Fwd: Greece 2015
Brent Dover
Begin forwarded message:
From: ddaug...@copperwyndfinancial.com
Date: May 29, 2015 at 11:05:43 AM MDT
To: w.bren...@me.com
Subject: Greece 2015
Brent & Cathy:
Many times we think we know a situation when we have only read about it in the press. Even though there may be extensive writings about a situation, it is still seen through the eyes of the media.
I just returned from a trip to Greece and my ideas about their economic and political plight have changed because of that trip. Before the trip, my opinion of the Greeks were of a lazy people that could not compete against the major economies of Europe and would have to leave the euro sooner or later. I mean how could they not be lazy if they retired in their 50’s and their economy is just 75% of what it was in 2007.What I found in Greece was something much different than I expected. The economic outcome will not change, as Greece will ultimately need to leave the euro and go back to the drachma in order to devalue their currency and be more competitive in the global markets. They are in an economic death spiral as the austerity measures keep government spending down with nothing to stimulate the economy and get it going again. A whole generation will be lost if nothing is done and there is a real risk of significant social unrest. A brain drain is occurring as educated professionals are leaving Greece for other countries where opportunities are better and pay is higher. I also saw far too many young people in the squares and at cafes during the middle of the day. The unemployment rate for the 18-25 year-olds is more than 50%.
When I visit anywhere, I always ask everyone I meet lots of questions (to the chagrin of my family) about the politics and the economy of their country. I feel that it helps me understand things from a more global perspective and not just through the filter of our media.
So what did I find out in Greece that changed my thinking? I found that most of the employed people were working incredibly hard and not making much money. In Athens, a taxi driver we used four different times told me he works from 6 am until 7-8 pm six days a week. He grosses about $45,000 per year and probably nets $30,000 a year. That is a lot of work for not much money. Another man we met is now a private driver for a tour company after being laid off as a manager of an industrial company where he had worked for 23 years. His 22-year-old daughter that has just become a nurse and his 19-year-old son are still both living at home and unemployed. I found the people to be industrious and wanting a better economy while terribly frustrated with their government and the European Union. I heard comments about how the politicians have consistently lied to the people. I did not hear anyone say they thought the government was doing the right things. Not one single person during the whole trip. The infrastructure in Greece is good with the roads, bridges and transportation systems in good shape. Most indicated that they wanted to leave the euro so they did not have to be subjected to orders from Brussels. They all seem to know it will be painful, but their understandings differ as to just how painful it will be. In talking with people that had real assets, such as bank accounts and real estate, it was clear this segment of the population did not want to leave the euro as they do think that the asset prices will decline by 50% or so with a new currency.
The bottom line is that politicians have led them into this dark place economically through promises that can’t be kept and largesse that is contrary to the good of the people. Greek politicians promised a lower retirement age, and people took advantage of it. That is human nature. If the government would reduce the red tape for businesses, increase tax compliance and make it feel fair to the average citizen, and start the process to leave the euro, things would be better in the next 3-5 years. There is no other way to improve than to make the hard choices and accept the additional pain before it gets better. At the end of the day, governance does matter. We should make sure that our government does a better job at the local, state and federal level. We complain about our government with good reason. I think it is the worst government except for all the rest.
I saw many new vineyards and orchards in Greece as people are looking to the future. Greece wants to get better in spite of what the politicians are doing. It is a beautiful place and I highly recommend that you visit this cradle of democracy. The weather, food, people and sites are fantastic and with the strong dollar, it is 20% cheaper to visit than it was a year ago.Warmest Regards,
David Daughtrey, CFA, CFP®
Copperwynd Financial
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