greece

NO B.S. FRIDAY: Famous Greek Work Ethic

June 19, 2015 by Jon Giaan

The last time I was in Athens I was almost hit in the head by a Molotov cocktail.

Well, ok, maybe I wasn’t in the thick of the riots, but I was in the neighbourhood. It seemed to be everywhere. Police sirens, young people running in packs. Older people who had given up running but still looked angry.

Pension payments hadn’t gone through. Financial institutions were fending off a run on the banks. The police were on rolling strikes. So were the rubbish collectors until they got paid.

It was mayhem. Greek civilisation seemed to be on the brink of collapse.

‘This is going to get ugly.’

But then at 3pm, it just stops. Peace and quiet descends on the city.

Why?

It was a long weekend. The ferry for the Greek island of Paros leaves at little after 15:10. Seemed like all the protestors were on it.

Rebellion, anarchy, the over-throw of capitalist oppressors. All that could wait until Tuesday. The forecast was for beautiful weather.

‘Oh those lazy Greeks.’

This is one of the narratives that have emerged from the ongoing Greek crisis. The Greek people are just lazy. They’ve been living beyond their means and now that it’s time to pay they bills, they’re just crossing their arms and having a hissy fit.

This is the lecture a friend of mine was trying to give me – though she knew nothing about the Greek situation or international politics.

But that’s when you know you’ve won the battle for the narrative – when people who got no idea about it suddenly have very strong opinions about it.

This is the PR game.

And right now, it’s the game the Greek people are losing. Who’s winning? Their creditors. Germany, France, the IMF – and a bunch of private enterprises.

I’m not saying they don’t have a legitimate claim to the money they lent – but constructing a narrative about “Lazy Greeks” helps you convince your people to let you play hard ball with the lives of an entire nation.

So is it true?

The first mistake is taking a reading on an entire race of people based on the actions of their government. How far do you identify with the decisions of the Abbott government? Or the Rudd/Gillard government?

How would you feel if Hockey stuffed up the books, and now suddenly all Australians are lazy and incompetent?

The other point is that it just isn’t born out in the data.

If you look at Average Weekly Working Hours, based on OECD data, Greeks actually have the longest working weeks in the EU!

Those Dutch folks only work 30 hours a week, but you don’t see anyone waving the ‘lazy’ finger at them!

They’re even working 7 more hours a week (almost a full day) more than those uber-industrious Germans!

A lot of these differences are structural. There’s a lot of self-employed people in Greece. And farmers. Both tend to work long hours.

Also part-time work is less common in Greece. It’s much more common in busy-bee Germany.

But even if you strip out the part time difference and only look at full time workers, Greeks still work 10% more a week than Germans.

And that’s because the Germans take more holiday, sickness leave and maternity leave – on average four weeks more than the Greeks.

Sorry, what were you saying about laziness?

Or what about the claim that Greeks retire at ridiculously young ages? They shuffle off in their early 40s to long and indulged permanent holidays?

Again, it’s just not born out in the data. On average, Greeks take their pension a little earlier than the rest of Europe, but the difference isn’t huge.

But then, what does this have to do with laziness? It’s a product of the system. Are you telling me that if the system allowed you to retire at 40, you wouldn’t? You’d just keep working?

No thanks. I prefer to spend another 15 years in the Lederhosen factory because I have a righteous Western European work ethic.

Give me a break.

And that’s what gives me the craps. It’s like the rest of the world looks at us and sees us having a great time. Enjoying the Mediterranean sun, drinking ouzo, playing music, talking crap with our friends.

We’re known for our lifestyle. We’re a lifestyle people.

But then they make the grand logical leap that because we have a reputation for fun, then we must also have a reputation for not doing any work.

I’d say that this is a particularly western idea. The idea that work and fun are incompatible.

The only virtuous life is one where you slave away in misery for 60 years, and then enjoy a few quiet years under a tree when you retire.

It’s an idea that has a good hold in Australia too.

It’s garbage. Work and fun are not incompatible. In fact, one energises the other.

And look at me. I like my lifestyle. I love it. And I’m wiling to work really hard to make it happen.

So just because we’re not buying into your misery mantra, don’t go calling us ‘lazy’.

That said, Greece is pretty stuffed. It’s in a world of pain. GDP has fallen by 25% in the past 5 years. Poverty rates have doubled.

And their budget is a total mess. And only getting messier.

(Military spending hasn’t been touched though! Probably because Greeks like buying German war machines. Does Greece really need new submarines at a time like this?)

And the property market is still shell-shocked, though it seems to be stabilising. You’d hope so. Prices in Athens have fallen 40% since the GFC!

And even though prices are falling, rents are going south too, and yields are still a pissy 2% in a lot of places.

Time to snap up a bargain?

No freaking way.

It’s a renter’s paradise. You could rent on a different island every year, and landlords would be tripping over themselves to have you.

I’ll stick to the Aussie market thanks.

Greece is in trouble. No doubt about that.

But just don’t tell me its because Greeks are ‘lazy’.

Will the Greeks exit the Euro and make it “the place” to holiday?

Does Australia need to have a more ‘Greek’ work ethic?

Will you be going to Mykonos this year?

Brits being led to the slaughter in Greece?

August 20, 2013 by Jon

Real estate or building land for sale

You’ve got to feel sorry for the Brits don’t you?

The economy’s in the doldrums, it rains 350 days a year, and the cultural culinary high-water mark is a shepherd’s pie. Meat AND mashed-potato… IN A PIE!

Genius.

But I feel most sorry for the poor old mum and dad British investors. Ignorant, naïve and cashed-up. Everything a scammer could hope for.

And now a text-book guide to everything that can go wrong in off-shore property investing.

You’d think they’d learn. There’s been 20 years of investing horror stories, across the Mediterranean, but they keep coming back for more.

And right now, here in Greece, there are a whole bunch of specialist agencies lining up to market bargain basement Greek property directly to the Brits. Some of them are probably ok. Some of them are probably shamelessly criminal.

One of those organisations is the Greek government itself. Apparently you can now rent out the treasures of ancient Greece – places like the acropolis – for fashion shoots or music videos… for a modest fee.

Maybe if we ever go broke we could do something at the Sydney Opera House, like put on a concert. Oh wait…

But there are shysters out there playing off the British dream of a cute little holiday villa in the Mediterranean. And who’s going to help them do anything about it. MI5?

I’ve been looking around at property since I’ve been here (I can’t help myself. Some people like looking in Galleries, I like looking in real estate windows…) And there are some bargains here to be sure!

I’ve seen places, quality places, going for discounts of 50-70 percent. Premium inner city houses, stunning water-front villas. There are some incredible bargains on offer.

Because the debt crisis has had a huge impact on the Greek property market. And the truth be told, a down turn in property was underway well before the debt crisis hit. Actually it was one of the key causes.

But now property prices nationally are 30 percent lower than they were three years ago.

And in the 5 years leading up to the GFC, an average of 150,000 properties changed hands every year. Now, Greece is lucky to post 10-20,000. Volumes are down an incredible 90 percent!

A 30 percent fall in prices, a 90 percent fall in volumes? That’s a property market that’s been decimated. But it’s also a property market that’s offering up some incredible bargains.

And new taxes on property are pushing even more sellers on to the market. If it isn’t a buyers market, I don’t know what is.

And it’s a market that’s attracting buyers from all over Europe, not just the UK. Snare yourself a piece of paradise at bargain basement prices!

But I wonder if the British mums and dads really know what they’re doing – if they really understand the risks.

It highlights some issues that everyone thinking about offshore property investment should be aware of.

First of all, the Greek property market is not particularly sophisticated – definitely not relative to Australia. There’s still no one website to look at all properties available for example.

So buyers are relying on buyer’s agents to source their properties. But how much can you trust your buyer’s agents? Often, they just work on commission, so unless they think you’re going to be a repeat customer, they don’t really care what piece of crap they flog you.

You think the Brits would have learnt this lesson in Spain. A lot of folks bought there, completely sight unseen! And then it turned out that quaint little villa with water-views was actually a hovel with a garbage tip aspect. And there was nothing they could do about it.

The second issue is the difficulty of navigating a foreign legal minefield. Greece doesn’t have a reputation for being light on red tape. And there’s still a lot of uncertainty around the legality of foreign title.

Again, you’d think their experience in Turkey would have been instructive. There were a lot of cases there of transactions that lacked the proper documentation, which meant that down the track they were null and void. There were also cases of Brits rocking up to find that the title had actually been put into the name of the buyer’s agent’s cousin.

And how many do you think had the pockets or the wits to try and drag someone through the Turkish legal system? You’re a long way from home.

The other thing I wonder is how many of them are hedging, or even really understand the currency risk involved…

There’s always the Pound / Euro risk. It’s not really clear which way that might go. There’s a lot of factors to consider.

But what about the risk that Greece exits the Euro? That still remains a possibility. Those Brits could find themselves with a euro-based mortgage against an asset denominated in next-to-worthless drachmas… scary.

And then there’s sovereign risk. Foreign property owners (with no vote!) would be tasty targets for tax hikes to try and fill the budget black-holes.

It’s a minefield.

Now I’m not saying Greece is a no-go zone. I’ve been keeping an eye out myself. There are some incredible bargains. And if you could afford it, and you bought well, a piece of paradise is a piece of paradise, no matter what happens to the economy.

But you really need to know what you’re doing if you’re going to invest off-shore. Or at the very least, you really need to partner with someone who does, and who is someone you can trust!

Get that in place, and Greece could be an incredible opportunity.

But if you don’t you’re just a lamb to the slaughter. Makes me wonder how many unsophisticated Brits are being led up yet another Mediterranean garden path…

The Real Greek Crisis

August 15, 2013 by Jon

Socrates

Someone was telling me that a University here in Greece had a new policy on security guards. To save money, they’re firing all the security guards, and only keeping on those with masters degrees of PhDs.

Now, I don’t know if security is a more complex business here in Greece. But I thought it was more of your Cert IV kinda skill set – not a university degree.

And you can’t imagine someone’s invested in a PhD with the hope of cracking the security guard market. Something’s going wrong here.

And I think it goes to the heart of the crisis Greece is in – when you have an educated people, unable to find meaningful work.

And I’m not joking or trying to be punny when I say it’s a tragedy.

Take Olympia. She’s been our waitress at our favourite little café here in Mykonos. She’s mid-20s, bright and articulate, speaks perfect English, and has a masters degree in Social Work…

… and waits tables for lazy tourists like me.

If you think that’s a waste of potential, it is. It’s a waste of her talents and it’s a waste of the contribution she could have made to her country.

I’m not bagging working at a café mind you. For some people it’s great. For some it ties in with their lifestyle. Some have a passion for it.

But Olympia’s got no passion for her job. If she could be working in her field, she’d toss in her apron at the drop of the hat. No, it’s the economy that holds her here.

The youth (under 25) unemployment statistics in Greece are horrifying. At last count, 64.2 percent of people of working age under 25 didn’t have a job.

That means only 1 in 3 are working. It’s a depressing stat if you’re one of the two hoping to be one of the one. The numbers are against you.

It’s a tragedy in Greece, but it’s ugly across Europe.

Euro Unemployment

This chart shows that youth unemployment is up to 56 percent in Spain, and up over 40 percent in Italy.

Only Germany have anything looking like a full employment rate for it’s youth – which again shows just how different the euro zone economies actually are from each other – and how hard it is to keep the wriggly bag of roosters that makes up the euro together.

If this isn’t a crisis, I don’t know what is. I believe the children are the future (because that’s logically true by definition). But if the future is being lumped with an erosion of productive skills as well as massive set-backs to their self-esteem, what will the future look like?

Not pretty.

Normally, it’s the unskilled that have the hardest time finding work in a struggling economy. Again, this is almost true by definition. If you don’t have particular marketable skills, it makes you less marketable.

But it’s gone further than that in Greece and continental Europe. A full 30 percent of 20-35 year old Greeks are university educated. In Spain, it’s 40 percent. It’s the most educated generation in history, and it’s all going to waste.

Think of all that knowledge and energy embodied in those young minds – all that investment – just going to waste. Spectacular fruit left to rot on the tree.

I ask Olympia if she has any regrets about studying and studying so much.

“At first, I was happy with the choice. I enjoyed the topic, and I wanted to work in the field. Now I wonder if I should have studied something that could get me a job overseas. Like finance and commerce. Maybe medicine. If I had my time again…”

The irony is that Greek needs social workers now, perhaps more than ever. Six years into recession, on a lot of measures the crisis in Greece is topping the Great Depression in the US, and is lasting longer. With more and more people out of work, Greece is at risk of running into a humanitarian crisis as well.

“Sure, there’s lot of social work to do,” says Olympia. “But who’s going to pay for it? All the municipal governments are broke. There’s no money.”

And so how did Olympia, originally from Athens, end up waiting tables in Mykonos?

English.

Here, being able to speak English gets you a lot further than any experience you have in hospitality. Olympia spent some time in the UK when she was younger, and had a knack for languages.

Today, it’s her saving grace. “If I couldn’t speak English, I don’t know what I’d be doing. I’d been looking for work for over a year in Athens, and couldn’t find anything. So I came here. But I don’t know what I’ll do when the season ends. I don’t want to think about it.”

Maybe she’ll go back to Athens and join the rest of her disaffected generation on the streets of Athens. She doesn’t look like the rock-throwing kind, but desperate times make for desperate people.

Or maybe she’ll just throw it all in and try her luck overseas. The numbers on the leakage of skilled and educated professionals out of Greece are staggering. A recent study by the University of Thessaloniki found that more than 120,000 professionals, including doctors, engineers and scientists, have left Greece since the start of the crisis in 2010.

That’s a real Brain Drain. And just when Greece could really use that talent. But who can blame them?

For some of the young here, unemployment is all they’ve known. And when you feel you can’t make a valued contribution to your society, it eats away at you. It scars you.

For their sake, and for the sake of Greece’s future, they need to get on top of this problem fast.

When your carers forget to care, and learn how to throw stones instead, you’ve got a real problem on your hands.

A First-Hand Look at the Euro Crisis

August 13, 2013 by Jon

Mykonos

Determined to go whatever lengths necessary to discover the truth for my faithful readers, I’ve come to get a first hand look at the Euro Crisis.

Let me tell you, it’s ugly. The beaches are crowded, the harbour’s so full of 100 million dollar boats you can practically walk across it, and the clubs and the bars are so pumping, that last night I had to wait a full 45 minutes for a Mai Tai.

Ok, so perhaps coming to the Greek island of Mykonos – one of the most popular tourist destinations in Europe – wasn’t the best way to get a representative sample.

Because there’s certainly no sign of the Euro Crisis here. The place is pumping. The locals I talk to say it’s the best season they’ve seen in years. They’re even using the word ‘optomistic’!

So what’s the deal? Have our media misled us again?

You’d have to think there’s a fair chance of that. But I think the mayhem in Mykonos hides two separate phenomena.

The first is that Mykonos has always been a favourite cubby house for the rich and famous. Jacqui Onassis Kennedy made put it on the radar back in the 60s, and since then it’s been a favourite summer stop-over for every billionaire with a yacht.

Down in “Little Venice”, where the white-washed houses sit literally on the sea, with nary a care in the world for global warming and rising sea levels, apparently Madonna has a little hide away for when the pressures of being rich and awesome all the time get too much. (Tour guides will take you to the street, but they can’t tell you which house is hers…)

And last month, so my cabbie told me, the Kardashians were here, film crew in tow, just doing what they do…

…which is sod all as far as I can tell.

But this is the first rule of economics. When the crisis hits, it’s the poor who go to the wall first. The rich have their riches to protect them.

And in an economic collapse, when prices and wages are falling like they are in Greece, the wealthy actually find their wealth stretches a lot further than it used to. “Another Mai Tai, James? They’re practically giving them away.”

And if you own assets, especially property, when everything else is going to ruin – when everything is unwinding in a reverse economic miracle – then you’ve got something you can bank on. Something real.

So our small statistical sample of life in Mykonos only tells us that the rot hasn’t reached as far as the top end of Europe-town.

The other story playing out in Mykonos is the pulling power of deflating prices in post (mid?) crisis Greece. A Greek holiday doesn’t cost as many euros as it used to, and savvy Germans and French, and a growing mix of affluent Hungarians and eastern Europeans are turning it to their advantage.

Apparently foreign tourist arrivals were up 24 percent in the year to May, and as the locals keep telling me, it’s looking like one of the best summers on record.

Tourist revenue is already up a massive 38.5 percent over the year. But then you’ve got to remember that a year ago, the streets were filled with protests and Greek society looked like it was on the brink of collapse. Hardly a strong pull for a retired German couple.

“I went to Greece and all I got was this lousy t-shirt and a rubber-bullet wound.”

But with GDP still falling (output has now fallen a devastating 22 percent since 2008) prices are heading south too. In large part this is driven by falling wages. The waitress who brought me my breakfast Mai Tai said that they had taken a 50%+ pay cut at that particular café.

With unemployment up at a staggering 27 percent nationally, with youth unemployment up at an inconceivable 65 percent, a job is a precious thing to have – even on half pay.

And so with falling prices, a Greek holiday is not the extravagant luxury it used to be, and cashed up Europeans are looking to take advantage.

You might hope that this tourism boom might lead Greece out of its crisis. That soaring spending might boost the taxation revenue take, and help bring down Greece’s crippling public debt.

But Greece’s problems run deeper than that.

A recent survey here on Mykonos found that 56 percent of cafes, restaurants and hoteliers were committing some kind of tax fraud.

On some islands it was up as high as 85 percent!

Scandolous! In Australia, that kind of behaviour, in the middle of a debt crisis, would end up on Today Tonight so we could all have an good, entertaining judge. But in Greece, no one thinks much of it. It’s just what you do.

And it highlights just how difficult the Greek problem is. No one feels like they caused the crisis – and in a way that’s true. Greece’s problems emerged from generations of poor public policy and governance. And so no one feels that they should bear the brunt of the burden.

Which, again, you can understand. But everyone with a Greek passport finds themselves in a sinking ship. And so the situation requires a new sense of collective and national identity – a willingness to take the problem on together.

But when you don’t have that kind of national identity and responsibility, it’s not something you can easily engineer.

And so the buck-passing, tax-dodging, and do-what-you-can-to-get-by continues. Of course it does. Can you expect little Maria in her souvenir stall in Mykonos to go out of her way to pay full tax, when there are sports-stars and entertainers who haven’t paid tax in years?

It’s a very curly problem. Almost intractable.

But Greek history is full of challenge and tragedy, and they’re still here. I think they’ve got themselves out of worse jams than this ones.

And so for my part, I’ll be doing what I can, in my own small way, to give the economy a push.

“I think I’ll have another Mai Tai please, Olympia.”

This Greek Drama Will End With a Twist

June 20, 2012 by Jon

You might find this interesting…

I don't know if you know this, but I actually come from a Greek heritage/background. Proud to be Greek, but thanking my lucky stars that my parents moved to Australia.

So with the Greek/Euro drama that's going on at the moment, I'm interested in it on many different levels.

Spiritually, emotionally and financially.

You're probably not interested in the first two, maybe on another occasion I can talk to you about them.

You're probably more interested in how you can make money out of all these shenanigans.

I don't know whether you know, but the Greek Stock Market is down 93%.

Yes that's right, 93%.

Would you be brave enough to invest in a market that is being smashed? Probably not.

But a lot of money has been made in the last 3 or 4 days with people who know how to play the contrarian game and make a killing.

Last Thursday, in the office we were talking about exactly this scenario. I showed a few people a chart of the National Bank of Greece (Fallen from $60 to $1.20) and the Bank of Cyprus (A high of $8 to $0.24).

They were shocked… Oblivious to the carnage.

Imagine the Commonwealth Bank going from $50 to $1. This is how crazy markets can be, especially in a crisis… and how bad it is for the Greeks.

Now, being a Greek and a student of money matters, I knew a couple of things… That the Greeks would vote to stay in the Euro and consequently vote for the new Democracy Party.

The alternative being a return to the Dracma, a catastrophe that no Greek would be willing to risk or bare. The new Democracy Party won as expected.

Markets rallied Monday morning, especially the Greek stock market.

The National Bank of Greece was up 20% and the Bank of Cyprus was up 25% in a couple of days.

Put that in financial terms, $100,000 invested in the Bank of Cyprus would have made you $25,000.

I didn't do it, just to let you know… Not through fear or anything else, it's just not that easy to setup accounts and invest in the Greek Stock Market from Australia in just a couple of days.

Would I have done it if I had an open account?

Yes.

Would it have been risky?

Not really, if you've been following the last 12 months.

Is it out and out speculation? Of course it is.

Is there still an opportunity?

Considering the all-time high of the Bank of Cyprus was $8 and it's trading at $0.30, I think there's plenty of money to be made. But don't get me wrong, there are plenty of risks in this strategy and you have to get your timing right.

It's not a buy and hold scenario.

Here's what you should be learning from this crisis…

There is opportunity and plenty of it. We haven't seen the last of the stock market gyrations globally, the next 3-6 months is going to be an amazing lesson in human psychology and fear.

The main lesson here is understanding how to be contrarian and opportunistic when there's fear, gloom and doom around you.

Here's a perfect example of that…

We all know the Germans are playing a major role in the Euro crisis, but there was a time when their market was down 90%.

The year was 1945, they had just surrendered to the allies, the future looked bleak. Nobody wanted to see them rebuild. The French (current buddies), oddly enough were opposed to restarting the German industrial production.

They didn't even have a stock market until 1949.

There were other problems too. The country was in between the cold war that was emerging between the USA and Russia… Unemployment was through the roof, hope was slim if they had any.

From 1949 – 1959, the German Stock Market returned 4,094% …compared to the US return in the equivalent period of 426%.

Isn't it ironic that the Germans were once upon a time in a similar position?

Yes, I know there are a lot of differences between Germans and Greeks and there are a lot of potential scenarios that could play out. Far too many to mention in this short email.

But Greece as a country will not disappear. It will still produce something. People will live there and lots of folks will holiday there as well… The sun shines bright from April until October (Germans love that).

My views going forward… I've got plenty.

So many potential twists and turns in this Euro crisis, and so many things to learn from a financial education point of view.

But let me put this out there… People think that this crisis will end with the Greeks leaving the Euro and then the Spaniards and Italians, etc, etc, etc.

…here's a controversial contrarian opinion.

There will be exits form the Euro, but it won't be the Greeks or any other Southern European country…

Drum-roll please…. It will be the Germans.

Hmmm… Now that would be a classic turn of events, wouldn't it? The Germans leaving the Euro? Think about it. They're doing all the lending and the only thing that is happening is it's pissing off their own people.

There are also plenty of other economic reasons why this is a plausible scenario.

Don't rule it out.

Don't forget… When it comes to theatre, drama.. the Greeks invented it.

Signed with Success,

Jon Giaan
Knowledge Source

P.S. For goodness sake, don't rush out and on my bullish view, buy into the Greek stock market. Even if it is something that I'll be doing when I set myself up. If nothing else, watch, listen and learn from all this.

One thing for sure, there are several opportunities around the corner in the next 12-24 months.

P.P.S. It could come down to this… On Thursday night (Friday morning), the Greek soccer team plays the Germans in the Euro 2012 Quarter Finals. What do you reckon? Double or nothing? The Greeks would be up for it.