how to save a dead economy?
Friday, 07 May 2010 03:32
Yannis Zabetakis
Greece is in dire straits. Two days ago, 3 innocent Marfin's bank employees were murdered. They were not allowed to go home the day of the massive demonstration in Athens, in fact they were locked in the Bank (MIG Group is the owner, with Mr Vgenopoulos as CEO) and when some rioters set fire at the ground floor...the chain of the fire spreaded in the whole building ...
Notably, all Good Manufacture Practice (GMP) and personnel training were missing:
- the building did NOT have any fire escape,
- did not have proper fire fighting installed systems and
- the personnel never had done any fire-evacuating-exercise...
The tragedy was Greek! 3 dead (see photo) with one of them...4 months pregnant.
According to Malcolm Brabant, BBC's reporter in Athens,
"I have not seen this level of anger for quite some time, but the cuts that have been announced are much more severe this time and people have realised how much these austerity measures are going to hit them in their pockets. This demonstration however, looks better organised too, with clear "military" objectives".
The last few months, the greek goverment is trying to save the country in a very unorthodox way! When a family budget is in deficit, the parents of the family need to sit and talk with all the members of the family about this!
There are no magical solutions! When a family is in deficit, income must increase and expenses must decrease! Income? Sales, market shares and so on.
For Greece, income can increase by reducing the vast tax evasion. Estimates for the black market in Greeece range from 30 to 70%! Notably, Greece has the higher number of Mercedes and Porsche Cayenne per capita in EU!
Expenses? Reduce manufacture cost, train personnel to work smarter and not just harder!
For Greece, expenses that needs cutting is the massive defence budget, it is about 6% of GDP...so close to the Israeli one...But Greece is an EU member and Greece needs to ask EU to protect the greek borders (under the Lisbon treaty). So, EU protects Greece from ...Turkey and Greece stops buying French and German weapons! Simple, mmm?
And then, we can think what Paul Krugman thinks about Greece: "The only thing that could reduce that need for austerity would be something that helped the economy expand, or at least not contract as much. This would reduce the economic pain; it would also increase revenues, reducing the needed amount of fiscal austerity. But the only route to economic expansion is higher exports — which can only be achieved if Greek costs and prices fall sharply relative to the rest of Europe".
However, I think there are a couple of parameters that are lacking from this Paul's posting:
- lack of competition within the greek economy and
- ease of setting up a new business (i.e. in Ireland it is feasible to set up a new company in few days...here in few years). [More analysis on these two factors to follow pretty soon]
Given these 2 points, how can we increase the exports?
