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Wednesday, May 18th, 2011

Greece: In Time of Storm
posted by Ross Dawkins

[This is from “The Complete Poems of Sappho”: translated by Willis Barnstone (and the reproduced translation is his copyright), published by Shambhala Publications, Inc.]

In Time of Storm

And with good luck
We will reach harbour
And black earth
We sailors have no will
In big blasts of wind,
Hoping for dry land
And to sail
our cargo
floating about
until dry land

I have noted previously that the commitments made by successive Greek governments to the Greek people are fundamentally out of kilter with the current growth potential of their economy.  Even a substantial haircut now would not change this: a further, future default would still be likely without substantial reform in Greece.  The cost of financing Greek sovereign debt will remain high until there’s evidence of such major reform actually achieving results.

The market has little interest in funding these commitments even on a short-term basis — and this interest will disappear completely in the event of default.   

And Greece is not about to grow its way out of trouble (the positive Q1 2011 GDP performance needs to be seen in the context of past shrinkage).  Indeed, the most recent Global Competitiveness Report published by the World Economic Forum ranks Greece last within the EU27 and 83rd globally (in fact, 139 countries are ranked).  By way of contrast, Sweden and Germany are ranked 2nd and 5th globally.  There’s nothing inherent about EU membership that prohibits competiveness.   

The country is ranked in 125th place globally in terms of labour market efficiency.   Respondents to the WEF’s survey ranked such labour market rigidities as the third most problematic factors to doing business.  Inefficient government bureaucracy and corruption were one and two on the list.

Greece’s economy is neither innovative nor is it low cost (even within the EU).  So there is a lot required from Greece in terms of change.

My belief is that there is increasing frustration elsewhere in the Eurozone at the progress to date, after a briefly promising start.  So looking back to the poem from Sappho at the beginning of this article I now explain my belief as to its relevance: Greece’s crew have shown a lack of will to date and they will continue to be buffeted by the storm until adequate recognition is given to the effort necessary to escape it.


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