JP Morgan AM’s Dan Morris shares his thoughts from Athens

I was in Athens last week. On the surface, everything appeared calm; there were no riots or strikes while I was in town. Restaurants in the centre were busy. Traffic heavy.

But when you spoke to people, you could see the worry in their eyes.

Among the financial professionals that I met, few had any illusions about the causes of the country’s current problems.

They acknowledged that no one forced them to borrow the money they did, or to spend it hiring civil servants instead of aiding the private sector.

That the political parties had used government revenues to buy votes but that voters had let themselves be bought.

There was frustration with the rigors of the bailout packages, but this was directed as much at the political parties who had made such drastic measures necessary as at the country’s creditors.

Few disputed the need for reform and for reducing public spending. As difficult as the bailout package was, it was at least a way forward.

The results of the election had led to great surprise and dismay. Until perhaps just a couple days before, polls had predicted that pro-bailout parties would win enough votes to form a government.

Those I spoke with explained the success of the anti-bailout Syriza party by saying people had voted for it to protest against the historical failures of the political system without comprehending the consequences of what Syriza actually advocated.

They appreciated, though, how much more difficult and unstable the situation had become because of the party’s rise.

A few possible paths to the outcome of Greece either staying in or leaving the eurozone: the proposal by Syriza party leader Alexis Tsipras to place a moratorium on debt payments but to continue receiving funding from the Troika seems fantasy.

 

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