hellenic crisis
TRANSCRIPT
Hellenic Debt Crisis: Threat or Opportunity?Theodore N. Krintas, Ph.D., CIIA
The Background
Some why, some how and most important of all where should we be now…
The simple story of a GAP
Questions
Is this a Greek Crisis?
What created it?
How long will it last?
Is the treatment proper?
Why recession is so big?
Is Drachma a solution to the problem?
Living another person’s life
Decade 70-79 80-89 90-99 00-09
Deficit (% of GDP)
1,2 8,1 8,4 5,9
Basic 2008 FiguresGDP/Capita: $30.000Agri/GDP: 4,5%Consumption: 89%Gov Debt: 110%
Sources of income:Tourism
Agriculture
Commerce
Services
1970’s GDP per Capita:$ 1.651
1970’s Attica Population:30% of total
Source: OECD
Non Productive & Expensive
For every €1 produced in the public sector €2,42 are consumed.
770K civil servants for a 4,6M work force (17%).
Nepotism & Elite
Clientelism
Corruption
Always over-budget
Bureaucracy
Years to earn a full pension: 35
Proportion: 80%
Pension PMT: 14
Retirement age: 58
% € -14,1
What changed the motive?
1. Internationalization of Hellenic Bond Market
2. Fiscal Policies Unification Anticipation
3. Excess Liquidity
4. Hunt for Yields
5. 2008 Crisis and Credit Crunch
6. Herding
7. Focus (again) on Fundamentals + €50 bn - €65 bn
This is a new ERA…
Emerging regions, such as Brazil, India, China and (South) Africa have overtaken economies in the West as engines of global growth.
New technologies have created new industries and old ones are disappearing
New communication networks of high speed are born
Global emergencies are happening in shorter intervals
Behavioral Aspects
Prospects
Anchoring
Herding
Overconfidence
Depression
Qualities we need
Vision and crisis plan
Leadership by example with passion
Will, speed and decisiveness
Self confidence, optimism, cold blood
Stamina combined with high values
Is all this a Problem?Once again modern philosophers will refer to the average Greek Housewife…
The last days of Pompeii
The situation has been unsustainable for too long.
Balanced Budget as an immediate target.
Fiscal Consolidation through: Increased exports, decreased consumption, asset sales, foreign direct investments and serious expense cuts!
Huge Financial Transformation Needed.
Greece needs VISION & LEADERSHIP.
No more easy solutions and myths. Work in Reality
Problem or Opportunity?
Restoring CONFIDENCE.
Setting up a System of VALUES.
Productivity & CREATIVITY.
Investment and no Consumption EMPHASIS.
Fight Millenials UNEMPLOYMENT.
Every Problem has a flip side: OPPORTUNITY!
After this period of unrest and denial…… a wrong financial model failed and is going to be replaced by a new one based in realistic assumptions and hard work!