Greece emerges from eurozone bailout programme

[Itsallaguess]

Interesting article today on the BBC website, plotting Greece's path through their debt-crisis -

Greece has successfully completed a three-year eurozone emergency loan programme worth €61.9bn (£55bn; $70.8bn) to tackle its debt crisis.

It was part of the biggest bailout in global financial history, totalling some €289bn, which will take the country decades to repay.

Deeply unpopular cuts to public spending, a condition of the bailout, are set to continue.

But for the first time in eight years, Greece can borrow at market rates.

https://www.bbc.co.uk/news/business-45243088

Some interesting graphs and statistics on the page linked above, but I think some of the feet-on-the-ground experiences might still be showing the true story behind the headline -

Yorgos Vagelakos, an 81-year-old retired factory worker, took home a pension and benefits amounting to €1,250 before the debt crisis.

Today he gets €685 and his debts are growing, he told Reuters news agency. He can no longer support the families of his two sons and can barely cover his and his wife's needs.

"I wake up in the morning to a nightmare," he said. "How will I manage my finances and my responsibilities? This is what I wake up to every morning."

Cheers,

Itsallaguess

[odysseus2000]

Sad situation, hopefully the 3% rise yesterday in the Grek etf is a sign of better times coming, but even that rise does not take the Grek back to where it was 10 days ago.

With high debt to GDP & unhappy economic times predicted till past mid century, is there any hope for Greece?

The UK went from a bad place in 1945 to the prosperity of the swinging 60's in 15 years, so perhaps Greece can do similar.

Should there be any hints of improvements in Greece the equity markets will likely take off as did the UK ones in the 70's, the alternative is not sonething one has seen in modern Europe. Of course it could happen, but the history of civilisation is that bad times do eventually give way to good & so perhaps my miserable holding in the Grek etf has seen its bottom.

Regards,

[DiamondEcho]

The UK went from a bad place in 1945 to the prosperity of the swinging 60's in 15 years, so perhaps Greece can do similar.

The UK had democracy and the ability to determine it's own economic policy; Greece does not. Greece is economically broken and until it walks out of the EU, and it's debts to it, will remain so. Greece is broke, but the German constitution [intra-country fiscal transfers being illegal] mean they demand their money back. There is no sign of this circle being squared.

[odysseus2000]

The UK went from a bad place in 1945 to the prosperity of the swinging 60's in 15 years, so perhaps Greece can do similar.

The UK had democracy and the ability to determine it's own economic policy; Greece does not. Greece is economically broken and until it walks out of the EU, and it's debts to it, will remain so. Greece is broke, but the German constitution [intra-country fiscal transfers being illegal] mean they demand their money back. There is no sign of this circle being squared.

Agreed, but where I differ is that I expect in the by and by that someone will figure out a way to make the circle square and once that gets into minds the price of the equity will rally strongly.

It is of course possible that this never happens, but most European basket cases do recover, one might argue that Argentina, Libya, Zimbabwe and Venezuela might never recover but even in these places there is usually some recovery sometime.

Regards,

[onthemove]

The UK went from a bad place in 1945 to the prosperity of the swinging 60's in 15 years, so perhaps Greece can do similar.

The UK had democracy and the ability to determine it's own economic policy; Greece does not. Greece is economically broken and until it walks out of the EU, and it's debts to it, will remain so. Greece is broke, but the German constitution [intra-country fiscal transfers being illegal] mean they demand their money back. There is no sign of this circle being squared.

I disagree.

While many may not like to admit it, the Greece / EU situation will be (already is largely) extremely beneficial to Greece in the medium to long term.

There are two beneficial sides to this for Greece...

1. The conditions put upon Greece for their bailout have forced a material change in Greek society. Ridiculous pensions, corruption, etc. It has forced Greece to start living within its means.

For a non-EU contrast, look at Argentina. Had a debt crisis a while ago. Wasn't constrained by any EU to force changes and what do you know, they're now having to go back to the IMF to ask for another bailout.

2. Freedom of movement has been hugely beneficial to Greece.

There is a Greek collegue where I work. He's been here 2 to 3 years now. Straight from Greece. His english has improved markedly over those few years, but more importantly so has his technical ability and work ethos.

Since the Brexit vote we've had a spike in foreign collegues - both EU and non-EU - choosing to leave the company. A number of them don't even have solid job offers lined up when they get home. These are highly skilled people - the sort that the brexiteers say they want to keep. They're already leaving. That I believe speaks volumes for what brexit Britain is going to be like - but I digress.

At the moment our Greek colleague is still with us. But it's fairly possible - even probable - that at some time he will choose to return to Greece. (Irrespective of the brexit vote, freedom of movement was always going to reach a stabilisation point, where *net* migration across the EU would be negligible, but still composed of many people choosing to move in each direction - those returning home balancing those looking for change, etc)

And when he does, he will take back with him a great technical ability, and greatly improved work ethos. You never know, but they are the sort of skills that would work well for him in future. He will be greatly positioned to setup his own company in Greece, building it around that technical ability and work ethos.

Summary...

Combine the above two aspects together - a changed Greece, living as a county within its means, with sensible, affordable pensions, sensible pay, corruption under control, and so on, with newly skilled, motivated individuals returning to the country bring with them a greater technical knowledge, and a reformed work ethos, and the future for Greece could be very rosy indeed.

And all because they chose to stick with the EU and accept their bailout conditions, rather than isolating themselves and just letting their currency devalue, sh*fting lenders, and just perpetuating the cycle of overspend, go bust.

It's obviously painful to go through such a transition - no-one likes to admit they were overspending. No-one likes to admit that *their* pension was unaffordable and therefore they were part of the problem.

But truth be told, Greece as a country is now far better positioned for the future than it's been in a long, long while. And that is in the most part thanks to their being in the EU.

[Lootman]

The UK went from a bad place in 1945 to the prosperity of the swinging 60's in 15 years, so perhaps Greece can do similar.

Should there be any hints of improvements in Greece the equity markets will likely take off as did the UK ones in the 70's

Were the "swinging sixties" that prosperous? I wasn't old enough to recall first hand but looking back it seems that the UK was not particularly prosperous back then. I recall headlines about the balance of payments deficit, trade deficits, crises in sterling, brain drains, ultra high tax rates and endless strikes.

As for the 1970s, the stock market was certainly volatile, especially around the end of 1974 and early 1975, But didn't the real stock market gains only start in the 1980s with Thatcher? And didn't we have more sterling crises, very high inflation and interest rates, debt crises, an IMF bailout and a 3-day week all during the 1970s?

To my mind it took Thatcher, tax cuts, a fightback against unions and excess welfare, and sound money policies to turn around the ailing UK ship. In investing terms the UK from 1945 to 1980 was essentially a recovery situation - you'd buy on the hope of a recovery and that did eventually happen, but not for a few decades.

[odysseus2000]

The UK went from a bad place in 1945 to the prosperity of the swinging 60's in 15 years, so perhaps Greece can do similar.

Should there be any hints of improvements in Greece the equity markets will likely take off as did the UK ones in the 70's

Were the "swinging sixties" that prosperous? I wasn't old enough to recall first hand but looking back it seems that the UK was not particularly prosperous back then. I recall headlines about the balance of payments deficit, trade deficits, crises in sterling, brain drains, ultra high tax rates and endless strikes.

As for the 1970s, the stock market was certainly volatile, especially around the end of 1974 and early 1975, But didn't the real stock market gains only start in the 1980s with Thatcher? And didn't we have more sterling crises, very high inflation and interest rates, debt crises, an IMF bailout and a 3-day week all during the 1970s?

To my mind it took Thatcher, tax cuts, a fightback against unions and excess welfare, and sound money policies to turn around the ailing UK ship. In investing terms the UK from 1945 to 1980 was essentially a recovery situation - you'd buy on the hope of a recovery and that did eventually happen, but not for a few decades.

The chart of the UK market index show a steady rise, punctuated by the 1973-1974 stock market crash:

http://stockmarketalmanac.co.uk/tag/ftse-all-share/

One can argue all sorts of things about the 1960's but the feeling of the folk at the time was that things were better as exampled by MacMillian's 1957 speech "Never had it so good..." The 60's were a very optimistic period with better employment and the beginning of the rise of the consumer, especially the young consumer as emphasised by the Beetles and of course other developments like the contraceptive pill, washing machines etc. MacMillan was right compared to the miseries of the second war years and the years immediately afterwards with continued rationing etc.

Looking backwards from where we are today tells us how much better we are now, but that doesn't do justice to the improvements that came in the post war years for the people who lived through them.

Any small sign of things getting better in Greece and their stock market likely adjusts substantially upwards and there is plenty of upside scope to the levels post the 2008 troubles.

Regards,

Regards,

[onthemove]

Some interesting graphs and statistics on the page linked above, but I think some of the feet-on-the-ground experiences might still be showing the true story behind the headline - [i]Yorgos Vagelakos, an 81-year-old retired factory worker, took home a pension and benefits amounting to €1,250 before the debt crisis.

Just thinking back through all the points on this thread, I think it's actually quite clear what is going to change to make Greece prosperous again.

I probably broadly agree with most of the comments that don't relate to the EU aspect. And thinking about it, that's the key here.

True, as in the OP, there are going to be individuals feeling hard done by. They were promised pensions that weren't affordable. For the structural changes that were necessary, those on unaffordable pensions, public sector pay, (etc, ) and going to feel hard done by. That is absolutely unavoidable - it's absolutely core to getting the economy on the right foot.

But reading through this thread, it isn't the EU that is the problem.

And no longer is Greece the problem either - they've stuck to the bail out and reformed themselves.

The problem is the outside perception by many that the EU is the cause of Greece's problems.

Once that perception starts to dissipate....

Once that perception starts to give way to the realisation that the EU has actually helped Greece change, actually helped Greece get back on the front foot, then things will really start to take off.

Once the realisation dawns - and it will - that actually the EU bailout, and Greece's willingness to stick to it - and crucially the terms - that has led to a fundamental change for the better in how Greece functions, manages itself, etc,...

.. and the realisation that Greece are still in the EU with the freedom of movement of goods, services and labour, etc, with the EU, allowing frictionless trade with the rest of the EU, allowing Greece to be part of the just-in-time production lines that crisscross the EU...

When that realisation starts to gain momentum - and it will! - then the investment will start ramping up in Greece, and the progress is likely to then be very dramatic.

You could easily be seeing major investments, major economic improvement as a result in the next 5 to 10yrs, and not the 50yr some are suggesting that it could take.

In fact I didn't realise there was a Greece specific ETF ... I might just look into that...

[DiamondEcho]

Agreed, but where I differ is that I expect in the by and by that someone will figure out a way to make the circle square and once that gets into minds the price of the equity will rally strongly.

Such a sea-change, within the remit, rules and limitations of the EU, isn't visible to me. They have over 20+% unemployment. They've been painted by Germany as user/losers. IMPO they should have never been allowed to enter the Euro in the first place, for their own sake - the required constraints not being in their character [IMPO]. Perhaps you remember the despair that led UB40 to pen 'I am the one in ten'. Google/translate their equivalent of 'I am the one in five' would be 'Eímai o énas stous pénte'. And the answer is 'someone will figure it out'? The EU wanted scale at almost any cost [why they're still eyeing up Turkey etc - can you imagine what a complete disaster that would be; 95% of the country isn't even in Europe!], yet refuse to deal with the consequences of their vanity project.

It is of course possible that this never happens, but most European basket cases do recover, one might argue that Argentina, Libya, Zimbabwe and Venezuela might never recover but even in these places there is usually some recovery sometime. Regards,

It won't, as the direction can only come from the country that rules the EU that is Germany. And they're fresh from dealing brutal punishment upon Greece. Recovery depends on liberty and democracy, something EU states do not have.

[Lootman]

I didn't realise there was a Greece specific ETF ... I might just look into that...

Just the one mentioned earlier and it is US-traded, ticker symbol GREK.

https://www.etf.com/GREK#overview

Interestingly it has options available on it which could be a way to play Greece short-term with defined risk. Even so, the implied volatility of some of the options is over 100%, so not for the meek.

[DiamondEcho]

Once that perception starts to give way to the realisation that the EU has actually helped Greece change, actually helped Greece get back on the front foot, then things will really start to take off.

Do you imagine that the Greeks want to change the way in which they live, in order to abide to laws set down by the country that invaded and occupied them during WW2?
There seems to be a German arrogance about the EU, that everyone would just be happier, if and when as they have to, just take on the mind-set of and live like the Germans. Club-Med laissez-faire vs northern hair-shirt puritanism. I don't believe it can ever work; and German arrogance can't see that.

[Lootman]

Do you imagine that the Greeks want to change the way in which they live, in order to abide to laws set down by the country that invaded and occupied them during WW2?

True, and I'm not convinced that the average Greek citizen has really changed, judging by the whining of those who have had their impossibly generous pensions crammed down. It takes a lot to change a culture. As evidence of that even in the UK, the current popularity of Corbyn indicates that there is still a substantial number of British people who believe that we can all live large just by "taxing the rich" and going back to the old socialist ways of welfare, class warfare, envy-based policies and the government with its hand on everything.

[onthemove]

Do you imagine that the Greeks want to change the way in which they live,..

Not for 1 minute. People in debt, who are used to living above their means, never want to change the way they live

... abide to laws set down by the country that invaded and occupied them during WW2?"

This is a common theme by the brexiteers, russian trolls, breitbart types, etc, to try to portray the EU as being some kind of German dictatorship. Attempting to play on people's memories of WW1 and WW2 where the Germans (more specifically the Nazi Germans) were the bad guys, and trying to incite feelings of distrust of, or hatred towards, the present day EU by trying to portray it as being a German led entity, and then trying to project those ancient WW1, WW2 hatreds of Germans onto the EU.

Utter tosh. It may have worked for a while, brilliantly timed to nudge the brexit referendum over the line, but people are starting to wake up and see it for what it is. Nonsense.

People are starting to realise that the EU really is what it is - a collective of countries, each of which has say in it's laws, etc, both via their individual elected leaders, and also by democratically elected MEPs.

The EU is a set of common laws across Europe that provide for common, fair and level playing field across which all EU businesses - and individuals - have fair and equal chances. An area across which success really can be down to the individual's merit, and not tied down by asymmetric regulations, or preferential treatment just because of region of birth and so on.

The only reason Germany is sometimes legitimately portrayed as a significant player in the EU is entirely down to Germany's proven economic capability. Though their own economic policies - which most people would agree are eminently sensible economic policies in their own right (if you stip away prejudice around the 'who') - Germany has managed to create a very successful economy. They have proven that economically, they know what they are doing.

You can argue the toss over whether it is the EU or whether it is germany behind the bailout requirements, but even the Greeks reluctantly acknowledge that actually the requirements are economically sound, and are ultimately for the benefit of Greece. Even Varoufakis realises that.

If he didn't think that, he could very easily have taken Greece out of the EU and out of the Euro... he certainly would have easily found the political support to do it.

The reason he didn't, is because much as it pains them to change, he knows that the reforms were and are in Greece's best interests.

And now the worst of it is over. They can now start to reap the rewards of those changes. They can now start to really capitalise on those changes, while still being a full member of the EU/Euro.

Like I say though... there still seems to be a perception - exeplified by the comments that I am responding to - that it's somehow the evil EU, the evil Germans, who are stamping on Greece's throat and killing them, and that they were unable to escape from that, and until they do they will just be slaves to the evil germans ... blah, blah, blah.

Utter nonsense, but a perception that has now grown deeply embedded into some people's minds.

And as that perception (misconception) starts to evaporate, foreign investment into Greece will really start to accelerate.

[DiamondEcho]

True, and I'm not convinced that the average Greek citizen has really changed, judging by the whining of those who have had their impossibly generous pensions crammed down. It takes a lot to change a culture.

Of course they're haven't changed their culture. We're talking about the heralded cultures of Rome and Athens that are considered foundations of modern Western civilisation; why should, or how could, they turn on a heel within 20 years and change?

[onthemove]

True, and I'm not convinced that the average Greek citizen has really changed, judging by the whining of those who have had their impossibly generous pensions crammed down. It takes a lot to change a culture.

Of course they're haven't changed their culture. We're talking about the heralded cultures of Rome and Athens that are considered foundations of modern Western civilisation; why should, or how could, they turn on a heel within 20 years and change?

Turn that on it's head...

Let's consider if they have changed their culture. Public sector pay now at more sensible levels, public sector services stripped back to affordable levels, and so on.

How long will it take for those outside of Greece to change their perceptions to match the reality on the ground.

I mean just look at the comment I'm replying to. It's entirely based on perception of Greece of (very) old, coupled with a assumption that people cannot change. Ergo, via that 'logic' you don't need to look on the ground, change isn't possible.

And that's the problem I refer to about perception. It takes a long time for people to change their perceptions of other people.

In my view - that's where we are.

Through the bailout package enforcing structural changes as part of the terms of the bailout - with the potential that bailout payments could be withheld if the terms weren't kept to - this has genuinely meant Greece has changed.

The question now is, how long will it take for those outside of the country to change their perceptions of the country.

The real growth spurt will come as more and more people abandon old and outdated stereotypes, and start to recognise the country for what it has become, not what it once was.

I've seen for myself over the space of 2 to 3 years the change in work ethos in a Greek colleague where I work. If he now returns to Greece along with the many, many others who used freedom of movement to move elsewhere in the EU at the height of the Greek crisis, there really are the foundations for a genuine cultural shift in work ethos, expectations for a given effort, and so on.

And we're not just talking a few - there was a significant exodus of people using freedom of movement out of Greece at the height of the crisis. Most of them doing so for financial reasons. When they see the improvement in Greece, as the investment returns to Greece, these are people who will happly move back to their place or origin, taking their new found work ethos (and skills, experience, etc) with them.

[Lootman]

(the) perception of Greece of (very) old, coupled with a assumption that people cannot change. Ergo, via that 'logic' you don't need to look on the ground, change isn't possible.

And that's the problem I refer to about perception. It takes a long time for people to change their perceptions of other people.

In my view - that's where we are.

That is the crux of the matter though, isn't it? Either Greece has really changed and the perception is wrong OR the perception is correct and, under the surface, the Greeks haven't really changed at all - they are just suppressing their resentment and long for the good old "something for nothing" days.

One clue is to look at how the change derived. In the case of the UK it was a populist reform from within - we the people elected Thatcher to turn the ship around, and she did.

Were the Greeks similarly convinced of the virtues of sound money, less government, fiscal restraint? I don't think so because they elected a few socialist governments to resist, and could again. The key difference with the UK is that change in Greece was not organic and from within, but rather imposed from without by the IMF and Germany.

Unless the Greek people are convinced themselves then they could backslide if given half a chance. They may eventually deserve our trust but I'm not sure we are there yet. That Greek pensioner complaining about his cut pension needs to stop whining - then maybe we have got when we need to be.

[onthemove]

One clue is to look at how the change derived. In the case of the UK it was a populist reform from within - we the people elected Thatcher to turn the ship around, and she did. Were the Greeks similarly convinced of the virtues of sound money, less government, fiscal restraint?...

The Greek people had the democratic opportunity to abandon the bailout program and leave the EU/ Euro (and therefore re-instate a devalued Greek currency of their own, etc)

It was the Greek people who chose to continue with the bailout, adhere to the terms for reform, etc - which were already known at the time - and stay in the EU/Euro.

[Lootman]

One clue is to look at how the change derived. In the case of the UK it was a populist reform from within - we the people elected Thatcher to turn the ship around, and she did. Were the Greeks similarly convinced of the virtues of sound money, less government, fiscal restraint?...

The Greek people had the democratic opportunity to abandon the bailout program and leave the EU/ Euro (and therefore re-instate a devalued Greek currency of their own, etc)

It was the Greek people who chose to continue with the bailout, adhere to the terms for reform, etc - which were already known at the time - and stay in the EU/Euro.

They did, but was that because they were really convinced of the need to change their ways? Or because, short term, it meant less pain?

I want to hear that Greek pensioner declaring that he is proud of "doing his bit" rather than whining that he got crammed down.

[onthemove]

They did, but was that because they were really convinced of the need to change their ways? Or because, short term, it meant less pain? I want to hear that Greek pensioner declaring that he is proud of "doing his bit" rather than whining that he got crammed down.

You are unlikely to hear such a pensioner say such a thing, and I don't think I'd ever expect them to do so.

But that doesn't mean the country hasn't turned the corner.

What matters is the critical mass. Those currently in work, or youngsters who will be the workers of the future.

The country has turned the corner when todays government workers accept the new terms of employment, etc. When they accept the realistic wages, realistic pension promises. When they accept that the government can't simply employ ever more people. When they accept that services won't be as generous, and so on.

And I believe that those people have changed.

There'll always be a few. And you can't blame them. If you've worked all your life believing you can retire relatively young on a generous pension, then find when you get to that age the deal is taken away from you, I would never expect anyone to be totally 'happy' at that. And you can't blame them.

But in effect, they have accepted their situation. They might not be jumping for joy (I wouldn't expect them to), but there aren't riots in the streets and their democratic elections have chosen a path that isn't going to re-instate their unaffordable pensions.

So the critical mass is their, that means as a society they have accepted what is needed.

That provides stability now, at this moment in time, and then (sadly) as the older generations die off, and todays youngsters replace them, those youngsters of today have never been promised the same unaffordable terms - moreover they've seen the effects of having such unaffordable government - so as time goes by, there really is now the foundation in place for a reformed Greece going forwards.

And with the bailout now 'over', Greece really can now start looking to the future, rather than still being eaten up by their past.

[PeterGray]

The UK went from a bad place in 1945 to the prosperity of the swinging 60's in 15 years, so perhaps Greece can do similar.
Should there be any hints of improvements in Greece the equity markets will likely take off as did the UK ones in the 70's

Were the "swinging sixties" that prosperous? I wasn't old enough to recall first hand but looking back it seems that the UK was not particularly prosperous back then. I recall headlines about the balance of payments deficit, trade deficits, crises in sterling, brain drains, ultra high tax rates and endless strikes.

Perhaps not prosperous compared to now, but compared to the 50's absolutely yes

Inflation adjusted GDP rose by 36% from 55-65 one of the best post war increases
65-75 32%
75-85 20%,
85-95 34%
95-05 44%
since then, largely flat!