19 Comments

  • Greece has so many nice locally-owned boutique hotels near beaches. As opposed to say Mexico with its luxury resorts everywhere. I stayed at my first resort in December, I noticed the first day that the workers worked through the day 7 am until 10 pm. I went through town and found deplorable living conditions. I was told that the concierge that books all tourist excursions (fishing boats, ATVs on the sand, bird watching etc.) pays the locals for little for this service–the hotel chain pockets the vast majority.

    I sat on a beautiful beach for a week with a bad conscience.

    Greece doesn’t need this, Greece should not sell it’s children.

  • We watched your appearance on Max Keiser’s program (actually we never miss a Keiser show) and we thought your discourse was very insightful and that you kept Max from getting crazy as he is sometimes wont to do.

    As Americans living in Greece we really appreciate your efforts on getting the truth out there.

  • Although the Germans are very bright in many ways, in others they are not as they have a strange linear thought framework – they seem to believe in the idiotic notion of saving their own debt.
    What in fact we are witnessing is a crisis of ambition withen the west in general as the Germans for instance want to recycle their own wealth without spending it thus creating a deflationary degradation.
    It seems the Germans have simply not read their own modern fairy tales – condemning both them & us to a lifetime of nothingness in this strange sad debt swamp.
    Such a shame to reject your own tradition and nearly always a disastrous decision.
    http://www.youtube.com/watch?v=bjW30BiJ5gw

  • @Yanis:

    Your estimate of appreciaion of the new Deutsche Mark (50-100% is way off. A reasonable estimate would use the development of the Swiss Franc as a ceiling. This will get you to about max. 30% appreciation. Do not put your credibility at stake.

    Regarding OPAP. I was a OPAP shareholder until a few weeks ago. I sold (loss of 15%), because two issues could kill my investment thesis: (1) Greece taxes OPAP higher than at the moment when it is sold. (2) The dividend will be paid in currency A in the future whereas I will have currency B. f it is true that they will sell it for 2-3 times dividend. I would be interested to invest again. The price provides the safety buffer for potential tax and currency breakup.

    For all assets: At that price level and volume my advice to the seller would be “call up Buffett”. Buffett does not send a lot of lawyers, bankers etc. The process is quick and you would have a honest stable owner. If he does not buy anything, then reconsider your opinion about the value. If he buys something, the signal to the markets would be stronger than anything else.

  • @Yanis:

    Your estimate of appreciaion of the new Deutsche Mark (50-100% is way off. A reasonable estimate would use the development of the Swiss Franc as a ceiling. This will get you to about max. 30% appreciation. Do not put your credibility at stake.

    Regarding OPAP. I was a OPAP shareholder until a few weeks ago. I sold (loss of 15%), because two issues could kill my investment thesis: (1) Greece taxes OPAP higher than at the moment when it is sold. (2) The dividend will be paid in currency A in the future whereas I will have currency B. f it is true that they will sell it for 2-3 times dividend. I would be interested to invest again. The price provides the safety buffer for potential tax and currency breakup.

    For all assets: At that price level and volume my advice to the seller would be “call up Buffett”. Buffett does not send a lot of lawyers, bankers etc. The process is quick and you would have a honest stable owner. If he does not buy anything, then reconsider your opinion about the value. If he buys something, then the signal to the market would be stronger than anything else.

  • That was a nice thing to say at the end k. Yani. Many of us feel the same way. None of us has a right to sell that which is not ours. Too many people sacrificed too much for us to just roll over during this critical time.

  • I thought the Keiser interview was extremely insightful. I particularly agree with you that, unfortunately, this is not all the result of some conspiracy theory. If only it were! Then there would be some rhyme and reason to it! Also, good for you and your empassioned reply about how much for your children. That and the fact that now even the US is being threatened with down grading is perhaps our only cause for hope!

  • To Knut:
    Maybe it’s not my job to reply here since you are referring to Yannis but I just want to say something and I apologise for wasting some space for that:

    It’s amazing how narrow minded people can be…The word moral should only accompanied by the word hazard for you…If Germany leave, they all leave and that means that they all will try to depreciate their currencies to get some money from exports, Do you think that the Swiss Franc will remain untouched? There will be a lethal competition between the until then allies where each survival will depend on somebody else’s collapse, aggregate demand will slump and huge deflation in a EU level will be spread and that will increase their own debt plus their exposure to others’.EU Households will fall into much deeper trouble, and bank balance sheets will become nearly impossible to repair. Europe is not a ”Highlander” environment where only one should remain alive after chopping off the heads of its counterparts first…

    Regarding privatisations: Despite the fact that Greek’s will never agreed to sell something they are morally attached no matter what, even if this entails their self-destruction which is tightly embodied to the greek way of thinking, do you really believe that now where the mid-term privatisation framework has been formally ratified by the Greek parliament, that everybody involved with that, (Trade Unions, individuals, towns etc) will agreed to sell because a law says so? Do you think that Greek police -knowing about most of their rationale departures – will carry on doing it’s brutal job when they will be convinced that here we are dealing with selling the property of our ancestors? Do you think that a travesty vote of a law makes it so legitimate for subsequent implementation?

    Apologies again…

  • When we had earthquakes, all educated greeks became seismologists, now we have an economy quake we all start reading up on economics. The interview was good, and I agree that talking about conspiracies in such a chaotic system as a world economy is more or less futile.

    I want to remind though, that chaos results in dynamical systems not because there are no known causes to cause effects, but because there are too many causes that compete in the creation of the effect. Thus, listening on another Keiser interview circulating by emails, http://www.youtube.com/watch?v=p-6xZaR2vc8&feature=player_embedded#at=83 where banksters and Soros are built up as a conspiracy plot to dominate the world, I still wonder whether they indeed are a part of the dynamic input that creates this melt down situation in Greece and in Europe.

    In other words, not a straw that broke the camel’s back but a planned paving of the road to hell can be envisaged, people taking advantage to steer debt economies for their benefit. After all the crisis of the pound in the UK was assigned to Soros. How far is it from conspiracy?

  • Yanis,

    I think it’s about time you study the “Portuguese problem” as well. What happened in the last months and especially yesterday would probably give you new insights and definitely strengthen your already stated ideas.
    I would also appreciate some commentary on the planned raise of interest rates to 1.50% by the ECB tomorrow. How does that affect the economic outlook?

    • You are perfectly right. Portugal must be studied by all of us much, much more closely. As for the interest rate hike, it is yet another example of the deep structural faults of the eurozone: a sledgehammer to crack a nut. The result is a destroyed nut and much collateral damage.

  • Hi Yannis,

    I have been following this blog (and your articles and TV appearances as well) for about a year now. Although I am not an Economist (I ‘m a Computer Scientist myself), I find your analysis regarding the Eurozone’s systemic crisis reasonable and I agree (to the level I understand).

    However, I would like to also hear your opinion whether Greece requires to reform its economy and public sector and what are your exact proposals? For example, what’s your opinion on regulated professions (such as civil engineers, lawyers, pharmacies, taxi services etc). Should these reforms proceed? Would such reforms benefit the economy? There is consensus in Greece public speaking that people who oppose to the momerandum, also oppose to any kind of reform. You might not be one them, but surely I ‘ve seen people putting you into this category (you posted an article regarding criticism from journalists like Pretenteris and Tsimas)

    Thnx,
    Christos

  • Let’s turn a bit optimistic here:

    “Strange as it may seem, there are still credit rating agencies that give cash-strapped Greece top marks. The experts at Germany’s Euler Hermes Rating currently give the Mediterranean country their top AA rating, citing its “very strong business environment.”

    And there is little doubt that Euler Hermes can be trusted. It is the first rating agency that officially meets the tougher European regulations for the industry that were introduced at the end of 2010.

    There is only one problem: Their good rating for Greece is not related to the creditworthiness of the state, but to that of Greek companies. When it comes to rating sovereign bonds, that is still done almost exclusively by the three major US-based rating agencies — Standard & Poor’s, Moody’s and Fitch — who are collectively known as the Big Three.””

    http://www.spiegel.de/international/business/0,1518,772733,00.html

  • Hi Yanis and all ,

    I enjoyed the conversation ,but once again ,being a “conspiracy” oriented person ,not using the classical term ,but for the unique and more imaginative perspective it allows ,i’ll accept and lean towards the “looting” situation.

    I do not know if this situation is engineered entirely from the beginning ,nevertheless is an opportunity for certain people to acquire assets as cheap as possible.

    In all this chaos of diverse interests ,many reasons apply.

    This is a book that explains a bit about looting:

    Looting: The Economic Underworld of Bankruptcy for Profit
    Author(s): George A. Akerlof, Paul M. Romer, Robert E. Hall, N. Gregory Mankiw

  • […] In one year, the Chinese economy will perform poorly – they will have a recession. This could be a technical recession from a gross annual rate of say 10% to 3% but still a recession. One shouldn’t believe in the gross GDP that China reports – if adjusted for the real rate of inflation, true growth is even slower.

    There is something disturbing in emerging and developed economies. There are far too many Ferraris, Maseratis and Bentleys. That is not a good sign. You should see depression when things are depressed. There is a boom everywhere except for the working class and the well-to-do price. The price of high-end properties is incredible. A lot of people are going to loose a lot of money.

    Ferraris everywhere at the beaches on the east and west coast: more fancy cars now in America than anywhere else. Not necessarily wrong: just a marked opulence among a very small group of Americans while there is a much larger group that is struggling. This often means that it is time to get out of asset markets. They probably won’t continue to go up.

    QE2 will come to an end, there will be a correction, then there will be more money printing but no real help to the economy this time.

    Ultimately the fiscal situation in the United States will be fixed when there is a crisis. What will happen is that the deficits will stay very high and they will lead to very high inflation rates, most likely hyperinflation. This won’t happen tomorrow but it will come over time.

    It is surprising that the US can publish a CPI of 2% when every price in the economy is significantly higher. The rate of inflation must be at least 5% or 10% but probably closer to 10%. Prices are also up significantly elsewhere in the world.

    If the US goes into recession, what will happen to tax revenues? They’ll collapse. Then the deficit goes up automatically and it must be financed with money printing. Mr. Bernanke will be very busy.

    The economy right now is slowing down. But when one walks in the streets of Manhattan it looks like a boom period. Manufacturing is down and unemployment is unlikely to pick up. Who wants to hire when there are so many regulations? There are some jobs but they are all low paying jobs or temporary employment.

    Lowering the value of your currency and injecting trillions of dollars into the economy through money printing stimulates the economy for a while but not permanently. Real estate won’t move up but not going to collapse either. In Asia you can buy a portfolio of equities that could give you a dividend of 5%. They may go down but at least you pocket the 5% cash flow with which to invest […]

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