Greek Businesses Fear Possible Return to Drachma

[FarCenter]

Worries that Greece might default on its debts or even leave Europe’s currency union have deepened since May 6, when Greeks voted in shocking numbers for a left-wing party willing to tear up Greece’s $170 billion international bailout agreement. These days, even though 80 percent of Greeks say they want to stay with the euro, talk of “drachmageddon” can be heard in conversations all around Athens — in executive suites, at mom-and-pop shops and even in nightclubs.

“A return to the drachma would be a nightmare,” said Mr. Ioannidis, whose bookings began to trail off a few months ago and slumped badly after the election. “It would create a panic for businesses and also for people wanting to do business with Greece.”

...

Aside from shipbuilding, most of Greece’s industrial base has eroded in the 30 years since the government nationalized large areas of industry. Wealth-generating businesses diminished, and tens of thousands of laid-off workers were absorbed by the state to reduce unemployment.

Today, Greek exports of manufactured products account for only 10 percent of gross domestic product, compared with a 30 percent average for the rest of the euro zone. In addition, Greece’s adoption of the euro hastened a steady shift away from agricultural production. Today, Greece imports nearly 40 percent of its food, most of its medicine and almost all of its oil and natural gas, a situation that may lead to shortages if international suppliers halt business for a period.

http://www.nytimes.com/2012/05/23/world/europe/greek-businesses-fear-switch-from-euro-to-drachma.html

[dkf]

1. So they nationalized their industries huh?

Well now I have a better picture of why they are so messed up.

[FarCenter]

2. During the Andreas Papandreou regime after the Colonels junta

Andreas brings change

On August 16, 1974 Andreas Papandreou‘s plane arrives at the old airport in Elliniko. Wearing a black leather jacket and sporting the sideburns trend, the charismatic academic, with almost zero governmental experience, had came to bring change. His supporters shouted numerous slogans, also referring to Andrea’s father, the (old man of Democracy), Georgios Papandreou-current prime minister’s namesake grandfather also a Greek prime minister- urging him to raise from the dead in order to see his son (?ή?? ?έ?? ??? ?? ???? ?? ????ί ??? ?????ή?!). Andrea’s popularity rallied. By 1981, his leftist ideological rhetoric and political Utopia, had diminished the Conservative Party’s leader and Greece’s prime minister Konstantinos Karamanlis-his direct right wing antipodes- who foreseeing his defeat quits and moves on to Greek democracy’s presidency. Andreas wins a crushing general election victory with 48% and his supporters go ballistic

He was determined to make big social reforms that would change Greeks’ quality of life after years of starvation and war. He creates ESY (Greek National Health-care System), he boosts the welfare system, healing of the wounds of the German invasion and the Greek civil war which enabled thousands of ex-communists and rebels to gain pensions. He upgrades forgotten rural countries by creating schools and medical centers. From sheep farmers on the rocky slopes of Crete to fishermen in Cyclades, the Greek underclass voted for him massively. And why wouldn’t they? He was the first to pay attention to ordinary Greeks like them. Pasok workers had visited the farmers in villages and islands that men of power in Athens had always ignored.

The fall out

But then spending went out of control. Despite the fact that at first he fiercely opposed to the European Union, Andreas kept Greece in the club and started milking it of money. Instead of investing the European packages, he hired thousands and thousands of civil servants in the already over-bloated public sector only based on “rousfeti” (Turkish word for reciprocal dispensation of favours). He even ”hires” his son (current prime minister) in his cabinet. He nationalized failing companies, increased government handouts of every shape and form. He allowed female civil servants to retire at thirty five and granted tens of thousands of disability benefits to perfectly healthy people (there still are Cretan villages where 98% of the population is either blind or handicapped). Famous “Delor’s packages” kept pooring money for Greek rural areas to develop, funding non-existent cultivations and the same five sheep the villagers kept moving around the village so that inspectors would give them the valuable “????ό????” while Andrea’s Minister of Finance Dimitris Tsovolas, becomes the most recognisable slogan of the eighties ”????ό?? ?ώ??? ό??!”(Tsovolas give us everything).

http://greece.greekreporter.com/2011/09/05/from-father-to-son-pasok-celebrates-its-37th-birthday/

[dkf]

3. Very interesting. Thanks.