Blog: Greece Has Problems but Perspective Please!
Debt crisis! Public Spending out of Control! Bond Market Panic! Euro zone Collapse Fears!
These headlines and many others of the same ilk are often used to describe situations akin to the present one facing the Greek economy. Headline writers love a good splash regardless of the realities on the ground or the exacerbation of the problems caused by such sensationalism.
The truth is business news, economic reporting and stock market gyrations are often the result of complicated inputs which leave the headline writers somewhat bemused - and that's where the problems begin.
Greece is a great case in point. Yes, the crisis has reached a head and forced the 100 day old government here to bring forth an austerity budget designed to create a three year turn around. It is a big gamble and one that will cause reverberations around the country and the wider European Union community if it fails to come off. And yet the current furor fails to take into consideration that this overnight crisis has been over a decade in the making.
Only now that the bond markets and equity investors are taking fright on Greece has the necessity to act become imperative. Cynics would suggest that only now that the euro has started to decline are EU-wide politicians beginning to feel uncomfortable. And there was me in my naivety thinking most European big wigs wanted the value of the euro to decline. Shouldn't they be thanking the Greeks?
Questions over Greek data, Greek spending, Greek productivity have been asked for years so why now for the big assault on the country? I can only imagine that investors, the media, politicians and the rest of the peripheral players have not only a short attention span, but also a limited capacity to deal with more than one crisis at a time.
Both points are exemplified by a multitude of cases where today's crisis becomes tomorrow's 'fish and chip wrappers', if you can still say that in the age of internet? Seriously, why are Dubai's colossal structural issues less of an issue today than a month ago? Has Iceland solved its problems and found a way to avoid each citizen being saddled with $40,000 worth of financial crisis-related debt? Has the U.S. recovered one job out of the 7.2 million lost in the current recession? No on all counts, it's just that we seem to want our crises in an orderly queue. "Line up please, one at a time."
Yes, there is no denial that Greece has a wretched budget deficit, high unemployment, massive public debts and an economy still in recession but you can bet your bottom dollar that the external players will tire of this story when they feel there is no more capital to be squeezed out of it. As most market players know full well, you can only sell on one story for a certain period of time before everything has been factored in and a position needs closing. Yes, Greece's finances could deteriorate further and yes, Greece may struggle to attain all its goals but, as things stand, a lot of the bad news appears in the price of Greek assets.
At the danger of 'going native', as one of my on-air colleagues once accused me of, I have been heartened on the ground here in Athens by the people side of a story that for me was purely about numbers and missed economic targets before my arrival at the airport. I've met Government ministers, academics, economists and even souvenir shop owners. The Greeks know they have massive problems, not least from the cultural tendency for parts of the economy to see tax evasion as a national pastime, but, to a man (and woman) they seem unified in their desire to sort out age old problems once and for all.
The Government still has a clear mandate with 70 percent of the population, according to the most recent poll, to make the necessary reforms. An approval rating far higher than Obama, Merkel or Brown. So who am I to pour cold water on those aspirations? Who is to say that this time the political establishment will fail to deliver yet again? It's not great headline but maybe, just maybe, Greece will prove the doomsayers wrong and pull this one out of the bag.