Mind Your Ps and Qs

Hi all, been taking an extended stay in Athens, and I wanted to tell you all how the global economic crisis is being felt there. It’s not pretty. Greece has the feel of a nation on the edge which has closed in on itself and is going through collective anxiety. People are extremely fearful and irritable. Everyone has a story to tell about people running on empty as they work double shifts to make ends meet, of taxi drivers falling asleep at the wheel. And there’s been social unrest in the city centre (the kind we’ll see in other cities but started here) for 6 months now, with kids seeing no hope for the future taking out their frustrations on police.

The unwritten rule in Greece is that those who work for the state, and that’s most people as there is very little industry to speak of, have a job for life, they’ll get poor pay, but won’t have to work hard and once they’ve finished working, pay goes up and the state will look after them until the end of their days. Retirement benefits are good and are all funded by the state. There are people getting pensions which seem very high by our standards. The whole system seems to be based on patronage, political parties buy votes in return for favours. No effective job market exists, if you want a job you go through family or through your MP.

People are mainly employed in 3 industries, and therein lies the problem. Those industries are tourism, shipping and building. Tourism is projected to be down 20-30% this year due to the strong Euro and the economic crisis, the shipping companies built in loads of extra capacity and now find a lot of their ships sitting in dock, and around 250,000 newbuild homes have been built without buyers. Suddenly state revenues are plummeting, whereas commitments are growing. In the first 3 months of the year, the government had to borrow money from the European Central Bank to pay public employees and pensioners. Now it’s starting to realise that normal housekeeping rules, like keeping within your budget apply. It’s levying one off taxes on high earners ie anyone earning more than 1700 a month and putting in pay freezes. And the markets are placing a 275 basis point differential between Greece and bonds issued by other countries  in the Eu – yes they are paying 2.75% more and that’s because the markets see the likelihood of a default as that high.

And how are people reacting ? In the usual way. Farmers are blockading motorways and cutting off routes from north to south. Ministry of culture officials are stopping tourists from getting into see the Acropolis. Every interest group is refusing to face up to the truth and behaving as if their protests can be tolerated forever, nomatter how much damage they cost to the rest of the economy. The stock exchange has come off its highs by 70-80% and everyone cries international conspiracy.

They can count themselves lucky that they are in the Euro too. Had they not been, their currency would have been under attack too, just as the currencies  have been in Hungary, Iceland, Latvia and Turkey.

So all in all not a pleasant place to be right now. Psychologically it’s a lot more twisted than the UK is. Only 15,00o people have lost jobs up until now, nobody from the public sector, but a whole population is realising that what they have always taken for granted in their way of life may have to change forever.