Jim Armitage: A glimmer of hope for Greece but it's still going to be a long haul
There have been real reforms made to reduce labour costs, pensions and so forth
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Friday 08 February 2013
Global Outlook To visit Athens these days is to witness the flesh-and-blood, bricks-and-mortar embodiment of an economy gone badly wrong.
One in three shops in the centre is boarded up – more than 40 per cent in some districts. Graffiti, some of it rather good, are everywhere. Five years into its depression – if that's a strong enough word for this collapse of a country – thousands of businesses have closed.
Unemployment was recorded at 26.8 per cent last month. Even those in work have seen their incomes fall 30 per cent .
As Oxford University's Dr Othon Anastasakis says: "Athens still suffers a very great deal. There are no signs of green shoots here." I called Dr Anastasakis for some advice on the recent spate of encouraging news coming out of Europe's sickest member.
According to the country's finance minister, Yannis Stournaras, recovery is around the corner. In October, he predicts, growth will begin.
Figures this week from an Athens think-tank showed business sentiment in the country jumping to its highest level in two years.
So, which indicator is right: the depressing evidence on the dirty streets and buildings of Athens, or the growing optimism in the business community? I would say both.
Being an optimist by nature, I reckon Greece is hitting the very early stages of that turning point where the narrative of a country begins to change from deeper and deeper gloom to the very first hint of something better.
Economies need a decent dose of hope in order to grow. Hard to define, hope. Difficult to measure with a clipboard and calculator. But, while the majority of people there probably don't feel much of the stuff yet, it could soon be on its way.
Greeks are starting to trust their banks again, and have moved much of their money back into their savings accounts, having withdrawn billions of euros last summer when the Grexit looked inevitable. The hard-left Syriza party – the party of the desperate and dispossessed – is no longer riding high, as The Economist pointed out this week.
Foreign tourists are booking up their island summer holidays at a quicker pace than they have for years. Inflation is coming down. This is all good news. Better still is that the dramatic fall in wages – so punitive for Greek families' quality of life – does finally appear to be attracting businesses to open their operations there.
After the exodus of recent years, big names such as Henkel and Procter & Gamble are now increasing production in Greece. Unilever was reported yesterday to be considering shifting some production there from cut-price Poland.
Even Dr Anastasakis, who one senses has learned to be cautious when it comes to his country's future, agrees there have been some improvements: "Prices are beginning to drop, which is helping the people a bit. And there have been real reforms made to reduce labour costs, pensions and so forth. There are some private bankers, and people at the Bank of Greece, who talk of a really strong bounceback when it starts to take hold."
Forceful recoveries do happen when an economy has been crippled for as long as Greece. On the way down, one sector hits another like falling dominoes, spreading and accelerating the collapse. But that effect can be reversed on the way back up with dramatic, positive consequences.
While I'm delighted that Dr Anastasakis' friends in the Greek banks are so upbeat, I'm not so sure this is the most likely outcome.
If I were a betting man, I would be putting my euros on a long, slow improvement in the Greeks' lot, perhaps boosted by a good couple of summers for the tourist trade.
Athens will continue to be grim in parts but, as spring prepares to arrive, perhaps its citizens will soon feel a little more warmth in their quality of life. After all they have been through, they certainly deserve it.
Bailouts were right call despite the critics
Popular joke doing the rounds of the City last year: A Spaniard, a Greek and an Italian go to a bar. Who pays the bill? The Germans, of course.
The German people may have detested every bit of the bailouts they led to rescue Greece last year, but the current, albeit tentative, signs of an improvement are a testament to the rightness of their action.
Yes, it took a long time for the politicians to string the deal together, but the complexity of such an action, getting leaders from across the continent to agree, was never going to be easy. How irritating it was to have industrialists and investors repeatedly chastising Angela Merkel and other leaders for dragging their heels, as if getting cross-country co-operation for multi-billion-dollar "handouts" should be as click-of-the-fingers as a corporate boss approving the marketing budget for a new brand of cheese.
Trust the sheriff to keep Warren's house in order
Common sense tells you it's wrong for the chairmanship of a stock-market company to pass from father to son. The chairman is meant to be an outsider, there to keep checks and balances on the exuberance of the board. An independent scrutineer.
But with Warren Buffett's Berkshire Hathaway investment firm, you can forgive this flouting of best practice. The 82-year-old Sage of Omaha has lined up his second child, Howard (no callow youth at 58) to fill the chair from which he has directed operations since 1970.
Why doesn't it matter? Because the Buffett investment machine relies so much on the almost-unique long-term culture instilled by Warren at the firm. Berkshire Hathaway is no buy-it-and-flip-it trading house. It acquires stocks after long consideration and holds them, sometimes for decades. Investment managers, unless they screw up badly, stay for most of their careers. Like Warren himself, it's homely, the opposite of Wall Street.
Howard, who also serves as a deputy sheriff in Macon County, Illinois, is so steeped in the Warren Buffett way that he's physically morphing into a plumper version of his dad, right down to those big 1970s glasses and balding grey combover. Check out the interview he gave Bloomberg yesterday – it's weird.
He's been on the board for 20 years and is a director at one of its longest-held investments, Coca-Cola. Absolutely steeped in his father's firm. Crucially, unlike his dad, he won't be a hands-on executive, leaving that to a soon-to-be named CEO.
It would be terrific fun if, as soon as his father pops his clogs, he goes crazy, rips off the grey wig and glasses and snorts the firm up his nose with hookers in Omaha nightclubs. But I can't see that happening.
If anybody can corral Berkshire Hathaway through the succession process that has laid low so many companies before, it's Sheriff Howard.
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