I too often fall to the Greek trap of “being introvert”. I focus on the strict Greek reality of protests, mocking and grimy mood, and forget to take a look around. For example, how our esteemed German allies and friends look at Greece of success story, while it struggles – more or less, but rather less – to get out of the crisis.
Germany’s priority seems to be that Greece is lead out of the crisis. On very specific terms and conditions, of course. Nobody offers solution at no cost.
One thing is very clear: we need investments to re-start our economy. Banks-recapitalization takes longer than planned, loans are scarce as a pine tree in the middle of the Sahara dessert. More and more people lose daily their work places and income sources. While our elected (government, ministers) and non-elected (finance minister) leaders do their utmost to make our lives difficult and poorer.
A observation I’ve been repeatedly making over the last three years is: the glorious ideas the others have about the economical future of Greece. with others, I primarily mean the Germans. IT is so far correct that they do propose concepts of our economic recovery, as no Greek government on power since 2009 has even been able to put on the table project with the title: “Aspects of Greek economic development.” What the Greek governments do – three since 2009 – is just to impose revenue increasing measures.
1. Zero inflation (or even deflation) in the South;
2. Higher inflation in the North;
3. Transfer payments; and
To be honest I cannot deal with much too much macroeconomics theories and concepts. But I can translate them into my real Greek life. My friends and the readers of this blog, too.
“There is something missing, as far as I am concerned. Prof. Sinn assumes that all, say, Greece would have to do is to become cheaper (‘more competitive’ is the jargon) relative to the North and positive things would start to happen automatically.
That, it is my firm belief, would not happen automatically in Greece because that assumes that Greece has enough of a productive capability to start booming as soon as competitiveness is restored relative to the North”
“the need for the North’s shifting investments to the South. The only way to strengthen the productive capability of the Greek economy is to steer investments into it. As the CEO of the Allianz Group said a couple of years ago: “We will have to shift some of our (Germany’s) foreign investments from the East and Far East to Greece”
How should steering investments to Greece would looks like? According to Kastner:
(a) the preparedness of the EU to implement the proper incentives (i. e. guarantees for the political risk including a possible Grexit); and
(b) the preparedness of Greece to offer a competitive economic framework for such investments. That could be either in the form of individual agreements with individual investors or in the form of Special Economic Zones where all investors have those terms. Either way could work.
“Once Greeks are sufficiently “competitive” – ie Chinese wages & no social benefits, absolutely begging to work 13 hour days, 6 days a week – Germany will shift factories from China to Greece. On its part, for Greece to benefit from these German ‘investments’, Greece will need to give German companies attractive ‘tax breaks’ PLUS a state guarantee against ‘Grexit’. Thus the German companies will pay little or no taxes to the Greek state and the burden of taxation will fall more heavily on Greek ‘workers’.
German investors, German banks, German economists and Greece as a country, they all lived happily ever after
PS all but the average Greeks.