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Author Topic: Greece's financial plight  (Read 7509 times)

Offline Mike G

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Greece's financial plight
« on: February 18, 2012, 01:38:33 PM »
Many who use this forum have visited and loved Plakias (and other areas of Greece in many cases) for many years and feel very sorry for the economic predicament the Greek government (aided and abetted by others) has got the Greek people into. We hope they get through their current situation for better times ahead but many (me included) suspect that they are in an impossible situation and that default on their debts and leaving the eurozone is inevitable.
 
If this happens I wonder what the consequences for both the Greeks and us, the holidaymakers, would be? The new drachma would be massively devalued, that is virtually certain, and prices in Greece would rise considerably as a result. These two facts would work in opposite directions with respect to our costs. No one would lend money to Greece, so as a nation they would have to live within their means. Would the fabric of Greek society fall apart? It is at breaking point now and sometimes gives the impression that Greece is becoming ungovernable. Little of this has fitered through to Plakias though. I am old enough to remember when Greece was a military dictatorship (1967-1974). Would this happen again? It would mean Greece would have to leave the EU I think.
 
One issue is the inability of the Greek authorities to collect the tax owed and this was brought home to me last year at the Olympic welcome meeting when the rep, Sian, told us about the private medical facilities available in Plakias. By the way, she said, you need to know that the doctor only accepts payment in cash!! Presumably another Greek professional claiming an income of only around €5000 as has been widely stated in the British press.
 
I would be interested to hear what other forum members think and what the prognosis is for Greece and our many friends in Plakias.
 
Mike

Offline John R

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Re: Greece's financial plight
« Reply #1 on: February 18, 2012, 02:27:57 PM »
Like many - I am sure - I am watching the situation with interest. Selfish interest re hoping I get my annual trip to Plakias as usual but also very concerned for the financial welfare of the many locals that we now know. The best thing we can do for them is to turn up and pay up as usual.

Difficult to speculate on the consequences for us tourists of a Greek financial collapse. I would have thought that a much devalued Drachma would initially mean cheaper prices for tourists but I would not feel happy if that was the case and I was effectively cashing in on local hardship. This year I am using Olympic to get me there and back (still going to stay at my favourite place Stella Pension at additional cost to me). If troubles occur near departure time I worry what Olympic might do - whatever it is might be to their advantage rather than mine. If I was still an independent traveller then I could make my own mind up and face any consequences. So I have mixed feelings as to whether my ATOL protection will be better than my independence. I'm not too worried about my holiday one way or the other (as long as I get it) but I feel for the financial hardships of the Greek person on the street.

Offline nora

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Re: Greece's financial plight
« Reply #2 on: February 18, 2012, 11:34:01 PM »
Greece has always been one of- if not the cheapest place to go on a package holiday from the UK. I have been to many other places in Europe but to me non compare. I do really hope that the greek government listen to their people = if that means its more expensive for uk tourists  - I still feel confident they will come - as i think there is no place better....

Offline Bertie

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Re: Greece's financial plight
« Reply #3 on: February 19, 2012, 08:06:53 AM »
I agree with John that the best way for us to support our beloved Greece and Plakias is to continue to visit and spend, even if we have to endure a little inconvenience on the journey. We know how hard some of our friends in Plakias work in the season and they deserve our support more now than ever. This is what sets us apart from those who take a package to Malia and simply sit by a hotel pool all day. I still intend to make my regular two visits in July and September this year.
On the subject of locals paying tax Mike, don't jump to any conclusions about the doctor. I recently saw a consultant here in the UK and had to pay up front. He wasn't avoiding taxes but just ensuring he got paid. He'd obviosly been stung too many times previously. However, why single out the doctor? I, who uses plastic for almost everything I buy at home, use nothing but cash in Plakias and am fully aware of the reason why I sometimes don't receive a written receipt in a restaurant.
With our help they'll get through it.

Offline Colin & Sandra

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Re: Greece's financial plight
« Reply #4 on: February 19, 2012, 11:08:46 AM »
Has anyone any thoughts regarding spending money whilst there?
We were in Skiathos in 1992 when Britain withdrew from the ERM (Black Wednesday) and had our posteriors well and truly chafed when changing our travellers cheques.
Over the last few years we have taken Euro's, but if the situation hasn't stabilized by June I think we will take all Sterling this year

Offline John R

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Re: Greece's financial plight
« Reply #5 on: February 19, 2012, 11:36:52 AM »
If say Greece suddenly came off the Euro and say introduced Drachma then there would be initial chaos - no banks open, no cash machines working, no Drachma immediately available - basically no money available. However I understand that the Euro in ones hand would be very desirable indeed - so much so that the Greek Government would have to put border controls to stop the export of caches of Euro notes being smuggled abroad for exchange in to something worthwhile or be banked abroad. What would worry the Greeks would be Euros that are frozen in their bank accounts as those would be no longer available to them as euros but only as a much devalued new currency. If you take sterling there might be nothing in any exchange shop to exchange it for and the locals would not have any idea of any rate of exchange in order to accept them. Greece coming off the Euro will not mean that the Euro will be worthless there at any stage - particularly on day 1. In Russia where the Rouble is neither available over here nor exportable from Russia they will accept US Dollars or Euros but not Sterling (except at a premium). So I think the Euro will be a safe bet in any event.

Offline Voloudakis

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Re: Greece's financial plight
« Reply #6 on: February 20, 2012, 11:53:10 AM »
We normally take sterling as it can be difficult on smaller Islands to change travellers cheques. This Year however we are at a loss, take Euro's or Euro travellers cheques? The crisis makes me think Euro's and sterling in the form of cash are best to take. Who knows how the crisis will affect banking and if it does will branches close, will ATM's be maintained? Tourism is the Lifeblood of Modern Greece so Holidays booked via the big tour operators should be safe. Islands depending on Local ferry and Aircraft connections are already reporting many problems. Crete with its International Airport should still be a safe bet as Airport operators are striving to keep strike free because of the huge loss to the economy if national strikes were to happen. I really feel for the low paid and the pensioners in Greece as the Rich still avoid their taxes so the burden continues to fall on the poorest. You can read about the dilemma of tax collection and avoidance here (reminds me of "Catch 22" ) http://www.ekathimerini.com/4dcgi/_w_articles_wsite3_4_19/02/2012_428730
Well that was a bit rambling :-)

Offline Voloudakis

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Re: Greece's financial plight
« Reply #7 on: February 20, 2012, 12:04:32 PM »
Crisis, riots weigh on bookings.
By Stathis Kousounis

The reduction rate in bookings for the current tourist season from traditional markets such as Germany, the Netherlands and the Scandinavian countries has reached double digits so far, compared with last year, according to hotel market professionals. Recent images from the riots in Athens will not help the Greek product, meanwhile.

Although it is still early to draw any safe conclusions -- as just 15 to 20 percent of the year’s bookings have been made so far -- it appears that there are also losses from the British market, albeit smaller, while the Russian and the Israeli markets are on the rise.

Hellenic Hotel Federation President Yiannis Retsos said this is the most crucial period for final planning and provisional bookings as foreign tour operators will have to decide on the number of flights per destination depending on demand.

The prolonged discussions on the Greek debt swap and the recession environment in various European countries have weighed on bookings, he added.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_15433_19/02/2012_428745

Offline Mike G

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Re: Greece's financial plight
« Reply #8 on: February 20, 2012, 02:47:19 PM »
I certainly agree with John R that a Greek withdrawl from the euro would lead to a period of chaos and it is arguable which would be the safest currency to take. Personally I take € and £ notes, with credit cards as backup.

I am still suspicious about the doctor wanting cash. I don't have a problem with his wanting an up front payment; it's the fact of its being cash only.

I'm not surprised bookings are down. The general strikes (i.e. no flights) are one issue. Also, many just want a good Mediterranean break and, unlike us, are just as happy with other places. They don't want to risk Greece. Germans have always had some hostility from older Cretans re. the war but now it seems it is more widespread owing to the fact that the Germans are dictating terms to the Greek government. I understand that, but you can understand why the Germans and other eurozone countries who live better within their means are fed up with bailing out the Greeks.

So, like all of us, I'm just keeping my fingers crossed that I can carry on going to Plakias and other parts of Greece. If not, I'm sure I shall find some places to my liking elsewhere.

Mike

Offline Voloudakis

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Re: Greece's financial plight
« Reply #9 on: February 21, 2012, 10:42:39 AM »
Very Interesting Article on the Greek crisis in Der Spiegel.
Europe's finance ministers plan to approve a second bailout for Greece on Monday but Hans-Werner Sinn, the head of Ifo, a top German economic think tank, warns that the money will only help international banks -- not the Greeks. He argues that Greece can only solve its crisis if it quits the euro.
http://www.spiegel.de/international/europe/0,1518,816410,00.html

Offline John R

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Re: Greece's financial plight
« Reply #10 on: February 21, 2012, 03:16:28 PM »
This report today - reported today (AFTER the financial settlement) by Daily Mail and Travel Mole doesn't show too much optimism. I still think that Plakias should be safe enough at all times :-

"British holidaymakers in Greece are being urged to register with the Foreign Office so they can be contacted immediately if the social unrest in the country worsens. Foreign Secretary William Hague has reminded Britons of the importance of letting the government know their whereabouts, according to a report in the Daily Mail. He told the paper the Foreign Office had drawn up contingency plans in case the situation in Greece worsens and puts Britons at risk. To register, holidaymakers can visit www.locate.fco.gov.uk"

I suspect however that the press have distorted the notification and that it is directed more at the expat community than holidaymakers
« Last Edit: February 21, 2012, 03:20:41 PM by John R »

Offline Voloudakis

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Re: Greece's financial plight
« Reply #11 on: February 21, 2012, 08:34:44 PM »
The improbable Greece plan

Greece is now officially a ward of the international community. It has no real independence when it comes to fiscal policy any more, and if everything goes according to plan, it’s not going to have any independence for many, many years to come. Here, for instance, is a little of the official Eurogroup statement:

"We therefore invite the Commission to significantly strengthen its Task Force for Greece, in particular through an enhanced and permanent presence on the ground in Greece... "

The problem, of course, is that all the observers and “segregated accounts” in the world can’t turn Greece’s economy around when it’s burdened with an overvalued currency and has no ability to implement any kind of stimulus.

The effect of all this fiscal tightening? Magic growth! A huge amount of heavy lifting, in terms of making the numbers work, is done by the debt sustainability analysis, and specifically the assumptions it makes. Greece is five years into a gruesome recession with the worst effects of austerity yet to hit. But somehow the Eurozone expects that Greece will bounce back to zero real GDP growth in 2013, and positive real GDP growth from 2014 onwards.

Note that the downside, here, still looks astonishingly optimistic: where’s all this economic growth meant to be coming from, in a country suffering from massive wage deflation? And under this pretty upbeat downside scenario, Greece gets nowhere near the required 120% debt-to-GDP level by 2020: instead, it only gets to 159%.

Oh, and in case you forgot, this whole plan is also contingent on a bunch of things which are outside the Troika’s control, including a successful bond exchange.

More to the point, the plan assumes that Greece’s politicians will stick to what they’ve agreed, and start selling off huge chunks of their country’s patrimony while at the same time imposing enormous budget cuts. Needless to say, there is no indication that Greece’s politicians are willing or able to do this, nor that Greece’s population will put up with such a thing. It could easily all fall apart within months; the chances of it gliding to success and a 120% debt-to-GDP ratio in 2020 have got to be de minimis.

Offline plakias on the rocks

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Re: Greece's financial plight
« Reply #12 on: February 22, 2012, 01:13:35 AM »
Unfortunately in my country there are no politicians and much more a political leader who can give an objective and vision to the Greeks that we be born again as a country and leave behind the wrongs of modern Greek history. It seems that still need 1 or 2 generations to change people mentality and way of thinking, because surely the economic crisis is the result of moral values, not only in Greece or Europe but Worldwide.
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Offline Voloudakis

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Re: Greece's financial plight
« Reply #13 on: February 22, 2012, 10:28:42 AM »
More doom and Gloom reported in the Guardian Newspaper today 22/02/12.
Greeks will suffer austerity measures for another five years as the price of their government securing a €130bn (£109bn) bailout to prevent national bankruptcy and chaos within the eurozone, it has emerged.

The scale of the wage and spending cuts required to implement the rescue package prompted an array of analysts to raise the spectre of yet another Greek debt crisis later this year and the country's exit from the euro as recession deepens.

Senior EU officials admitted, that, after enduring wage cuts of 30% since 2009, Greeks would suffer a further 15% reduction in the next three years and even more cuts would be required after that.
http://www.guardian.co.uk/world/2012/feb/21/greeks-five-years-eurozone-crisis
Terrible news for the Greek people, the Politicians seem to think only of repaying debt whilst their people lose their jobs, become homeless, lose medical care and starve.
I do not know what the answer is, but it seems the single currency is not it.

Offline Rogataber

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Re: Greece's financial plight
« Reply #14 on: February 22, 2012, 07:53:25 PM »
I do not know what the answer is, but it seems the single currency is not it.

It never was, it's difficult enough to set financial parameters on sterling in a small country like the UK - London, rural Wales, Tyneside, Belfast are so disparate that no exchange rate suits all! The divergence between Berlin and Plakias is even more vast - making it impossible. Why the Greeks wanted to join the Euro is mysterious but even more strange, why did Germany & France want them in (especially enough to assist them in colluding to fudge the entry criteria)!

Roger