Letter to Mr Verhofstadt — A Modest Proposal

Dear Mr. Verhofstadt: By now you must have received several thousand messages of praise for your brilliant speech in the European Parliament. Your speech was full of eloquence, real world specifics, a keen sense of history, and an obvious love for Europe and for Greece.  You even offered to come to Athens to help. My question is, when can you start? Would you consider being Prime Minister of a Greek government of national unity?  It is not as crazy as it sounds.  You hit the nail on the head when you said that the Greek political class is the problem; they are all tainted and corrupt, Syriza is part and parcel of that system, and cannot or will not be any different.  As a people we are deeply divided, part of that is history, part of that must just be genetic, and at this time, to fulfill the program you so clearly and concisely elucidated, someone from the “outside” has to do it. Who better than you? First of all, you have done this job before, as Prime Minister of Belgium, a country with the same population size as Greece and one which is, let’s face it, also divided and with its share of dysfunctions.  You already have a plan, outlined with more depth and specificity than anything the Tsipras government provided.  You have a sense of history, not the cliché allusions to Classical Greece but to the real modern state.  You have an energy and optimism singularly lacking, frankly alien, to the Greek political class. Your being a foreigner need not be a problem.  As a Belgian, you are no doubt fluent in several languages, and the only Greek under 60 who could not communicate with true precision with you is Mr. Tsipras himself.  Anyway, given the way you pronounce Trikoupis and Venizelos (the Real One), you will no doubt make headway with Greek as well.  Being a foreigner is your greatest advantage; you have no local base or bias, and Greeks know instinctively that no Greek today can take command of the ship of state.  That is why the “electoral accident” of Tsipras occurred, because there was no real choice. Until now. Greek history is full of precedents of foreigners helping out or taking the helm at key times in our history, enabling us to rise over our divisions.  I prefer a more recent example.  In 2004 a German coach named Otto Rehhagel led a Greek team against 150 to 1 odds to the European Football Championship.  Our people have the will and the guts; we lack the leadership and the reforms. Come to Greece.  (Don’t worry about the citizenship, this is Greece, we can arrange something!)

Yours sincerely, Alexander Billinis, Co-founder,  Reform Watch Greece

The Greek Middle Class: 1955-2012

Reader please note, this is the unofficial obituary . . .

The Greek Middle Class (hereafter “GMC”) passed away last week, after several years of deteriorating physical and emotional condition. Cause of death is currently being investigated, but decades of spousal abuse from the Greek Public Sector (“GPS“ also known as Big Fat Greek Public Sector “BFGPS“) is believed to be contributory to GMC’s early demise, as are, unfortunately, the conditions in the Greek public hospitals, and lack of heating oil.

GPS is the successor to GMC’s few remaining assets, and has successfully fended off claims from GMC’s relatives in America, Australia, Canada, and elsewhere. GPS wrote a moving death notice but requested “that the family’s privacy be respected . . . [and] particularly that these slanderous and hurtful allegations of spousal abuse cease.”

The funeral was a somber affair, paid for from GMC’s estate. Other middle classes, particularly from Italy, Spain, Portugal, and Ireland, were too ill to attend, and GPS pointedly refused to allow the German Middle Class to attend, calling them, predictably, “Nazis.” The Greek plutocrats were well represented, with lovely bouquets in tow. Father X, formerly of Vatopedi and lately confessor to the grieving GPS, gave a moving graveside eulogy pointedly praising the spousal solidarity exhibited by GPS, and asking for forgiveness for the hapless GMC. In spite of GPS’s advanced state of mourning, GPS still managed to record the eulogy on a recently acquired I-Phone 5.

GMC was born via a difficult birth circa 1955, the birth records were destroyed in the 2007 fire that charred the Peloponnesus so exact date of birth is uncertain. GMC and GPS were third cousins, with business and political interests. GMC was a sensitive and articulate adolescent, but constantly in the shadow of the plutocrats and GPS. Some of GMC’s relatives decamped to America and Australia as a result, but after the marriage of GMC and GPS in 1981, a certain domestic harmony ensued. GPS appreciated GMC’s willingness to work and eventually GMC rose to regional manager of the other Balkan Middle Classes, in the latter 1990s.  GMC also bankrolled their daughter’s education in Britain, at City College in London.

According to a copy of GMC’s diary, smuggled out of the house by a relative from Toronto, the trouble really began in the late 1990s when GPS forced GMC to agree to signing off on a false financial statement to join the Euro Club. Membership had its privileges, though, and for the next few years, the couple partied hard, not just in Mykonos with the VIPs, but all over the world. For a poor kid from the village, it was heady stuff. But keeping up with the VIPs, both local and foreign, was hard going and GPS began to skip paying bills while demanding more and more from GMC’s paycheck. Blackmail and verbal abuse became the order of the day, and GPS actively stirred both the poor and the rich against GMC, further isolating GMC. Also, relatives from America and peers in Europe were pushed away, and eventually GPS’s bad manners and temper resulted in GMC becoming friendless. GMC’s long history of enabling GPS also eroded others’ respect for GMC.

Just as GMC’s health began to deteriorate, GPS forced GMC to work harder, and constantly demanded GMC’s pay. GPS’s health insurance proved to be less than effective, because GPS had stopped paying the premiums, and GMC was not allowed to seek help from relatives or from peers. By this summer, GMC’s pallor had turned a deathly grey, even as GPS was planning yet another ponzi scheme. With the first serious cold snap, and no money for heating oil, GMC gave up the ghost. A few days before, neighbors did hear a muffled argument about yet another financial demand from GPS, but GPS insisted that the neighbors misheard.

A few days after the funeral, GPS was seen in Mykonos arm in arm with VIPs, hardly a grieving spouse.  Among those in GPS’s entourage included officials in charge of the inquiry into GMC’s death.  A finding is expected shortly.

We all eagerly await the findings of the inquiry.

Greece under Sanctions? A Yugoslav Deja Vu . . .

 

Greece, like Yugoslavia under sanctions, is starting to be cut off from the world economy.  This time, it is not due to war, but rather economics, and, let’s face it, politics.  The debt binge of the first decade of the new millennium was going to require massive belt tightening to pay under any circumstances, just as it has in Ireland, Portugal, now Spain and likely soon others.

The inability of Greece to reform, and even, on May 6, to elect a coherent government has resulted in the market taking the situation into its own hands.  Greeks are taking advantage of the EU’s lack of currency controls to take their money out of the country, by the billions.  Investors are cutting and running.  Those who sell to Greece demand payment up front; commercial insurers, refuse any Greek business.   And just days after the election, Russian Natural Gas behemoth Gazprom warned that the spigot will be turned off if Greece does not pay up.

Effectively Greece is under economic sanctions, dictated not by politics but by the market.  A nation with a huge trade deficit in energy and even food is basically being cut out of world markets.  This harkens back to Yugoslavia in the 1990s, though the Serbs had the advantage—an important one—of being utterly self sufficient in food and had a far, far lower level of economic integration with the rest of the world.  Though they had serious indebtedness (which contributed not a little to Yugoslavia’s demise) their debt and trade deficit was far less than their Greek neighbors have today.  As such, though the politics are different and (thus far) there is no war and violence, the sanctions effect on Greece may be eerily similar.

Of course, Yugoslavia in the 1990s suffered some of the highest inflation in world history, which thus far Greece has not.  True, but whether this element of the Yugoslav equation comes into play is entirely a matter of what happens on the June 17 election.  If Tsipras comes out on top and puts his imbecilic and ill-defined plans into play, Greece will likely be bounced from the Euro and hyperinflation will no doubt begin, complicated by not having a legacy currency already in existence and by the scarcity of vital products (food, medicine, fuel) due to the virtual sanctions on Greece.

Nearly twenty years on, Serbia is still reeling from the twin blows of sanctions and hyperinflation.  The damage to national wealth and, perhaps more importantly, the national psyche, is palpable everywhere.  Greece today is at the threshold of similar pain, and real prudence is necessary to avoid the abyss into which we now stare.  One of the shoes has already dropped, the other is teetering at the edge.

Tsipras must not win.

Hippocrates doesn’t live here anymore

Among the crises inflicting Greece today we must include the crisis in the health system.  To borrow from a medical analogy, the crisis in the health system is a cancer on the Greek body politic.  Like many cancers, symptoms existed long before the recent diagnosis.  Even in times of apparent economic health, the Greek health system was far from healthy.

For years now, the Greek public health system has been plagued by debts and corruption, effected, if not with official connivance, with toleration.  One of the key places a typical Greek will pay a bribe (among, of course, others) is to a physician at a public hospital.  Bribes are so commonplace as to be accepted as part of the cost of treatment.  The patient, or his family, who is not prepared to pay a bribe may be directly endangering their health.   As the system further deteriorates, even bribes are less effective than they used to be.

Greek public hospitals for nearly a decade have been known as the deadbeats of Europe within the pharmaceutical community.  Companies would often wait for years to receive payment, and often as not the state would reduce the amount paid to the companies.  Greece’s already ballooning debt increases further when considering the several billion EUR of liabilities in this sector.  Not surprisingly, pharmaceutical companies padded their invoices to make up for the late payment terms, and often enough kickbacks and bribes demanded by public servants, government officials and doctors would further increase the costs, stretching the finances of the state health system, again, even in apparently healthier economic times.

It was not uncommon, even in the good old days, for hospitals to have shortages of vital medicines and more mundane items such as bandages and toilet paper.  Often enough, patients bring their own!  The debt-plagued procurement system was a key reason but another reason stands out: outright theft by doctors and hospital staff.  It is not uncommon for those employed in public hospitals to help themselves to white goods or common medicines at the hospital.  Oversight?  Not here, most hospitals lacked even the rudiments of bookkeeping; without a paper trail, how do you prove something is missing or stolen?  The EU Commissions first Quarterly Report from the Task Force for Greece diplomatically cites a “concern . . . as [to] the efficiency of and access to the healthcare system.”  They further talk about the need to rein in expenditures and “implement best practices,” etc.  They could go much further and talk about the blatant graft by procurers, hospital staff, and even by holders of the Hippocratic Oath.

So, the story is the same here.  Bribes, graft, and a willful lack of professionalism or oversight conspire to make Greece’s health system increasingly dangerous to your health.  It simply did not have to be that way.  Greece, in spite of the debt and eroding competitiveness, did make considerable strides in its standard of living.  Greece has one of the highest percentages of doctors to population in Europe, and therefore the world.  In spite of the onslaught of junk food and stress-inducing lifestyles, the Greek diet and climate is very conducive to good health.  Greece’s health crisis is, rather, a subset of its general crisis, which is not primarily financial but rather civic and civil.

As for Hippocrates, he clearly doesn’t live here anymore.

Greek Public Sector Unemployment, or Lack Thereof

According to The Economist, dated 14 January 2012, of 470,000 jobs eliminated in Greece since 2008, “not one has been from the public sector.” Reformwatch.gr seeks to chronicle and to track the pace of reform in Greece necessary for the country to survive as a developed nation in a community of developed nations. If the above figure is true, or even remotely so, there has clearly been no reform.

Actually the quote is not technically correct as there have been many contract employees released from public sector and especially local government administrative slots over the past 18 months, but Minister of Public Sector Reform Reppas has indicated that no public sector employee will be dismissed, in the purest form of cheap electoral politics. Clearly, some Greeks are more equal than others.

We are distressed by the relaxed approach the PASOK elements in the current Greek government have taken to mergers and eliminations of non-essential public sector entities (originally laid out under George Papandreou and handed to Vice PM Pangalos for actual implementation), choosing to “except” a large number of the personnel that had been designated for firing or the “labor reserve” once their employing agencies were abolished/merged.

As Solon beautifully expressed in last month’s Private Sector Death Spiral posting, the current existential financial crisis in Greece has become an opportunity for the Public Sector to squeeze the life out of the remaining private sector, with the apparent blessing (or gross negligent disregard) of “The Troika.” The insanity of this situation ought to be self-evident. We are frequently asked why the Troika allows such back-pedaling on administrative reform. It is as if “Reform” in Greece has taken a page from Stalin’s Five Year Plan playbook. Stalin destroyed the kulaks, the small independent farmers, to finance his industrialization drive. In Greece, the private sector and the entrepreneur might not be going to the gulag, but they are increasingly out on the street, homeless, in order to finance the unproductive but protected Public Sector. This lack of logic would offend even Stalin.

Not only do figures like those quoted by The Economist demonstrate that the purpose of reform has been defeated and perverted, it also opens wide the possibilities for severe social unrest, as the private sector who suffers the bulk of the pain sees that the Public Sector is either partially shielded from its effects, or, more ominously, dishes it out. All of this at a time when Greece, still in extensive deficit spending mode, needs international support to pay monthly pensions and Public Sector salaries. Greece deserves better.

Taxing Times in Greece

Insult and injury are constant companions when living in Greece and navigating her soul-killing bureaucracy. This gross bureaucracy is one of the most extremely wasteful and parasitic parts of Greek society, and the one that should have been killed off in this crisis. It is not, and instead, it and the rest of the state sector are killing Greece.

The slew of new taxes, known in Greece by the expressive Turkish word, haratzi, recalls the “head tax” required of all Greeks and other Balkan Christians during the Ottoman era. The word expresses the disdain Greeks feel for these many new taxes, levied in large part because for so long, so many taxpayers evaded taxation, particularly the richest people and often as not with government connivance.

The payback has now arrived with interest. This in itself is not necessarily bad as the Greek debt must be controlled, except that, as usual in Greece, the tax has been corrupted, it is ridiculously inefficiently collected, and, as usual, the very staff collecting the taxes are for the most part as rude and as secure in their cushy state positions as before, while the Greek private sector is being choked to death. Here the Greek state, and especially its public sector, shows the full disdain it hasfor the Greek population. Reform remains an illusion.

Consider the story of one middle class Greek in one of Athens’ northern suburbs, and his saga in the process of trying to pay one such tax. Three hours’ wait, no internet payment option, no real process or procedure. An old man, who waited for a similar length of time, asked for the bathroom. The Little Caesars behind the desk informed him the restrooms were reserved for employees and the unfortunate man had to relieve himself outside! The Greek state knows full well how to humiliate her citizens.

Not only is the whole process a waste of citizens’ time and humiliating, it is also horribly inefficient. In an e-commerce era, payments can be done safely over the web. The benefits to the collector, the Greek state, are substantial. It reduces physical cash collections, automates and concentrates balances as quickly as possible, while at the same time giving the payer as many payment options as possible. This ensures quick collection of funds, minimized the security issues associated with cash, and provided for multiple, convenient, and safe ways of concentrating funds, as well as a more secure audit trail.

Having said the above, perhaps the answer to “why doesn’t the state encourage this?” is rather obvious. The process has suited the public sector all too well, though not the public. Of course, the official lines are different, such as “Greeks like to pay in cash, and have the stamped receipt that they paid.” That may have held water in the past, but internet penetration in households is now such that every Greek bank provides such a service, and the Greek State, now at the precipice of bankruptcy, could easily invest in a safe system to collect payment via credit or debt card. Greece has belatedly entered the current century by allowing for some payments, including some taxes, to be done online through the banks. There are grandiose plans to expand use of new IT across the Finance Ministry. But bill clarifications or disputes all have to be done in person — since tax bills usually come without explanatory letters –, and here the state exacts its vengeance (for what I do not know) on its citizens.

Perhaps the answer is facing you across the till at any Greek government office. The pocket pasha sitting in his chair believes that his time and job is simply more valuable than yours and nobody but a few newly-assigned Troika experts seems to be challenging these people to reorganize based on productivity. The Greek state, which Greeks (and bondholders) fund, seems to agree. The state even humiliates you when you try to do your civic duty.