GDP – can never be repaid and that no lasting solution can be found until the boil is lanced.

    Any such deal would give Greek premier Alexis Tspiras a prize to take back to the Greek people after they voted by 61pc to 39pc to reject austerity demands in a landslide referendum last weekend.

    While he would still have to deliver on tough reforms and breach key red lines, a debt restructuring of sufficient scale would probably be enough to clinch a deal, and allow him to return to Athens as a conquering hero.

    The Greek parliament is due to vote to ratify the measures on Friday.

    • The price the Greeks are willing to pay to stay in the euro
    German Chancellor Angela Merkel said “a classic haircut” is out of the question, but tacitly opened the door to other forms debt restructuring, conceding that it had already been done in 2012 by stretching out maturities.

    Athens here we come !

  21. Germany blinking is just postponing the problem a couple of months. Spain has elections this summer, I believe, and that guarantees that the “Podemos(??)” party that says it will do the same thing as Greece will win. Portugal, Italy, and Ireland will follow in whichever order of elections happens. The EU is now officially scrod [past pluperfect subjunctive]. Spain will not back down now, and the EU cannot take all those defaults.

  22. “Germany blinking is just postponing the problem a couple of months.”

    OK with me. I expect disaster any day now but it would be nice to finish our trip.

    One nice thing about being a pessimist these days is you are never disappointed.

  23. I finally canceled our Greek trip. Things are just too sketchy and my wife’s health is not the greatest, We will go, assuming she is OK, to London and not continue on to Athens. I had to make another payment this week for Greece and decided not to do it. The rest of the trip is insured and if her health goes down, we can cancel that part.

    Our present plan is to spend a few days in London then take the Eurostar to Paris for $59 each.

    We have both been to both places although we have not traveled together for 25 years when we divorced. Greece was just too far and too unstable. I had been planning that trip for ten years and my previous anticipated travel partner died on me in 2006.

    Paris will be fun together.

  24. Sorry to hear that, Mike, I’m sure it’s a considerable disappointment.

    Paris is great; I have also enjoyed driving around in other parts of France.

  25. I’m still not sure we will make it but Greece just seemed too far and foot unstable.

    I have a number of favorite places in Paris. The last time we were there together was 1981. It will be fun.

  26. Another reason why we have cancelled Greece is the increasing unrest. Thousands of “immigrants” trying to get to Britain. They are now rioting in Calais, trying to get through the “Chunnel” and we are making plans accordingly. Our new plan is to include having friends meet our plane in London and take us to their home in Chichester for a few days, then take the Dover auto ferry to Dunkirk to avoid the riots in Calais. From there we will go to Brussels and then to the Waterloo Battlefield.

    One of our friends had an ancestor who fought in the battle and who attended The Duchess of Richmond’s ball the night before. After that, we will return to London and they plan to attend some family events in Belgium.

    I wish Greece were stable but we are too old to deal with the problems there.

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