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Greek People Victims Of Political Games

Politics / Eurozone Debt Crisis Jul 17, 2015 - 09:30 PM GMT

By: SecularInvestor

Politics

Last Sunday, we arrived in Greece. We have interviewed since then more than 25 people across the country. We have selected ordinary people, with different jobs, from all ages, both in cities and rural areas. So our research is representative for the whole population. What people told us is staggering, and it becomes worse we compare this with the acts of the government. This is a live report about the government debt crisis.

In general, people describe the current economic situation as hopeless; there is no outlook for growth whatsoever. Everyone agrees that this crisis will go on for many years before the country can see any economic improvement.


If anything, people are extremely frustrated. That remains underexposed in the media. The frustration comes from the fact that the masses believe they are disadvantaged with the ongoing reforms. People understand they have to contribute (by paying taxes for instance) to fight the crisis, but it has to happen equally: the ones who benefited most during the years of excesses should contribute proportionately more. And that is not happening. Even with this extreme left government led by Syriza, it is simply not happening.

With the recent bank holiday (started July 5th) it became clear that the economic and political problem is not a far-flung event, a view which was shared by most people up until that point. The bank holiday has exhausted people financially, and the restriction of retrieving 60 EUR / day is extremely frustrating. Many ATM’s are not working, there is not always one nearby, so people often have a cost of 5 to 15 EUR simply to get to money out of an ATM.

Greek people were already in a very bad shape financially, but the bank holiday and ATM restriction is exhausting them. And everyone we interviewed was convinced that capital controls will be there to stay for many months, not a very healthy outlook.

Next to financial exhaustion, people are increasingly becoming psychologically exhausted. On the one hand, leaders proceed from one crisis meeting to another. Every meeting is announced as being a critical one. On the other hand, all local media are broadcasting all sorts of opinions and viewpoints, almost 24/7. People are at a point where they are confused, and don’t understand what is truly good or bad for them.

Everyone we interviewed said they desperately want “ a ” solution. The solution itself, whether it is in line with their view or not, has become of secondary importance. People simply want a direction, a path forward; they want to work towards a goal.

In that respect, most of the people we talked to had a lot of criticism about the referendum of July 5th as it has created even more confusion among people. First and foremost, because the people’s voice has been abused during political negotiations. People admit that they were not able to assess the documents that were proposed by the insitutions, which were technical in nature, long, and hence incomprehensive. The “OXI” votes were merely nationalistic. Second, the results have been misinterpreted. It remained quite underexposed that 39% of the citizens did NOT vote, so the majority vote was blank. Given that figure, the 61% “OXI” vote was in reality 36% in total, and so the remaining 25% voted “yes.” That’s a different story than the one propagated by the government and in the media. Third, all Greeks we interviewed agreed that the referendum left too much room for (mis)interpration. People admit that everyone has another interpretation, which adds to the confusion.

If anything, Greek people want justice. One of the big problems of the past was mismanagement of government money (think of subsidies, pensions, etc). The abuse was staggering, and the money has been distributed in an asymmetric way (in other words, a small group of people has benefited in a disproportionate way). Greek people want those issues to be solved. They want justice.

Case in point: one of the people we interviewed is running a cafeteria. The taxes for playing music were approx. 400 EUR per year. With a recent law, the tax increased to 1000 EUR. Apparently, that was the result of a ‘new’ law. However, only a few people have paid that tax in the past. The problem now is that those who did not pay it previously, are exempt because of the fact it is an ‘outdated’ law (replaced by  ’new’ one). That is extremely frustrating for those who are paying taxes correctly.

That brings up the point of fraud and overpaid civil servants. In recent years, there were a lot of reports about “shadow pensions”, for instance pensions to people who were not alive. Similarly, a lot of pension plans included premiums as high as 100k EUR, unreasonably high. Also, we heard a lot of cases in which subsidies were greatly abused, maximizing the unproductiveness of the country. “That is the reason we are in such a bad shape today”, is the view of almost all people we interviewed.

Contrary to what some others report, we got a very clear picture about how Greece got into this situation. Greek people understand that structural reforms are an absolute must. The number of civil servants has to come down, the government has to crack down on fraud and corruption. What remains unclear, however, is how economic growth can be stimulated. Let’s consider that the biggest challenge of the government.

And that is where we see a big problem. The current government has promised an even bigger state, not a smaller one. They have promised hard measures against the ones who benefited most in the past, but haven’t executed any so far. They have promised economic improvements, but the country is an economic catastrophe since Syriza took over in January.

Here is the biggest mistery of them all. Although the government has promised to fight any bailout plan, Mr. Tsipras came up with Greece’s 3d big bailout plan this week. How do Greek people react on that?

Opponents of Syriza obviously are critizing Mr. Tsipras for that. They point out that the current government has brought false hopes, based on unrealistic promises. On the other hand, proponents of Syriza are still defending Mr. Tsipras, saying that he was “cornered”, and that the bailout plan was the only viable solution. They believe that he had a “plan B” but was somehow “prohibited” to implement it. They still believe Mr. Tsipras is a great politician as he is the only one who can bring justice and reforms.

Let us pause for a minute here, and add our own observation. Taking everything together, it is clear to us that today’s economic and monetary crisis is a politically induced one. Politicians can facilitate the way out. And that is where it potentially can go wrong. The country needs drastic measures which are, in nature, politically unpopular. Moreover, politicians have a track record of creating confusion to people, and bringing false hopes (as discussed earlier). The only way out, in our view, is one of increased pressure by European leaders.

That leads us to the European aspect. The current government has stimulated an anti-Europe preference. However, by far most of the people we interviewed have a pro-European viewpoint. Almost everyone believes it is a better thing for Greece to stay in the Eurozone, as it is a much stronger currency than a Greek currency. Hence, the economic outlook, in the very long term, would be better being part of Europe. Moreover, people admit that European leaders have the potential to force discipline, order and justice, something Greek governments will probably not realize themselves.

It is not a strange idea that Europe can help Greece, and it is clear that European leaders are aware of it as well. When we analyzed the bailout plan which was agreed last weekend, we see in the agreement 9 measures related to structural reforms, one of which being the following:

“To modernise and significantly strengthen the Greek administration, and to put in place a programme, under the auspices of the European Commission, for capacity-building and de-politicizing the Greek administration.”

At the end of the day, that is exactly what Greek people are asking for. So Europe can really help Greece in its need to reform structurally. And, obviously, European leaders know very well that is the weakest point of Greece.

The anti-Europeans we interviewed, although a minority, brought up the fact that Europe (read: Germany) is suppressing Greece. That idea is originated from the feeling that Greece is not a sovereign state anymore, which is fed by the current government.

Our conclusion is that Greece is a textbook “boom and bust” case. The country is today paying the price of two decades of excesses, based on unsound economic expansion (i.e., uncontrolled government spending). Contrary to what some report, we clearly see that Greek people realize this, and they desperately want to change this. Whether politicians will be able to bring change or not, is the trillion dollar question in our view. In any case, politicans hold the key to change, especially when it comes to legislation and taxes, corruption and fraud, productive economic stimulus.

It is really sad to see how the Greek people fell victim of an unfair economic system, created by previous governments, cheap money, and a big state. But it is exactly at this point where some Greeks hope that this crisis has the potential to bring real change. Greek people are so exhausted that they are willing to accept change. Politicians, however, have to do the right thing, which means focus on the interest of their country, not their personal votes.

We are preparing a report on “crisis investing in Greece.” Stay tuned by subscribing to our newsletter at SecularInvestor.com.

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© 2015 Copyright Secular Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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