From dominance to shocks, an arrogant path

1) From dominance to shocks, an arrogant tendency

The column's assessment is that the model of customer-centered competence that the Greek government operates is largely responsible for the tragic accident in Tempe. In this model, almost all parties participate proportionally. And if Greek society wanted to change it, it would have voted accordingly and done so.

Unless this pattern changes, we will see other similar “failures” in which the government's limited ability to return overtaxed services to society is responsible for the latter.

Of course, accidents will happen as long as there are humans, and as long as reality is a more complex field than human brains can predict individually or as collective social entities. Well-functioning collective mechanisms – such as a private agency or state – regulate frequency.

It is obvious that the main responsibility for the accident rests with the station masters who did not adequately manage the conditions that led to the accident or did not attend their shift.

No one expects the Prime Minister or any minister to know 24 hours a day what is happening in every part of Greek territory, from Kavtos to Evros.

However, the political leadership directing the administrative machinery of the state is expected to ensure that it functions efficiently and competently. That is, highly skilled people are in positions of responsibility and are paid accordingly.

However, this issue of favoritism and clientelism has been a perennial problem not only of the current government, but of Greek public administration since the founding of the Greek state. Post-colonial socialist changes, giving trade unionists a co-management role in public organizations and impunity compounded this problem.

As a result, the political responsibility for the unfortunate accident and the sad state of public administration is borne not only by the current government, but also by part of the governments that have led the country in recent decades.

The Mitsotakis government's most tragic mistake lies in its management of the tragic event.

The responsible minister had to resign and requested to waive the immunity guaranteed by the Ministerial Responsibility Act from day one. Since he did not do it, the government must do it.

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Until the situation is clarified and judicial responsibility is given, the political head of the Ministry of Transport should refrain from political activity and participation in elections.

The government, instead of relying on the short memory of current events, should have reached out to the families of the victims and supported their efforts to find those responsible and bring justice.

However, the June 23 election victory was taken as an absolution from any liability. The failure and dissolution of the resistance created conditions of complacency and arrogance.

It wasn't long before the political “cuff”. Of course, the polls are recording losses for most of the institutional parties. No one started winning again.

European elections are generally characterized by slackness. These people vote believing that even if they make a mistake, there will be no significant damage to their lives.

However, with European elections recording losses of more than 10% within a year and percentages below 30%, many would rightly argue that the status quo has changed. They will start demanding early elections and undermine government policy, demanding that important decisions not be made because the parliamentary majority is inconsistent with the will of the people.

An environment of tension and uncertainty is not conducive to economic activity. The government's strong card is faster growth than the EU average. It will be in danger of burning.

The arrogance and complacency that comes with success carries the seed of downfall.

The government is betting on basic salaries and small improvements in everyday life to reverse the climate. Probably in vain, because people are ruled too much by fear and greed.

If a crisis like an epidemic or a hybrid invasion of Turkey or Evros resurfaces, the climate is more likely to change. Successful management of these crises maintained the political dominance of the new republic.

Of course crises help, when someone manages them effectively. Since the fire in 2022, the government has largely lost its momentum.

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2) The big picture

Mr. Stupa

Last time I examined why, in my humble opinion, developments are leading to a global economic trend reminiscent of the 1960s and less of the 1990s.

In a globalized economy, with open trade competition between the two major economic blocs even within the West, while everyone today is “betting” on lowering interest rates, they neither realize nor see the big picture. The film is entering an era of historical norms of mega-cycles – high interest rates, relatively high inflation and monetary tightening.

Greece still today, after three recalls, shows the same structural weakness.

Low investment to GDP ratio, supporting growth through consumption, very high pension expenditure in GDP, single economic sector (tourism), current account deficit. Simply put, the production vacuum.

In my previous article, I said – and I say – that I was positive on the trend of Greek public debt, as the economic adjustment of the previous decade had very substantial positive effects on the country's financial situation.

But what happens in the markets of the economy?

First, no more credit expansion, at least for now.

Despite this fact, there is a very rapid rise in real estate prices, which is not justified only by short-term leases, golden visas, etc.

Additionally, there is a gradual but steady increase in movable assets (deposits, mutual funds, investment insurance policies, etc.) at the same time as real estate prices rise.

It is no coincidence that the Greek mutual fund market has passed 17 billion euros (an all-time record).

I would hazard a “diagnosis”.

Sale of real estate will increase movable assets.

Some are betting on the rise in real estate, while others are betting on the rise in financial returns.

However, in economics, everything does not rise together or everything falls together, except in times of great joy or times of great crisis respectively.

I believe that the future will not contain any great “joy” or any great international crisis with narrow economic criteria.

The period of great euphoria has somehow completed its cycle with the Ukrainian war and Covid-19, while the great crisis of 2008 does not repeat itself every 15 years.

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The progress of the Greek real estate market reminds me of September 1999 in the stock market.

Sustained rise due to excess liquidity and ever-increasing turnover.

However, some people forget that in the real estate market, just as in the stock market then, in addition to the large number of buyers, there are also a number of sellers, and indeed an increasing number.

I believe there is still significant room for improvement as far as financial markets are concerned (bonds, stock market, deposits, etc.).

As I have already mentioned, I believe that the attractiveness of Greek bonds will remain for the long term (especially now that we are entering short- and medium-term interest rate cuts), and there is no excuse for the stock market. “Right”, while deposits and buying mutual funds still have significant inflows (money from real estate is not sent to other real estate, but to most financial markets).

One last thing.

Recently, I had a chat with an old acquaintance of my age (38 years old) who started selling an inherited property in the northern suburbs of Athens, actually a relatively old construction (about 30 years old).

When I asked him why he did that, especially since he had no other property, he gave me the following disarming answer:

“Listen, the money I just collected is equivalent to 20 years' wages. When my parents bought this house, the price was equivalent to 5 years' wages, and they did the right thing and bought it. Now I've cashed in. I'm very interested if I raise 100 euros at work or if I'm unemployed. .

In cold economic terms, I don't see a convincing counterargument to be honest.

PS A random example or symptom of the emergence of a younger new age “nouveau riche caste” who are actually now “cashing” their parents' paychecks (?) in the unskilled and under-educated Greek labor market without any meaningful employment opportunities. (?).

Thanks

DMK

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