By Lloyd Graff
The financial world views Greece as the hole in the Euroland dike. Riots in Athens sent the U.S. stock market down 1500 points because people feared it was the beginning of another subprime-like tsunami.
I didn’t have a good feel for Greece’s problems so I called Nick Logarakis, an old friend who had built and sold General Automotive Manufacturing in Milwaukee after emigrating to the United States from Greece following college at University of Wisconsin Madison. Nick is active in banking now and still has a hand in manufacturing through his son-in-law’s firm, Northern Gear in Franklin, Wisconsin. He maintains a home in Athens and imports Greek olive oil for fun. Nick understands Greece as a native, but has the perspective of an American businessman.
“What you’re seeing in Greece is the result of 30 years of Socialism,” he told me Friday. “Government workers get two weeks off for Easter, two weeks off for Christmas and four weeks off for summer. They get paid for two months not working,” according to Nick.
The orientation of the country is to make work. “I go in to pay a tax bill, and the clerk records the transaction on the computer, then he takes out a big ledger book and writes it down. It makes more work for the bureaucrats,” he said.
Coupled with the make-work is corruption. Companies work with two sets of books, one real and one for the tax collectors. The cash economy thrives while the country’s treasury starves
Nick says when he goes to a well-regarded doctor in Greece the expectation is that he pay 30 euros at the desk, but slip an envelope with 100 euros in cash to the doc when he’s alone.
Logarakis says in Greece you see a lot of people driving around in expensive cars, eating in restaurants and going out to clubs.
Government services cost more than the country can afford, the way they are presently being run. The European banks that hold Greek bonds are scared. Spain, Portugal, and Ireland, are in the same boat.
Now we have a new Euroland taxpayer bailout for Greece and its creditor. Take a deep breath and pass the Kalamata olive oil, please.
Question: Is the United States headed in the direction of a Greece-like debacle?