The View From Greece

Greek_proestYou think we have some difficult divisions within our country? Have you noticed what’s happening lately in Greece?

I write this from my family’s summer vacation. My wife, my daughters, my mother and I have immersed ourselves in sunny beaches, folkloric cobblestone streets in a two thousand year-old village, and chocolate croissants eaten on the daily. We are blissfully happy on our Greek island paradise, thank you for asking.

But! As an amateur dabbler in the dismal science – economics – I can’t resist pondering the underlying finances and of the beautiful place I’m visiting.
Ugh. I am sorry I lifted up that heavy rock, to see what blackened worms lay squirming beneath.

Alonissos_Old_villageWorms like the unemployment. The inability to control their own destiny. The maybe inevitable reaction to this horrific situation: a radical left-wing party in power clashing with Neo-nazis in Parliament.

Greek unemployment stood officially at 21.5 percent at the end of 2017, an improvement – if you can really call it that – from rates of 27.5, 26.5, 24.9, and 23.5 percent respectively the previous 4 years, 2013 to 2016.

How does that level of unemployment feel to the Greek people? Can you picture those grim black and white photographs of the Great Depression?
Compare those numbers to employment in the US during the worst stretch of the Great Depression, 1932 to 1936: 23.6, 24.9, 21.7, 20.1, and 16.9 percent respectively.
The Greek rates of unemployment over the past five years are similar, but actually a bit worse, than the US rates of unemployment in our darkest days. Think breadlines and grinding poverty in the cities and dust bowls in the agricultural areas. Your parents and grandparents were forever changed by those years.

And there’s not necessarily a cure for the Greek unemployment situation.

Mainstream economists believe that the best monetary policy response to high unemployment – meaning what a central bank should do with the supply of money – is to vastly increase the amount of money circulating in the economy.
During the financial crisis in 2008 in the US, the Chairman of the Federal Reserve Ben Bernanke earned the epithet “Helicopter Ben” for doing essentially the correct thing, which was to adopt a policy, metaphorically speaking, of dumping vast quantities of money from the central bank’s helicopter onto the economy. By and large, it worked. Unemployment peaked at 10 percent in 2009 in the US, and now is at an historically amazing 3.8 percent, a 49-year low.

Alonissos_mapIn Greece, by contrast, the European Central Bank controls the money supply. And the European Central Bank, by general consensus, responds to the cues of Northern Europe in general, and Germany in particular. Germany, unfortunately for Greece, right now has a 3.4 percent rate of unemployment, a 38-year low. The right thing for Northern Europe and Germany right now is to restrict the supply of money.

What I’m pointing out is that Greece and Germany have incredibly mismatched economies to share the same currency and monetary policy, to the terrible detriment of Greece in the midst of a massive depression.

Imagine now the gut feeling many Greeks must feel about the politics of this situation. You think there are political divisions in the US right now? You’ve noticed some resentment of possible foreign interference in our sovereignty? This sense that the German monetary policy keeps the Greek economy under its thumb with low growth, high unemployment, and high debt would naturally lead to resentment. Imagine if the Federal Reserve were controlled by a committee made up of financiers from Canada, the UK and the Moon, and they set policy with huge implications for the US economy. That’s how the Greeks feel.

Actually, it probably feels far worse than that.

On the island where I’m visiting this summer a statue proclaims the names of nine young men shot in 1944 by German occupiers on the island in World War II, as a warning against resisters. It wouldn’t take much stoking of nationalist resentment to make Greeks upset about their situation. Again, unemployment is worse that it ever got in the US during the Great Depression, for 5 years running.

Next problem. Since 2009, Greece has suffered from an unsustainable national debt problem. The national government collects too little in taxes and owes too much to domestic pensioners and foreign debt holders.

Not only do the Greeks not control their own monetary policy, their fiscal policy – government policies of spending and taxation – are deeply subordinate to what’s referred to as The Troika – the leadership of the European Commission, the European Central Bank, and the International Monetary Fund. In order to remain solvent, the Greek government has had to compromise its sovereignty to the Troika.

Meanwhile, the financial stress has fractured Greek politics. The
Neo-Nazi party known as the Golden Dawn holds 15 seats in the 300-person parliament and earlier was the third largest in parliament.
The ruling left-wing party Syriza was elected on a platform of opposing the Troika.

Greece_German_invasionBefore his election as Prime Minister, Alexis Tsipras promised the Greeks an attractive combination of butterflies, moonbeams, and fairytales regarding taxes and spending. In other words, he wouldn’t raise taxes and he wouldn’t cut spending on pensions. The Greek electorate seemed to like butterflies and moonbeams. I mean, who doesn’t?

Once elected, Tsipras immediately reneged on his promise, agreeing to raise taxes and lower spending because, well, the Troika demanded it. Cleverly, he called elections right afterward. For some reason, despite the reversal of course and lies, his party won election again.
This week while we blissfully vacationed, a member of the Golden Dawn party called for the arrest of the Prime Minister and President, essentially asking for a military coup.

Anyway, vacation is so relaxing. I assume everything’s good back home?


A version of this ran in the San Antonio Express News and Houston Chronicle.


Please see related post:

Podcast: A Greek Businessman on the Crisis Part I – Government Bloat

Podcast: A Greek Businessman on the Crisis Part II – European versus Sovereign Power

Post read (170) times.

Greece On The Brink: Notes From The Island


Editor’s note: The following is from The Banker’s Editor-in-Chief, aka Mom.

Mom spends a month every year on a Greek island, populated by ex-pats. She has watched the island move from the drachma-economy of extremely cheap living, to a much more expensive, but possibly unsustainable, economic model. All sides blame others for this crisis. In the details of her note are some hints at the causes and tensions of the crisis.

Greece is in the midst of a financial panic, likely the last few moments before they officially leave the euro and default. 1



From Mom, June 28, 2015

Afternoon update – I left the beach and went to the port village hoping to use the ATM to get euros for my return to Athens and then the States. Empty.

Morning update – Two summers ago, at an island luncheon, a Greek central banker remarked that in light of the ongoing crisis, Greeks would have to start paying the taxes they owe. But now, as default looms in a few days, I see little change here. Only about half the restaurants give bills rung up on cash registers; the rest still write them down on paper and presumably do not report them as income.  On my way here, one taxi driver from Athens proudly submitted his bill to me with the tax listed, but he is a notable exception. All encounters with bureaucracy, whether at the bank, the town hall, or the ferry ticket office take enough time to infuriate me and that inefficiency may discourage tax-paying. The Greeks, mostly self-employed entrepreneurial taverna owners that I deal with are delightful, helpful, and fatalistic about a bankruptcy over which they have no control. A few consider themselves and fellow countrymen to blame for overspending and over-borrowing, but others talk about the rape and pillage of Greece by the Germans in WWII as a reason for not paying the current debt. The majority of the island residents voted for the current government, which has said the existing debt terms are unacceptable because of the suffering of so many unemployed Greeks.


The Brits, Dutch, and Germans who have summer houses here love Greece and the Greeks they know, but they are very annoyed that their high taxes, funneled here through EU projects, have been wasted by poor planning and execution as well as by outright corruption in Greece. Lots of unhappy jokes about the 22 million euros spent on the new island reservoir that leaks and the small amounts for hiking paths that tourists use that are now overgrown and have rotting picnic tables. The Europeans are keeping only a bare minimum of euros in their Greek bank accounts so they won’t lose much if those accounts are converted to a devalued “Drachma.” A German partner of the retired local priest who lives here year round, however, has resisted that euro flight and proudly kept significant savings in the local National Bank of Greece.

Some historical context on the strong views from Greece

When I first came to the little Greek island – where I spend a month every summer – 30 years ago, the Old Village (high on the mountain) had no electricity, one telephone, no paved roads, but many tavernas with beautiful views and fairly quiet generators. Now, especially since joining the EU, and having years of a huge influx of Northern European cash, we have too many cars and scooters, but tourism has never been truly busy since the conversion to the Euro. When the super-cheap prices of tours using the drachma finished, those tourists moved on to Turkey and Bulgaria. Other Europeans and the few adventurous Americans who can afford the new Euro prices either don’t find Greece “shaped-up” enough or resent the ugly things some Greeks have been saying about them as “pillaging” creditors.

Post read (994) times.

  1. Either default ‘again,’ or default ‘officially’ for the first time on their sovereign debt, depending on your view of what happened over the past few years of debt restructuring and debt extension.

Interview Part II: Greek Businessman On European Sovereign Power vs. Local Greek Power

Please click above to listen to full interview.

In the first podcast with Mihalis, we discussed the excessive size of the Greek government, and the challenges and opportunities of entrepreneurship during the Greek crisis.  During that same conversation Mihalis went on to discuss with me his solutions for Greece.  He envisions a radically strengthened European Union, in which the Greek state withers in favor of more unified control from a federal Europe.  Combined with that, ideally, he imagines local politics still under Greek control.  Finally, and interestingly to me, Mihalis spoke about his father, a prominent businessman who took over as mayor of Thesssalonika, Greece’s second largest city.

Mihalis: I have many radical views. I don’t want to, you know, take them public yet.

You know Greece can, as it did in the 18th century, the Greek ideal, the Greek nationalism. Greeks were used by the European nationalists in the 18th century to create the nation state.  In many ways you know the ideas of democracy, a nation that creates its own state, it was formed – it was inspired – by Greek ideals.  And now there’s a second opportunity in which Greece can become the, an example of deeper European integration.  With loss of sovereignty, national sovereignty.  Because at the end of the day the solution is very simple but no one wants to tell it like it is.  You have to sell assets.  And it’s not very easy to do. It’s not very easy, but it’s not too hard to do, if you want to do it.

Politicians are afraid that if anyone’s going to say that, they’re going to be blamed for being traitors or whatever.

Mike: have Greeks benefited from unification with the rest of Europe?

Mihalis: Of course!  That goes without saying.  Not only because of the level of standard of living, it’s also a question of giving us access to a much larger market.  It’s become a lot easier than before. It is made tourism a lot easier – more transparent, more efficient.  We think about Greece as basically three things to offer. Shipping, which is a main area of excellence in the world; Tourism – we have good real estate; and the products that this real estate produces: good wines, olive oil – good stuff to eat because it’s a blessed place.

And these things have become more accessible with the euro than before. Of course, they become more expensive as well because in Greece we didn’t have a good adaptation.  So when we did switch from the Drachma to the Euro, there was a hidden inflation that really ravaged society.

Mike: As you know, my parents vacation in Greece and they’re the classic tourist – for a month a year they spend their retirement money in Greece.  But it got about twice as expensive when they joined the Euro.  As my mom has worried to me about “what happens if they leave the euro?”  I said “that is something you should look forward to.  If they’re back in Drachma everything is half price again!”  Which is the way it was when they first were going to Greece.  From a balance of payments, or tourism perspective, shouldn’t they just leave the euro?

I know you disagree, but I’m trying to play devil’s advocate a bit.

Mihalis: I don’t disagree, it’s more a question of a better remedy.  It really depends on how you assess the symptoms.  If you have to amputate you have to amputate.  Leaving the euro for Greece would be tantamount to an amputation. It’s something that’s really wrong, if it’s the only way to save the patient is by cutting off his arm.  I still feel there are other remedies.  Although I’m a pessimist by nature I still hope that there are some healthy forces in Greece that can team up with more visionary – more powerful forces in Europe –  for deeper integration because there are more benefits than disadvantages to deeper integration overall, for the whole.

My radical view is that, if you had Greece lose part of its sovereignty so it could be the experiment of European integration.  It might be unrealistic or utopia what I’m saying but, I don’t see any other way out.  Because if you don’t create some radical changes, in the way the political system works and in the way culture affects self-government, it’s not going to work.  So you’re right.  There’s no reason to help, so kick them out.  Let them not be part of our problem. And whoever has connections to Greece… Maybe let the tourists go there, and find the Drachma was cheaper and that’s it.

But there are two forces inside Greece that are still fighting since the inception of the state in 1821.  It’s between

  1. Modernity and Westernization, versus
  2. Orientalism, and Backwardness, and no change.

It’s kind of like the Euro is a conviction, a belief, that we could be more modernized.  We can be more close to what Europeans and the West expect us to be.

The most admirable thing about the US – and that is why the US has become so strong – is that you have a local government which can take care of things efficiently, and then you have a federal government that deals with the outside and inside whole of the body. In Europe you could take that example. Greece could already have institutions to run regional governments that could fertilize or be pollinated by European experts, people who run things well abroad, take best practices. The problem is we don’t have the best practice rule; You call in someone who has made it in some way, who succeeded in doing something, and really try to make it work.  And then you have a blended society that has a common goal in mind which is to make it work.



Mihalis: There’s been a lot of talk about it in Greece.  Writers and journalists and many people have proposed, have just tossed his name as a potential independent guy that could come and sort of create a stable platform on which different forces can be synthesized. But I think he knows, he’s aware of his limitations and he always wants to focus on his scale.  And his scale is at the city level and I think he is committed to that.  You know he didn’t run into politics for the power trip.  I think he ran because he felt that he could offer and do and make a difference at the city level. I don’t think he could make that difference at the national level.

But I think he’s an example of what I’m talking about.  The global/local combination where you can have people like him who fight corruption who fight this venality built into the parliamentary system in Greece. Who have run successfully a business, who can fire people at the local level and hopefully improve things at the local level which are relevant to the people in their everyday life.   Then you can have people of much larger magnitude that can run the larger federal institutions of Europe.

For example the immigration problem is not a Greek problem, it’s a European problem.  Instead of sending an army to Afghanistan, why don’t we have an army that actually goes out to Greece’s frontiers because these are actually Europe’s frontiers.  Just an example.  Why have 6% of Greece’s GDP being squandered in armaments?  For God sakes! Who are we scared of anymore? Turkey? Why is Turkey going to invade in the Greek islands? Why are we afraid of the Russians anymore and we’re going to keep a big standing army in Greece which is useless anyway? It’s money used for corruption with German suppliers of arms and big politicians facilitating the sales.  We’ve seen it. Where the big money is it should be federal.  I’m not saying that you don’t have corruption at the large scale in the US or another federal system but I think you can put checks in place that are more transparent, and more rational, more systematic.

If European leadership could rely on people like my father at the local level to keep people happy in their everyday life, and they can then run macro-economics, to stabilize economies and create a little bit of a new a new growth model.

Mike: My impression is after reading New York Times profile of your father  that he’s the type of person that if he was in the United States and we were going through the crisis that Greece is going through, he would be immediately drafted as a leading contender to run the country.  At least the United States, everybody loves the anti-politician.  And the guy who just, practically, gets it done.  For 20 years that I’ve known you, I know your father’s never been involved in politics.  And yet here he suddenly shows up running the second largest city.  It’s fascinating to me.

Mihalis: Yeah but he was always, always involved in collective affairs.  He always cared about the collective.  He ran for the Communist Party eight years ago.  In the local politics. My mother had cancer, I had kicked him out from the office when I took over the business with my brother.  And he needed to do something.  So he said okay I’m going to offer what I have of my time to local politics.

He ran with the Communist Party because he didn’t believe in what the big parties were doing. Because the big parties were basically reshuffling the cards.  Exchanging votes for jobs.  And the Communists never had power.  So he wanted to, say, be clean. Of course he didn’t really share the dogma of Communism.  His ideology is basically “you care for the guy next to you.”

He always you know when he was a big businessman they used to call him the “Red Industrialist” because he was helping the suppliers or vineyard growers establish their own vineyards, estates, and wineries and brands.  So he basically undermined his own power.  But he knew that that was an evolutionary stage, that his road was to encourage, rather than be opposed to it.  He knew it was going to happen anyway.  I mean there were 50 wineries in Greece 30 years ago and now there are 500. And there might be even some more.  Small-scale mom-and-pop operations like in Italy and France. So Greece is becoming more Europeanized. It hasn’t been a straightforward road but it’s happening.


Mihalis:  I do think Greece has always played inspirational role.  Greece could become the model for the post-nation-state Europe.  If you think about it, since the imposition of the King in France until today we’ve run on the same model. Two world wars, European unification model, using the paradigm of the nation state.  And now we see the need for a more multilateral kind of model.  And Europe has a lot to learn I think both from China and the US as to how a more pluralistic federal system can be established. And Greece would be the hardest place to run it. If you can do it in Greece you can easily do it in any other country.  For the cultural reasons I mentioned, because Greece is also a very Oriental country deep down.  It’s not part of the homogeneous core group of Europe.

Yes, from an economic point of view, exiting the euro would be a short-term good solution to the crisis.  But it would signify, and it would imply, a sort of refutation of Europeanism and of what Greece could become in the future. So I would like to hope and insist and keep fighting for more European success on Greek soil.  Because Europe – what Europe stands for – is something I believe exemplifies the highest values of human societies today.  The combination of achievement in terms of social organization and balance between society and the individual is really coveted. It’s really envied by the rest of the world.  And I would hate to lose that.  I would want that for Greece.

But maybe it’s not meant to be.  Maybe Greece has to remain sort of an oddball.  It takes a little bit of social engineering to get there.  And right now I’m not occupied with this. I’m trying to sell some wine. That’s my contribution to the problem.

Post read (3543) times.

Interview Part I: Greek Businessman on the Government’s Bloat, and A Solution

Please click above to listen to full interview.

Part I – This conversation is not with a banker in recovery, but rather an old friend of mine named Mihalis who comes from a prominent Greek family.  Greek finance is the tail currently wagging the European dog, and Mihalis is one of the most insightful people I know.  I figured he could explain what’s going on.  I started by asking him about recent Greek Parliamentary elections.

Mihalis: Maybe it’s my personal bias but you know Parliament the way it works it’s really like the HR department of Greece Incorporated.

Mike: The HR department employs as many people as possible?

Mihalis: Yes, its votes in exchange for jobs and that’s the root of the problem.

Mike: you are saying the Greek Parliament is an HR system essentially for the country.

Mihalis: Yeah the whole public finance was used to give salaries to people.  If you looked at the workforce of Greece, basically you have 1 million employees directly or indirectly dependent on the state. You have 1 million self-employed people and 1 million people who work in companies as employees.  In Greece you have about 800,000 companies, so the average FTE – you know full-time equivalent – is something like 2 1/2. In Europe or America that’s like 100.

So essentially out of these 3 million you now about 1 million unemployed.  So the situation is really, really bad.


Mihalis: Half of the people… You know, you walk into a government building and you see half of the officials, they are honest people, they would like to work, they have some ideals they have some skills. But, they are completely demoralized, by the other half, which are jaded lazy, they bought their position because of a vote, and they pollute the whole system.  So, you can’t easily distinguish the two, so you’ve got to let a little bit of the forces to weed out the good from the bad.  And the only way to do that is to reset it.  They been trying to cut down the state, no one has really wanted to do it so they haven’t succeeded.  All they did was to displease the people.  Because they lowered their salaries, they’ve cut their benefits.  They started saving, doing a little bit more oversight on things. But all they’ve ended up doing is creating an even higher resistance to change.

Mihalis: The voters suddenly said well…So long.  We’re not going to vote for you anymore.  We’re going to vote for somebody who promises us even more jobs. The guy promised 100,000 more jobs after the election if he wins the election.  Crazy.  Right now the Greek government could function with 100,000 people. And it has 800,000 people.

In many ways, you know you have a few bankers, mostly of Greek origin, in the Greek desks of the big banks in Europe, maybe about 100 people, and they were just lending money to corrupt politicians. For nothing, just to cover up the problems of every year’s budget.  And this happened for like 15 years in a row at least. And then you had a collusion, with the politicians that want to appear you know with numbers that are smooth, attractive, and you start lying with statistics and blah blah blah and again Greece in the periphery was not a problem to worry about it was too small.  And that’s a recipe for disaster.

It’s a matter of popularity yes, in order to be a politician you need to be popular.  To be a good politician you need to actually make some wise decisions.  The problem is today politicians are neither wise nor make decisions.  They’re sort of dragged along by bankers.  The banking system is the backbone of the world, and they’re driving political decisions today. And it’s sort of putting the carriage before the horse, in many ways.

Mike: as an ex-banker myself I always, well, one main motto “Follow the money.”  Or if you’re wondering why the politicians are doing certain things, it’s generally wise to figure out what are the bankers asking them to do. It’s a good rule to follow. Wondering why people are acting like they’re acting, I find.


Mihalis: You know, the Greek are realists.  With a built-in distrust for the state. Because the state treats you as a liar and as a thief and you treat the state back the same respect. You know I don’t respect you. I don’t expect that you give, that you will protect my wealth. I actually expect that you will take away my wealth because in Greece since the 1980s the whole notion of entrepreneurship has been demonized and we haven’t reached the point yet where we de-penalize entrepreneurs.

Mihalis: There was a model in the 1960s of entrepreneurs that were [taking advantage] of the laborers, and taking the money out, and not paying taxes. There were a few examples like this but they were ruined. This became one of the popular themes of the Socialist government that we don’t like business people, we don’t like capitalists. Because they keep all the wealth for themselves and keep everyone else unwealthy.  Again that was an abuse, that was Greek hyperbole. Deep down if you don’t have entrepreneurs you cannot have growth. And that has been part of the stifling of the Greek economy. Rather than boosting or helping entrepreneurs, it’s always there fighting against them. So you have then entrepreneurs fighting back. Evading taxes, trying to find any kind of way to protect themselves.

Because they know sooner or later that the state is going to go against them. Because it’s a small market as well, the scale is so small.  In the US if you’re an entrepreneur you have such a big market.  You don’t have to fight over the stakes.  Fighting is fierce when the stakes are low.  You fight over nonsense because there’s little to go around.

And we’re talking about the key problem.  Let the economy run. The Greeks can do very well in a very, very chaotic environment.  They don’t need a society. They don’t need the comfort of the state like the Germans do, or the Chinese do.  Greeks can survive no matter what. All you need to do is get the big state out of the way.  Because the Greeks were like, they chose the easy way.  The easy way which is o, the state can feed me and I can give my vote to it. And everything can’t be fine. But this doesn’t work and somebody has to publicly say that the people.  And if the money flow has to stop, it has to stop.


Mihalis: It’s a byproduct.  Freedom was born in Greece.  Greeks are free and I think that’s a byproduct.


Mihalis: I mean you’re talking about an abuse of things. There’s been an abuse of the state.  Of the welfare state.  I’m definitely pro-welfare state, because I feel that the world is not perfect. The right wing guys are privileged, strong, they never had to suffer, and that’s why they see the world in their own eyes.  And the world is not like that. You need a welfare state.

There are ways and ways of funding it. In the Greek case it’s been abused.

In PART II of this conversation, Mihalis discusses further European integration, and his father’s role in Greek politics today.


Post read (1998) times.

Book Review: Boomerang – Travels in the New Third World

Back in College, in social science classes, we learned never to rely on cultural explanations.  Professors excised culturally deterministic phrases from our analysis: “The Spanish society tends to…The African American culture explains…Inevitably, Catholic norms led to… ”

Cultures change, as does our view of them, the intellectual posits, and culture drops out as a powerful explanation in the long run.

In Boomerang, Michael Lewis raises up national culture as the key lens to understanding the European Debt crisis.  This makes for poor social science and weak financial insight, but like anything from Michael Lewis’ pen, wildly entertaining reading.

Lewis sets up the central conceit of Boomerang as follows: When the lights go out and nobody is looking, what do people do?  In the financial context, he means specifically that when easy credit flowed into Europe between 2002 and 2007, what national character trait explains how the people of Iceland, Greece, Ireland, and Germany reacted, respectively?  The first three nations blew massive holes in the balance sheets of their national banks and governments, while the Germans remained prudent, and more specifically, anal.

Icelanders, we learn, transformed themselves in one decade from risk-taking fisherman to free spending hedge funders.  Easy credit from abroad allowed their testosterone-driven inner-Viking to bust loose from any prudence or fiscal constraint.

Greeks bring an every-man-is-an-island-unto-himself, as well as a deep distrust of one another, to their financial lives, resulting in a nation of tax cheats who assume all citizens cheat on their taxes.  The government cannot raise revenues as a result.

The Irish moved from abnormally impoverished (in the European context) to abnormally enriched over the course of the decade.  Their seemingly acquiescent round-trip back to relative poverty fits in with what Lewis describes as an unwillingness to communicate their troubles to anybody else.  They nationalized their insolvent banks, needlessly in Lewis’ view, in a brutal financial move that kept their troubles deeply repressed.

Lewis saves his most memorable images for the German national character.  Their coprophilia[1] apparently explains why German investors prefer a clean-seeming AAA-bond investment that contains steaming toxic subprime bonds bundled inside.  Lewis hires an overeducated chauffer to drive him to the Hamburg Red Light district.  She then proceeds to list a steady stream of phrases using the German  scheisse in everyday German conversation.  Somehow

None of this helps explain how Greece will resolve its national debt problems or whether Germany will, yet again, approve ECB loans to bail out its less thrifty southern European brethren.

Lewis’ Big Short from the previous year managed to be simultaneously entertaining and informative about toxic CDOs and the traders who loved to short them.  In Boomerang, he mostly settles for entertaining cultural sketches, albeit with limited financial insight.  But given that Lewis writes about financial characters for a living better than almost everybody else does what they do for a living, it’s still fun.  If Europe is going to experience financial Armageddon, can’t we also laugh a little?[2]


Please see related post, my review of Michael Lewis’ Liar’s Poker.

As well as related post, my review of Michael Lewis’ The Big Short.

And Michael Lewis’ The Undoing Project


Please also see related post, All Bankers Anonymous Book Reviews in one place.

[1] You’d better go look that one up.  I’ll wait right here….Ok, all set then?  Great, let’s move on.

[2] This seems as good a time as any to break out the old saw: “Heaven is where the police are British, the cooks are French, the mechanics are German, the lovers are Italian and it is all organized by the Swiss.  Hell is where the police are German, the cooks are English, the mechanics are French, the lovers are Swiss, and it is all organized by the Italians.”

Post read (2667) times.

Greek Government Formed Today, Will Soon Crumble

European credit crisis watchers cheered the end of the nerve-wracking Greek electoral cycle, with a coalition government sworn in that does not seek further debt repudiation or a sudden break with the Euro, its European creditors, and the European Central Bank

A look at electoral results, however, suggests this government may be set to fail very quickly.   As a well-connected Greek businessman pointed out to me last night,[1] voter apathy indicates huge dissatisfaction with the choices of leadership in Greece.

The big winners were the absentees.[2]  If you look at the results you have 39% did not vote.  Which, for the US, is nothing alarming but in Greece we usually have absentees under 5%.  It’s a real conclusion that people have lost all confidence in politics and politicians.

He then explained that the peculiar Greek parliamentary system means the leading coalition can form a government with only a fraction of eligible voters in support.

You have about a third of the people who voted for the Conservative party and they’re going to form the coalition government.  Which is a joke!  Because of the way the electoral system works, the first party gets a bonus of 50 seats in the parliament.  So you have a government that now has a majority with less than 40% of the votes which represents 24% of the voters…Now that’s not really a democracy.

It’s also an indicator of a weak coalition position.  On top of that, fully a third of the electorate that did vote for the left-wing candidate will seek only to obstruct the new government.

Here’s the people who will do everything they can to block everything.  They’d rather die and create a mess than accept reality.

This is not a hopeful situation when what Greece needs, and what Europe needs, is unprecedentedly strong leadership.  Given the hard choices ahead, it’s unlikely the coalition government can hold power for the next year.[3]

[1] Audio interview to follow as soon as possible

[2] Meaning, abstention from voting

[3] My prediction, not my friend’s prediction.

Post read (1342) times.