I’m heading back to Greece. Have they turned the corner?
Timing is a funny thing – I’m here sitting in the airport, flying out to Greece on the same day that the European bail-out officially comes to an end.
The Troika – International Monetary Fund, the European Central Bank and the European Union – have been effectively running the country since 2010.
Today, the Greeks will say goodbye to them.
And hello to Jon.
They’ll also be saying hello to truckloads of other tourists if the numbers on this flight are any indication.
If there’s been any upside to the Greek crisis it’s been for tourists like me. I’ve never been a penny pincher, but even I’ve noticed my dollars going a lot further than they used to.
And as deflation’s gripped the country (remember, Greece is part of the Euro, so there’s no ‘cheap-currency’ effect, they had to rely on ‘cheap stuff’ instead) tourism has boomed.
At some points it seemed like Tourism was the only thing that was working in Greece. That and digital nomads like me. (Yes, I’m taking my laptop.)
And now, I’ve been coming regularly to Greece since before the crisis began. Even from the comfort of the resorts and yachts I’ve called home, I can still see it’s been a hellava ride for the Greek people.
And so are we out of the woods now? Is Greece ready to put the whole sorry business behind it?
For starters, there’s hardly been any recovery in Greek economic output. GDP is still almost a full third lower than where it was at the start of the crisis.
This crazy chart here compares the recent Greek experience with the Asian crisis and the US Great Depression.
Look at that chart! 10 years on and there’s still no recovery in sight!
And if the US had a ‘great’ depression, what did Greece have? A Mega-Depression? A Super-Dulux Family Size Depression?
And while the last bail-out funding has now come through, and most people think Greece should be able to take it from here, all that money still needs to be paid back, and Greece is still vulnerable.
Look at this chart here, which shows that Greek public debt (relative to GDP) is still the worst in the world… by a long shot.
Only Italy and Portugal come close, and they’re pretty much basket cases as well.
So that means Greece still has a massive debt burden. If anything should happen in the global economy (oh, you know, like neighbouring Turkey going into a currency crisis, for example), the wheels could very quickly come off again.
A debt burden that big is a massive drain on the economy, and gives you very little wiggle room in the budget.
And yet, Europe is celebrating this as a success. Cue trumpets, flags, open car processions.
But why? On what measure is any of this a success?
I’ll tell you. The banks were saved. The Euro-currency survived. The euro-project soldiers on.
So on that measure yes. If your definition of success doesn’t include any measures of well-being for the Greek people themselves, then yes, this project has gone monstrously well.
(Did I mention they privatised pretty much all of Greece’s productive assets too? That was a win.)
A mega-depression that still leaves an economy in the hole ten years later should be seen as a massive failure.
And as not a failure of Greece.
Economies have built in stabilising mechanisms. Depressions should never last this long. (They have literally never lasted this long!)
The only reason it’s dragged on as long as it has is because banks, currencies and money came first, and people came second.
Greece got unlucky. But Greece is every country in the modern world.
It will be interesting to see the mood. Will keep you posted.