Author: Alex Lamnidis
Author: Alex Lamnidis
Check this link, with all African States and their political situation presently.
Author: Alex Lamnidis
For all EU citizens who would like to travel for longer or live in another EU country.
Author: Alex Lamnidis
http://www.youtube.com/watch?v=kSCjwuA1Y20 Hey You!!!, by Pink Floyd.
THE DAY AFTER….
For years I have been wondering whether continuous economic growth is possible, eliminating the theory of economic cycles and all the pessimism it brings to the populace. Well, for decades Greece has been experiencing continuous economic growth as if the country had found the magic recipe to avoid all downturns.
No one asked, no one cared, really. The truth of the matter was that incomes rose, real estate prices exploded, while the State apparatus became overcrowded with missionless Departments and Agencies that never produced anything, but increase debt.
In late 2008 the collapse of Lehman Brothers and the near collapse of AIG and Citicorp, brought about the first debates, whether Greece was well equipped to go through the storm was developing. The era of mass hypnosis was ending and a new one was dawning, the era of thousands of opinions without clear cut strategy of eradicating the ills that torture the country, since independence.
The recent elections of May 6th, 2012 depicted the fast changing picture and the evident immaturity of Political Parties to understand the immense confusion Greek society is in. Their petty politicking and the lack of commitment to any concrete results, ended in a second ballot that is to be held on June 17th, 2012. The situation is highly precarious and various gallops exhibit contradicting results whereby Greeks want to stay in the Eurozone, however without the sacrifices such an effort needs. Political parties do not adequately explain what it means to stay in the Eurozone, while the presently followed program of IMF, Eurozone and the Commission seems to be absolutely sterile producing no results (as the economic downturn continuous with tenacity) and certainly Greeks see no light ahead in order to be encouraged and continue any austerity effort.
So it seems the problem is real, the therapy is wrong, the medicines prescribed are inadequate while the EU blames the “patient” (Greece) for not being resilient enough!!!
In the meantime the malaise is spreading to all weaker economies of the Eurozone, while the clouds in the international horizon are becoming denser in adjacent to Europe areas like Syria, Iran, Egypt, Libya, Turkey-Israel, Cyprus.
The Greek elections of June 17th, it is rather certain, will not produce any one party Government. If ND (conservatives) win the elections they will have to form a coalition Government that will have to include Socialists and the Democratic Left Party, at least. However, not even this coalition may be enough to govern the country and provide the stability needed in such turbulent times. In case SYRIZA (left wing) wins the elections, the coalition options are even less favorable, as they will have to form a coalition with the Democratic Left, as well as Socialists (who are presently despised having signed the Memorandum). Either case cannot provide the stability needed as the day after will push upon Greeks a series of hard economic blows that risk disintegrating an already badly battered society.
The day after may be an opportunity for a memorandum between the Political Parties that will help them agree on a number of remedies, form an overall coalition Government and go Brussels to renegotiate some measures that will help increase liquidity in the economy and will foster a climate hope and positive expectation for the future.
Otherwise the day after June 17th, will be chaotic for Greece and a heavy burden for Eurozone and indeed world economies.
Author: Alex Lamnidis
The results of the elections held in Greece last Sunday may well have sent a powerful signal to politicians and policy makers worldwide, that has yet to be discussed by the press. That message simply says: “We are no longer your useful idiots”.
It seems that for many decades – and especially since the financial crisis erupted – the politicians and policy makers have used fear mongering to push “solutions” that exemplify the new math, where through subtraction they hope to add to growth. The “solutions” proposed have neglected the causes of the crisis while addressing only some peripheral symptoms.
People, in their naiveté and without comprehending the implications of the propaganda to sustain an ill- conceived monetary union not worth saving, were used by the politicians and policy makers in a cynical way in order to sustain a cause which has been converted into a fetish. The worshipping of such an irrational idea has only been serving the causes of those responsible for the crisis, i.e. those who over-extended credit, cheapened standards, manipulated prices (including the price of money a.k.a. interest rates), collateralized worthless paper “assets”, created the monster of $700 trillion derivatives markets, and disguised liabilities as safe assets, while destroying wealth and productive capacities of many real economies around the world. It is my humble opinion that unless the banking sector in general – and the EU-wide in particular – is broken up and cleansed the problems not only will remain but most probably will be multiplied while the pain will be exacerbated.
It seems that the need for an EU-banking catharsis cannot be done without folding the Euro-project. The way that the Euro-project was designed and executed was nothing but an exercise in futility, where the traditional concepts of fiscal union and of a real lender of last resort were distorted for the sake of temporary profits, at the expense of the people and of the concept of true wealth creation. The EU-imposed fetish of saving the Euro at all costs neglects the basic economic idea that the prosperity of a nation does not depend upon its ability to have an overvalued discredited currency – so that they can buy other nations’ products – but on its ability to produce. Unless productive capacities are restored nations are doomed to fail. Moreover, the imposition of a common currency without a unified political identity and purpose is meaningless. Can you imagine the dollar as the currency of the States without a clear united political identity of its people? It would simply be absurd.
Why then did the EU try to save Greece with two bailout packages worth over $300 billion while also writing off another $130 billion of its debt? Cui bono (who benefited) of all these bailout efforts? The total cost of such bailout is close to 150% of Greece’s GDP! In the US we are still debating if it was worth saving the banks who were the perpetrators of the financial crisis. In comparison the US bailout and the stimulus package barely touched 10% of economy, and we still fight about it! How and why in the world did Greece need 150% of its GDP as a bailout? Cui bono?
We have written before in these commentaries that the cause lies squarely at EU banks that perpetuated over-extension of credit, securitized toxic IOUs, while accommodating misconceived political goals. The easiest clients for those banks were the governments that run their nations on a clientele mentality without understanding the dire consequences of their debt-issuing decisions. The true debt-to-GDP ratios of nations such as France, Belgium, and Germany, (when we take into account their unfunded liabilities), exceed 400%. Such ratios are simply unsustainable and point to an EU-wide financial catastrophe that will be nothing short of chaotic. Of course such financial catastrophe can still hit the US and the globe since we too suffer from similar problems, and unless we address them soon – with a comprehensive plan of breaking up the banks and establishing an anchor of hard assets (with gold playing a major role) for reasonable credit creation – similar catastrophe could impact the US.
In the second half of the 19th century, Greece participated in the Latin Monetary Union along with Italy, Belgium, France, and Switzerland, (later other nations such as Romania, Bulgaria, Serbia, and Austria joined too). Greece dropped out in 1908. Monetary Unions without a unified political identify are destined to fail, as did that Union. If they do not fail due to lack of the unified political identity, they cheat (like cartels do) by cheapening the currency/inflating their currency, and doom the union to failure by printing too much. The EU announcement of a “growth pact” points exactly in that direction.
It seems that the citizens of Greece woke up to the realities that EU politicians and policy-makers used them as useful idiots for their own purposes while treating them with contempt (when Greece was called a bottomless barrel by the German Finance Minister for example). The EU propaganda of saving Greece seems to be a mask for a malignant crusade while the preachers portray it as a cause for the common good. When the fetish mentality is done away with Kazantzakis’ freedom cry will echo throughout the EU.
The EU is in dire need of a strategic disintegration of its currency in order to save at least the free trade aspects of it. The sooner a nation jumps off that Titanic – by establishing a currency board/anchor with a more stable and credible asset class – the better its chances for survival would be. Those who want to stay onboard – in order to enjoy the music that the captain ordered to be played by the orchestra – may not be that well off after all.
Maybe that’s what Pablo Neruda meant in his poem “Ode to Wine” when he drafted the following lines:
“Sometimes you feed on mortal memories,
on your wave we go from tomb to tomb,
stonecutter of icy graves, and we weep transitory tears,
but your beautiful spring suit is different, the heart climbs to the branches,
the wind moves the day,
nothing remains in your motionless soul”.
Ode to the awakening then!
Author: Alex Lamnidis
9 Timeless leadership lessons from the great King Cyrus of Persia 4th century BC.
Cyrus the Great, the man that historians call “the most amiable of conquerors,” and the first king to found “his empire on generosity” instead of violence and tyranny. Consider Cyrus the antithesis to Machiavelli’s ideal Prince. The author, himself the opposite of Machiavelli, was Xenophon, a student of Socrates.
The book is a veritable classic in the art of leadership, execution, and responsibility. Adapted from Larry Hendrick’s excellent translation, here are nine lessons in leadership from Xenophon’s Cyrus the Great:
“Never be slow in replenishing your supplies. You’ll always bee on better terms with your allies if you can secure your own provisions…Give them all they need and your troops will follow you to the end of the earth.”
“Success always calls for greater generosity–though most people, lost in the darkness of their own egos, treat it as an occasion for greater greed. Collecting boot [is] not an end itself, but only a means for building [an] empire. Riches would be of little use to us now–except as a means of winning new friends.”
“Brevity is the soul of command. Too much talking suggests desperation on the part of the leader. Speak shortly, decisively and to the point–and couch your desires in such natural logic that no one can raise objections. Then move on.”
Be a Force for Good
“Whenever you can, act as a liberator. Freedom, dignity, wealth–these three together constitute the greatest happiness of humanity. If you bequeath all three to your people, their love for you will never die.”
Be in Control
[After punishing some renegade commanders] “Here again, I would demonstrate the truth that, in my army, discipline always brings rewards.”
“When I became rich, I realized that no kindness between man and man comes more naturally than sharing food and drink, especially food and drink of the ambrosial excellence that I could now provide. Accordingly, I arranged that my table be spread everyday for many invitees, all of whom would dine on the same excellent food as myself. After my guests and I were finished, I would send out any extra food to my absent friends, in token of my esteem.”
[When asked how he planned to dress for a celebration] “If I can only do well by my friends, I’ll look glorious enough in whatever clothes I wear.”
Be an Example
“In my experience, men who respond to good fortune with modesty and kindness are harder to find than those who face adversity with courage.”
Be Courteous and Kind
“There is a deep–and usually frustrated–desire in the heart of everyone to act with benevolence rather than selfishness, and one fine instance of generosity can inspire dozens more. Thus I established a stately court where all my friends showed respect to each other and cultivated courtesy until it bloomed into perfect harmony.”
There’s a reason Cyrus found students and admirers in his own time as well as the ages that followed. From Thomas Jefferson and Benjamin Franklin to Julius Caesar and Alexander (and yes, even Machiavelli) great men have read his inspiring example and put it to use in the pursuit of their own endeavors.
Author: Alex Lamnidis
Five years since the financial crisis erupted, we are still long way to full recovery.
Author: Alex Lamnidis
Greek Entrepreneurs to the Rescue
The Greek dimension of the EU sovereign debt crisis is by now well known to all. Investor anxiety over excessive national debt throughout the EU led to demands for higher interest rates from several governments with greater debt levels and current account deficits. This in turn made it difficult for some governments to finance further budget deficits and service existing debt. Unable to pay for its public debt, the Greek government turned to the EU for financial assistance.
The first bailout package was approved on May 2010, which provided the Greek government with a three year €110 billion loan. On February 2012, the lending troika (EU, IMF and ECB) eventually agreed to provide a second bailout package worth €130 billion. This second package included an agreement with banks to “voluntarily” accept a 53.5% write-off of (some part of) Greek debt, the equivalent of €100 billion, to reduce the country’s debt level from €340bn to €240bn or 120.5% of GDP by 2020.
So far, all the reforms forced upon Greece center on how to reduce the government’s budget. These reforms include decreasing the minimum wage for public (and therefore private) sector employees by 22%, cutting benefits to pensioners and health-care recipients, reducing the government payroll by laying-off 150,000 public sector employees by 2015, privatizing government companies, and opening-up some industries that were closed to competition.
For now, Greece has been brought back from the brink of bankruptcy. Though safe for the time being, the country could find itself struggling to meet the strict conditions outlined in the second bailout agreement if key structural reforms don’t take place. It’s not too late for the crisis to serve as an opportunity.
From Crisis to Opportunity
It is obvious to all that Greece needs a new set of rules that will allow for the smooth transition from the informal to the formal economy, through the simplification of processes and the deregulation of markets. The country will need a simple and fair taxation administration system that would be more efficient and would create a friendlier business environment. Also, Greece will need to simplify judicial services and enforcement of rules and laws. Furthermore, it will need to apply quality control on goods and services, eliminate organizations with overlapping mandates and rationalize the public sector.
The most recent OECD Economy Survey of Greece for 2011 also argues that the authorities should continue this vigorous reform process and their efforts to convince markets of their capacity to implement fundamental economic adjustments. Overall, the Greek government should:
- Continue deficit reduction to halt and then reverse the rise in public debt, by strengthening tax collection and ensure fair sharing of the burden and the benefits of reforms.
- Boost privatization and the development of public assets to reduce the debt burden and associated debt-servicing costs.
- Reinforce structural reforms in the labor and products markets to enhance competitiveness and raise welfare and incomes.
What these reforms have not included was a growth strategy. The country desperately needs to switch from deficit reduction to economic growth, and pursue reforms that will promote entrepreneurship that generate new business ideas. With Greece under the continuing threat of bankruptcy, the country desperately needs to generate sustainable growth and lift competitiveness if it is to ever pay down its debt and disengage itself from a chain of international bailouts.
A New National Growth Model
According to McKinsey’s ‘Greece 10 Years Ahead’ report, published in November 2011, Greece needs a new National Growth Model. Primarily, this new growth model requires that the economy becomes much more outward, focusing on foreign markets both for producing export goods and services and for importing foreign capital. Along with traditional tradable sectors like tourism, agriculture, and manufacturing, business services should get a large share of resources and investments.
Fundamental to this new growth model, according to McKinsey, is transitioning the funding of the economy from public debt to private sector equity and debt. This will require higher levels of foreign and domestic investment. Therefore Greece needs to construct a business-friendly environment that will attract local and foreign investment to generate new jobs and the economic growth required to gradually reduce the country’s reliance on debt.
According to the World Bank, net inflows of foreign direct investment (FDI) in Greece were last reported at $2.25bn in 2010, down from $5.3bn in 2008. In 2008, when the global recession started, net inflows of FDI in Greece were 1.55% of the country’s GDP. By comparison, 2008 FDI net inflows in Israel were reported at $10.8bn (or 5.38% of Israel’s GDP), according to the World Bank.
Greece will desperately need more foreign investment if it is to achieve any meaningful economic growth. Already, foreign investors from China, Germany and elsewhere are looking for bargains in the Greek economy, including in the tourism industry (which accounts for a third of GDP) and in the shipping business (which is very lucrative and growing quickly).
However, for a country like Greece, which lacks a major export sector that would allow it to raise capital, there is only one way to get new money into the economy: direct transfers. Be it for entertainment (tourists), education, or health-care, direct transfers of money by foreigners visiting the country and spending locally could be the only way to jump-start the contracting economy.
Risk Takers Needed
In order to achieve this Greece will need risk taking entrepreneurs. According to an article by Joshua Chaffin of the Financial Times, many Greek entrepreneurs believe that the growth of the state over the past 30 years and its all-embracing nature may have blunted young people’s appetite for risk. For many students, due to their parents cuddling and risk-aversion (“every parent wants their children to be safe”), the dream remains a cushy government job with a regular pay-cheque – not a business career.
However, Greeks are not that risk-averse, and per capita they have the largest number of small and medium size enterprises (SME’s) than any other EU country. Half the economy is dominated by SME’s while the other half is ‘safely locked’ under government control. In comparison to other EU countries, Greece has the highest concentration of SME’s.
Furthermore, the Greek diaspora is prosperous and legions of Greeks have thrived working abroad. While the government may be broke, private wealth is still plentiful. Just consider that by some estimates, the Greek treasury is deprived of €50 bn each year due to tax evasion. This coincides with the estimated €60 bn that have been withdrawn from Greek banks since the crisis began at the end of 2009.
One of the positive unintended consequences of this over-protective, risk-averse, obsessed with higher education parents is that Greece has an abundance of young people with college educations – English speaking, highly educated young adults with degrees in science and technology, medicine and health-care, and of course hospitality and tourism.
The ‘Silicon Island’ of Europe
In theory, Greece should be able to duplicate at least some of the success of Israel, another small Mediterranean country that has managed to become a technology powerhouse. By investing in research and development (R&D) Israel was able to leverage its educated workforce, its financially affluent and well-connected diaspora, and its strategic location to become of the better technology exporters in the world. All of the underlying elements are present in Greece as well.
According to the ‘Invest in Greece’ Agency, Greece offers a favorable environment for Information and Communication Technologies (ICT) investment, with strong market fundamentals, availability of superb talent pool, leading R&D activity, a welcoming ITC ecosystem, and rewarding public and private sector projects. The availability of ICT talent and its required low compensation (by comparison to other places) should make Greece a particularly desirable destination for international information and communication technology firms.
The specific model is something along the lines of ‘Sophia Antipolis’, the ‘Silicon Valley of the French Riviera.’ This science park is set in the hinterlands of Nice, attracting information technology and communications companies whose researchers and engineers community from nearby hilltop villages and picturesque harbor towns. It is no coincidence that technology innovators and entrepreneurs have made California their home – location, climate, and quality of life play a major motivating factor.
On the other hand, Greece needs to restructure its higher education (currently one of the ‘closed sectors’ of the economy) and create ‘University Innovation Zones’ (modeled after Free Trade Zones). With the right regulatory reforms and with some government assistance, foreign Universities and research companies could be encouraged to set-up campuses in Greece, an ideal location for students to study and innovate. These will be University towns, where student’s innovators, venture capitalists and producers can come together and start up technology driven companies that will be protected from the rest of the market.
Of course, you need start-up capital and a government commitment to either not interfere with the information technology sector, or provide the regulatory and legal framework that would accommodate the creation, attraction, and growth of technology information/services driven companies, and international research and education institutions. Usually, the hardest part is the people, and not the infrastructure, and Greece definitely has the people.
The ‘Florida of Europe’
Another objective for Greece coming out of the sovereign debt crisis would be to cater to the health-care and retirement needs of Northern Europeans. Greece has an army of well-educated doctors and nurses, most of whom are practicing their medicine abroad (because of the closed nature of the industry at home) as well as a very pleasant environment (physical and lifestyle) for retirement.
Healthcare, like higher education, is a sector under severe government control and ‘financially’ very inefficient, thus contributing negatively to the government’s debt. However, all this government subsidization of the healthcare industry has created a large number of well-educated, well-trained doctors, nurses, professionals and academics. The challenge should not be to ‘dismantle the system’ so it’s not a financial burden to the government; rather it should be to harness the people and grow the clientele – to import patients and elderly and profit from providing services to them.
Therefore, Greece should aspire to be the ‘Florida of Europe’, where the young go to attend college and stay for the summer to enjoy the weather and the beaches, and the old go to retire and receive quality healthcare and nursing coverage. Transforming the healthcare (and education) sectors to cater to the retirement needs of other Europeans will not be easy, but the current crisis presents the once in a lifetime opportunity to fundamentally restructure the way the society and the economy operate.
If You build it They Will Come…
The next 8 years will not be easy for the Greek people. Bankruptcy might have been averted, but if the economy does not grow the government will be in need of new money in no time. Temporary solutions focusing on tourism and exports could keep the country limping for a while, but only a fundamental restructuring of the economy focusing on technology innovation, education, and healthcare services can provide lasting growth.
If the Greek government can create the necessary infrastructure for ICT start-ups, for higher education growth, and for retirement healthcare, then Europeans will come and invest in Greece. If the right conditions were present, who wouldn’t want to run their ICT firm from a Greek island, or retire by the Greek coast?
Author: Alex Lamnidis
Author: Alex Lamnidis