The Greek drama, or the banker’s tie

The Greek drama, or the banker’s tie

Very few things make me really angry, but it did happen on Monday. I turn on the internet. Headlines. Greece: the 20 euro daily limit is on its way. I beg your pardon! I look up in surprise. Yes, from now on the Greeks will only be able to withdraw 20 euros per day from cash machines. Excellent, well done, congratulations…

Just how did we let it come to this? Should the whole world be ashamed of itself, when this can happen in the 21st century in the cradle of European democracy? When the financial world is managed and supervised by economists with all their qualifications from Oxford and Harvard… In the age of the internet, when super computers can monitor everything using software designed specifically for the purpose. Where were the IMF, the EU, the central bank, the politicians and all the others I could list for the past decades? All those who could have intervened, but didn’t. And who today are still just drifting with the tide of events. Because we can already see that in all likelihood nobody is going to be held accountable for this drama.

In the meantime, just spare a thought for the poor Greek pensioner who needs to buy a 100 euro medicine from the Chemist, but has to wait 5 days to draw out enough money. All over Europe temperatures are hitting 40 degrees. Our poor pensioner may not even make it to the 5th day. And all the while the so-called experts overseeing the system are flying backwards and forwards across Europe to hold crisis talks. Just they happen to spend the time between connections sipping chilled fruit juice in comfortable armchairs in some air-conditioned VIP waiting area…

In 2008, when the real estate recession began, I went into the bank to take out my money. Why? Because I was afraid that the bank would go bankrupt and I would lose my money. The banker started asking me all sorts of questions, like why I needed the money and what I was going to spend it on. After several rounds, he asked again why I wanted to withdraw the money. Because it’s my money, mine… He didn’t understand, so I explained it to him like this: “Do you know what the difference is between your tie and my tie?” He looked at me blankly. “Then I’ll tell you. I bought my tie using my own money. Your tie was also bought using my money!” He stared even more blankly. Unfortunately, I have the feeling that those managing the system still don’t understand today. This probably isn’t in the Harvard MBA course…

7 thoughts on “The Greek drama, or the banker’s tie

  1. The need for growth as a veclhie that would take Greece out of the current crisis is tautological. Yet, what is for debate and needs to be debated is how a country like Greece that has been suffering from serious structural problems in its recent and not so recent economic history can achieve growth. The debate about whether to remain or not in the euro zone is important, but it will remain academic unless there is a concerted effort (with the help of the EU in this case) to fight corruption. To do that most of the energy and effort has to be spent on reforming the judiciary. The rules of the game are such that whoever “screams the loudest” has better access to the media and the benefit of the judiciary system that is inherently incapable of ensuring a framework on which economic reforms can take place. Without contracts that are enforceable for all the parties involved, it will be futile to introduce reforms. The latter will be unravelled by the inability of the courts to enforce these contracts. For the new reality to become understood as something that requires new bold reforms to open up highly regulated markets and allow for productivity convergence between the public and private sectors, people need to be convinced that the rules of the game apply to all concerned. Until now as we speak, any attempt to bring individuals to justice who have either stolen public funds by not returning huge sums of collected VAT to the government, let alone the known income tax evaders, only results cases that are pushed into the future as these individuals are allowed to walk. The excuse here is that the judiciary is too overburdened to deal with these cases effectively and promptly. I am afraid that unless this government or any government deals with that aspect of the broken system, any reforms will never be implemented. To have any chance of success, let alone any chance to reach a climate for economic growth, there has to be a framework for enforcing contracts that is recognized and respected by all by imposing stiff penalties to all those who violate their side of the contract, whether public officials involved in corruption cases or entrepreneurs not returning the sums of VAT that they have collected on behalf of the government.One may counter, that Greece was growing until 2008 at reasonably healthy rates with the same judiciary and the same lack of contract enforceability system. Yet, even though we all recognize the reasons behind this consumption led growth engineered by easy credit, which led to the current crisis, it is the asymmetry between the upturn and downturn that obscured any need for reform. An expanding economic pie conferred benefits to all, even though these benefits also created “built in” destabilizers that now confront us all. I think, given the state of corruption as the result of lack of contract enforceability, the main reform that at this point that needs to take place, is the reform of the judiciary, for anything else to have any chance of success.

  2. wonderful points altogether, you simply won a new reader.
    What may you suggest in regards to your post
    that you made a few days in the past? Any positive?

  3. I’ve been absent for a while, but now I remember why I used to love this website. Thanks , I’ll try and check back more often. How frequently you update your site?

Comments are closed.