The international community isn’t betting on a Greek recovery yet, even though the signs are there. Are they telling the wrong story?
How do we understand abuse?
There’s an interesting phenomenon that psychiatrists have observed in victims of child-hood abuse.
The child will often construct a narrative that they are somehow ‘bad’. That they somehow ‘deserve’ the abuse they receive. That they did something ‘wrong’.
And this happens even if the adult figures in that child’s life are not contributing to this story at all. Even if they never tell them that they’re ‘bad’.
The child just comes up with it on their own.
The way psychiatrists explain it, there’s a comfort in understanding where your abuse is coming from, particularly if it has something to do with something you can somehow control (your own ‘badness’ for example).
The idea that the abuse you are suffering is random or completely out of your control just compounds the suffering. It puts you in a total state of helplessness, constantly on edge.
So a story that you somehow ‘deserve’ the abuse – that there is some reasonable logic to it, that maybe it is even ‘just’ – that becomes a strange sort of comfort.
(So sad that any child would have to lie to themselves in this way.)
But I think it points to a tendency we all have – a survival tactic we all have: we will lie to ourselves if it makes us feel better.
I’m in Athens right now – centre of the Greek universe. I’ve been to Greece every year for the past seven years now. I’ve watched the crisis unfold.
… and unfold and unfold and then keep unfolding. Like some magical foldy flag of misery.
And I’ve seen the effect it has had on the people.
At first, there was just confusion. Then anger. Then more confusion. Then confused anger. Then sadness, depression and resignation.
This year there is hope. I’m feeling that. There’s a change in the air. Things are happening. But this story will take a long time to get over.
It’s like there is a lingering depression. A self-doubt that will take some time to shake. It’s there at a national level. Like people are wondering if Greeks themselves are up to the challenge.
This is a sad thing to see come into the national character.
In part, it has a lot to do with European lecturing. The righteous finger wagging at the ‘lazy Greeks’. The Greeks who partied too hard and now refuse to pick up the tab. The reckless and irresponsible Greeks.
You hear that enough and you start to wonder if it’s true.
I mean, obviously, it isn’t. Even if the blame did lie on the Greek side of the economic ledger, it’s ridiculous to go and start blaming Greek people en masse.
I mean, the Australian cricket team got caught cheating. Now imagine that the whole world thinks that all Australian’s are cheaters, and treats you accordingly.
Worse still, imagine that the world judged you on the standards set by our politicians. I mean, would you let anyone in Canberra represent the Australian people, the Australian work-ethic, the Australian moral character to the world?
Of course not. (I mean, except Barnaby Joyce, obviously.)
But this is what Greek people have been copping for the better part of a decade – that this is their fault. Even if they weren’t the ones in government signing up to onerous, foreign currency denominated debts – the debt crisis was still, somehow, ‘their’ fault.
It’s not about complex monetary arrangements. It’s about the Greek character. It’s about what it means to be Greek.
And the complexity is a killer too. Huge pieces of the puzzle are still hidden from the public, and those that are on the public record, are often pretty hard to get your head around.
We’re talking about what it means to give up your sovereign currency and join a pan-European monetary block. We’re talking about how much responsibility lenders should take for the loans they made via various financial instruments. We’re talking about the best way to pump prime an economy after crisis.
None of this is clear-cut. Economists are totally divided. The public is just totally lost.
I mean, I could tell you a story.
I could tell you a story about a national government and a European commission getting high on their own hubris. How they sold the world on the miracle of ‘integration’ – the idea that integrating with Europe would mean that Greek living standards would rapidly ‘catch-up’ and that would, therefore, mean massive leaps in Greek economic growth.
I could tell you a story of the banks that believed that hype, and were more than willing to lend easy money to the Greek government. I could tell you about a run-up in government debt that didn’t really worry anyone at the time – not the Greek government, not the banks and certainly not the European Commission, because everyone thought the miracle of integration would run for decades.
I could then tell you a story about the Global Financial Crisis that just came as a massive flipping wake-up call to all of this.
I could also tell you about a little sovereign nation that no longer had its most important policy levers available to it. It couldn’t devalue its currency, as Australia would and has done. It couldn’t print money either, as America did. It had given its economic sovereignty to Europe.
And what was Europe worried about? It’s banks. Not Greece, and definitely not the Greek people, it was worried about it’s banks going under.
And so rather than going bankrupt (which in hindsight would have been a much better option for Greece), the IMF made the largest loan in its history (relative to contributions) to keep the Greek government solvent.
Which is really to say, to keep the Greek creditors solvent. Over 70% of the money coming from the IMF went straight into the pockets of creditors. Europe wasn’t bailing out Greece. It was bailing out its own banks.
At the same time, a just-never-seems-to-work Austerity agenda was enforced on Greece. Wages were cut, taxes were raised, anything profitable and not nailed down was sold off – ports, railways, shipping lines, you name it. European venture vultures made off like bandits.
And the Greek economy just never recovered… because it was never meant to recover. All this was about protecting European banks and protecting Europe. Greece was to be sacrificed for the greater Europe.
And so almost ten years on, the Greek economy is still down a massive 25% from its peak. More than 400,000 Greeks have just up and left the country. House prices are down 43%. Unemployment is still an unfolding tragedy.
But Europe was saved, so, you know, totally worth it.
That’s the story. It’s a story for the ages.
But then, that’s just the story I’m telling. The way I see it, Greece got screwed, and there just isn’t anything wrong with the economy, the people, or Greece’s future.
But I have an interest in these things, and I’m happy to spend my leisure time reading about it, but what do I know really?
Maybe it’s true, maybe it’s not. I can guarantee the truth is a lot more complex than whatever I’ve got in my head.
But if someone like me, with a nerdish interest in this stuff, is having trouble putting the pieces of the puzzle together, how is the average Greek person going with it?
It must just seem random, right?
But we know that random is terrifying. We feel much better if we think that things have a reason.
And so here comes the ‘lazy Greek’ story again. This happened to us because we’re lazy, because we’re irresponsible, because we couldn’t get the politicians organised to sort it out.
I can’t tell you what it was, but it was our fault.
Victims blaming themselves.
This is the real tragedy of this crisis, and sadly, I think it’s going to take years to get over.
But in adversity there is also opportunity.
Because things are definitely picking up, and as I said, now that the Troika has packed up and left, the fundamentals look primed for recovery.
The vibe on the street this year is definitely different. There are less shops for rent. There’s new cafes opening up. A few new hotels.
And people are letting themselves feel hopeful.
And even the property market, which has taken an absolute battering, things are really picking up. Some markets I’ve been watching have doubled in just a few years. Off a low base, sure, but still you’re doubling your money.
Of course a lot of the buyers aren’t locals. They’re Chinese, Russians, Americans, Israelis.
They’re looking at a Mediterranean location, with all that sun and beauty, on the doorstop of Europe, with full access to European markets, and things look like an absolute steal.
I do a bit of travel, and seriously, if it wasn’t for the lingering cloud of the crisis, most Greek cities are massively undervalued.
A lot of the activity here in Athens is around the e150-300K mark. For that price you can get a decent city-centre, 80-150sqm, 2 bedroom apartment – more of a townhouse really.
To most foreign investors (like me) that’s a bargain.
So my prediction is that we’ll see an internationally-lead recovery in property prices. The local sentiment cycle is already turning, but once they see foreigners loading up on bargains, Greeks will be quick to cash in as well.
(Greece also has a Golden Visa program to wealthy individuals, giving them full access to Europe. That’s going to be very attractive.)
And so in maybe four years, we’ll have doubled back to previous all time highs… that’s kind of what I’m thinking.
And I’m already looking around. I’ve teamed up with an old friend and local investor to form a small syndicate to purchase a few city buildings.
One example we were looking at is a derelict 8-storey building at a fire-sale price of 1.5 million euro. That’s less than 200K per storey!
… with 12 months settlement!
And from where I sit, it’s very easy to see the price doubling in 3 to 4 years.
Now some people will say I’m crazy to invest in Greece. Why would you take a risk on those lazy, irresponsible Greeks? You can’t trust them.
But that’s not the people I know, and it’s not the story I believe.
I see a people who just got screwed over. It’s rattled their confidence.
But they’ll bounce back soon enough.
And I’m backing them all the way.