Hellenic Debt Crisis: Threat or Opportunity?Theodore N. Krintas, Ph.D., CIIA

The Background

Some why, some how and most important of all where should we be now…

The simple story of a GAP

Questions

Is this a Greek Crisis?

What created it?

How long will it last?

Is the treatment proper?

Why recession is so big?

Is Drachma a solution to the problem?

Living another person’s life

Decade 70-79 80-89 90-99 00-09

Deficit (% of GDP)

1,2 8,1 8,4 5,9

Basic 2008 FiguresGDP/Capita: $30.000Agri/GDP: 4,5%Consumption: 89%Gov Debt: 110%

Sources of income:Tourism

Agriculture

Commerce

Services

1970’s GDP per Capita:$ 1.651

1970’s Attica Population:30% of total

Source: OECD

Non Productive & Expensive

For every €1 produced in the public sector €2,42 are consumed.

770K civil servants for a 4,6M work force (17%).

Nepotism & Elite

Clientelism

Corruption

Always over-budget

Bureaucracy

Years to earn a full pension: 35

Proportion: 80%

Pension PMT: 14

Retirement age: 58

% € -14,1

What changed the motive?

1. Internationalization of Hellenic Bond Market

2. Fiscal Policies Unification Anticipation

3. Excess Liquidity

4. Hunt for Yields

5. 2008 Crisis and Credit Crunch

6. Herding

7. Focus (again) on Fundamentals + €50 bn - €65 bn

This is a new ERA…

Emerging regions, such as Brazil, India, China and (South) Africa have overtaken economies in the West as engines of global growth.

New technologies have created new industries and old ones are disappearing

New communication networks of high speed are born

Global emergencies are happening in shorter intervals

Behavioral Aspects

Prospects

Anchoring

Herding

Overconfidence

Depression

Qualities we need

Vision and crisis plan

Leadership by example with passion

Will, speed and decisiveness

Self confidence, optimism, cold blood

Stamina combined with high values

Is all this a Problem?Once again modern philosophers will refer to the average Greek Housewife…

The last days of Pompeii

The situation has been unsustainable for too long.

Balanced Budget as an immediate target.

Fiscal Consolidation through: Increased exports, decreased consumption, asset sales, foreign direct investments and serious expense cuts!

Huge Financial Transformation Needed.

Greece needs VISION & LEADERSHIP.

No more easy solutions and myths. Work in Reality

Problem or Opportunity?

Restoring CONFIDENCE.

Setting up a System of VALUES.

Productivity & CREATIVITY.

Investment and no Consumption EMPHASIS.

Fight Millenials UNEMPLOYMENT.

Every Problem has a flip side: OPPORTUNITY!

After this period of unrest and denial…… a wrong financial model failed and is going to be replaced by a new one based in realistic assumptions and hard work!