Der Grexit kommt


   Die französische Wirtschaftszeitung La Tribune ist überzeugt, dass der Grexit unvermeidlich kommt. Gabriel Colletis schreibt, dass der persönliche Einsatz von Präsident François Hollande für den Verbleib Griechenlands in der Eurozone sich  als "sehr kostspielig" erweisen werde. Er meint, dass Hollande in ein übermässiges Risiko gegangen sei und ihn das die in weniger als zwei Jahren anstehenden Wahlen kosten kann.

   In einer detaillierten Analyse kommt La Tribune zu dem Schluss, dass für Griechenlands Wirtschaft eine sehr schnelle Rezession zu erwarten sei. Nicht nur die Kürzung der Renten und die Anhebung der Steuern wirken kontraktierend auf die Wirtschaft, sondern auch der zu erwartende weitere Rückgang der Staatsausgaben. Man müsse erwarten, dass die Griechen sich dem steigenden Steuerdruck durch Flucht in die "graue Wirtschaft" widersetzen werden -- eine Vermutung, die schon ex-Finanzminister Yannis Varoufakis äusserte.

   Da angesichts der Schrumpfung der Produktion nicht mit einem raschen Anstieg der Ausfuhren zu rechnen sei, bedeutet die Lage, dass alle Motoren des Wachstums im Rückwärtsgang laufen und die Zielsetzung für den Primärüberschuss unerreichbar machen.

   Ausserdem erwartet La Tribune parallel zur Schrumpfung des Sozialprodukts einen weiteren Anstieg der griechischen Verschuldung. Bisherige Ideen zur Minderung der Schulden seien vage.

   Die Tribune kommt zu dem Schluss, dass sich Griechenland in einer Abwärtsspirale befindet, die im Ausscheiden aus der Eurozone enden wird.  Das Nicht-Erreichen der Zielsetzungen der Gläubiger werde den Druck auf die Regierung verstärken, und die griechische Wirtschaft und Gesellschaft werde in diesem Räderwerk "zermahlen" werden. "Das Ausscheiden Griechenlands aus der Eurozone wird daher unausweichlich sein",  meint La Tribune

-- ed


   At this point, for the benefit of our non-germanophone audience, we prefer to switch to English.  After publishing the above article, we sent a mail to Professor Colletis saying that we at share his views. He answered:

... La question à présent, très vaste mais
essentielle, est : que pouvons-nous faire ?

(At present, the very large but essential question is: what can we do?)

    Wow!  feels asked to come up with ideas to help Greece in this dreadful situation and possibly show ways to avoid the looming Grexit.  That is a tough challenge. Some of the world's top economists have expressed themselves on this subject without presenting a really satisfactory solution.

   Nevertheless, let us try. Knowing and loving Greece since the days of the king might help.

   Back in 2010, estimated that about 40 percent of Greek GDP consisted of a bubble caused by years and decades of reckless deficit spending. Years when Greece seemed awash in money, permitting itself imports of everything from milk to luxury cars, economically unsustainable investments in prestige and convenience projects,,,corruption,,,tax laundering, you name it, Greece had it.

   As we know, some 25 percent of this GDP has already been shaved off after years of reforms and recession. Another 15 percent may already have been lost due to the consequences of the disastrous policies pursued by the Syriza government.

   Hence it is quite possible that by now, Greece's GDP is back to the level it had attained before the euro was introduced in 2001 and the really big bubble started.  Only after the dust of the current turmoil has settled, fresh data will reveal where Greece now stands in terms of GDP.

   Although GDP may have shrunk to sustainable looking levels, the structure of the Greek economy has not adjusted.  The shortage of cash and the extended bank holiday have damaged industries and commerce across the board, productive and unproductive enterprises alike, driving some into bankruptcy. For months, sometimes even years, neither the state nor the private sector have paid bills, causing hardship and more bankruptcies among creditors, suppliers and services. To sum up: the economy is in a mess.

   Two trends are needed to put the economy back on its feet: prices and tariffs (by public and private entities) must come down to levels which correspond to the lowered GDP, and imports must be substituted.  The Greeks' lower purchasing power is reducing the demand for expensive imported goods.  Import substitution must be the first goal of future industrial and agricultural development. The huge Greek import sector will respond to this challenge by fighting for lower cif prices of traditional goods. If these reductions cannot be achieved, the importers will switch to low cost suppliers. Romanian and Indian instead of French and German cars, Chinese instead of Italian apparel, Russian fish preserves instead of Japanese tuna. Fortunately, Greek merchants are clever and globally linked; they will adapt quickly to the new market frugality.

   Import substitution by Greek industries and farmers will take longer and may require assistance from Brussels, technical advice and preferential conditions for investment.  A lower level of prices and tariffs will benefit both the export trade and tourism.

   Only if the international creditors take charge to reboot the Greek state, its provincial and local entities, the private economy will again be able to breathe. The Greek state is a monster which needs to be attacked from all sides. It must be deflated, streamlined, modernized and freed from endemic corruption. It will require years of hard work, an army of foreign experts (Greek expatriates, Cypriots!) and merciless creditor pressure and supervision to tame the monster. 

   It consists, symbolically speaking, of three parts:

      • the head formed by Syriza, the trade unions, and the ruling families;
      • the belly consisting of close to 1 million employees (including state run companies) of the total Greek work force of 2.7 million (2014), largely unqualified and indolent bureaucracy;
      • the fearsome tail: the Greek pension system. 

   All parts need to be tackled immediately. Among the most difficult tasks are the creation from scratch of an effective tax collection system, as well as establishing a realistic and up to date land ownership register.

   Tasks which call for a modern Heracles. He will need all the strength and experience gathered in cleaning the stables of King Augeas to prevent the seemingly unavoidable to happen, the Grexit.

-- ed

Answers by Gabriel Colletis

   I see three three main points within it:

      • the need to reform the state and to establish new institutions
      • the price adjustment
      • the import substitution.

   I shall not comment the responsibilities of the current situation. They are shared: ruling families, corporatist unions, old parties as Nea Democratia and Pasok, Syriza because of their lack of preparation, EEC which knew perfectly the situation since decades and has closed its eyes and ears…

 The need to reform the state and establish new institutions

   The Greek state is, for sure, a monster. Too big, even if it is hard to make international or intra-European size comparisons because of the huge heterogeneity of the public sector in the various countries. The main problem in the Greek state sector is the lack of professionalism and clientelism as a legacy of the past.

   For sure, a tax collection system and a land ownership register are absolute necessities. As well as a fair and well balanced pension system. We should not forget too the education and vocational training sectors, the Universities, the Research sector, Health and care…

   Brief, almost everything has to be thought and organized since nothing serious has been done since Othon. This has as a corollary the large diffused corruption.

The price adjustment (in very short)

   Greek population has suffered very much since 2009 and austerity programs. Pensions as well as salaries have dramatically fallen. Despite this contraction, the prices are rather stable, with the exception of housing sector.
The danger, if deflation occurs, is that this process usually slows the economic activity because of the price expectations: everyone is inclined to wait for lower prices before investing or even buying common goods.

The Import substitution by Greek industries and farmers

   If I may, this third point seems to me to be the most original proposal you have done and I agree fully with it. The main problem for Greece is not the public debt itself but its reasons. The principal reason is that, since the 80’ the consumption has grown quite quick in Greece meanwhile the industrial and, a bit later, the agricultural activities declined dramatically. The gap between production and consumption is around 15% of GDP.

   Without a strong productive sector, revenues cannot be earned by a proper way according to the inland activities but are dependent of foreign transfers. In summary, Greece has to face a double problem: import and external financing dependency. 

   Rather than merciless creditor pressure and supervision, Greece, in order to answer to this double problem needs a national recovery plan and appropriate financing coming from its own resources, European Investment Bank loans and….a conversion of its debt into investment certificates.
We have proposed this option as well in Greece as in France or Germany.


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