Europe - why is Greece still so expensive if their economy is suffering?

Greece is one of my two favourite foreign countries in the world.(the other one is Canada)

There's so much negative stuff going on in Greece right now... however, I still want to visit again in the next month or two. However, I was kind of surprised to see the airfare and hotel prices remaining the same(or more) as last year. In fact, some of the same Athens hotels that I usually stay at have actually raised their rates.

Shouldn't it be the other way around?

Yeah, I am planning a trip and the prices are not low at all!!

Greece is one of my two favourite foreign countries in the world.(the other one is Canada)

There's so much negative stuff going on in Greece right now... however, I still want to visit again in the next month or two. However, I was kind of surprised to see the airfare and hotel prices remaining the same(or more) as last year. In fact, some of the same Athens hotels that I usually stay at have actually raised their rates.

Shouldn't it be the other way around?

Not really. I think that the hotels realize that they won't win any more business by lowering rates. Would anyone really want to go to Athens right now?

Would anyone really want to go to Athens right now?

In a heartbeat.

Yes -- the protests tend to be very centralized around Parliament. I'd go there tomorrow, if I could.

-W

at least for athens, i'd imagine they have a lot of business from IMF/EU and all the press that is there now plus advisors and such. It's the same reason why hotels are expensive is places like Kabul, Louanda, Baghdad, etc.
However, i don't think that should apply to the clearly touristy places on the island and yet even those hotels are also expensive. so, i don't know what's going on.

Prices are set by demand and supply. I don't think the "negative stuff" happening in Greece is going to impact demand. The Parthenon is still there, and people will still want to come and see it. Business people that have work there will still need to go there. I guess local Greek people traveling around the country might cut back a little.

Tourism in a country goes down when the surrounding countries have economic problems, because those people have less money to spend for travel. For example, the recession in the US really hurt the tourism industries in Mexico, the Bahamas, and other popular destinations for Americans.

Please follow the thread as it moves to the Travel->Europe forum where Greece is discussed. Ocn Vw 1K, Moderator, TravelBuzz.

Prices are set by demand and supply. I don't think the "negative stuff" happening in Greece is going to impact demand. The Parthenon is still there, and people will still want to come and see it. Business people that have work there will still need to go there. I guess local Greek people traveling around the country might cut back a little.

Tourism in a country goes down when the surrounding countries have economic problems, because those people have less money to spend for travel. For example, the recession in the US really hurt the tourism industries in Mexico, the Bahamas, and other popular destinations for Americans.

Prices in Mexico are also not cheap this year... at least not the places where U.S. tourist usually visit... so I guess they're doing alright! :)

Prices don't fall because EURO still has its power. However, property in Greece fell down in price.

This situation may continue for some time, due to constrained supply. Would you lend Euros to a Greek construction company to build a new hotel, when you might end up being paid back in worthless Drachmas, if at all?

I personally would hesitate to take a holiday in Greece at the minute if I was the typical tourist. Not because of unrest, but because of the possibility of strikes. Having to explain to my employer that I won't be back at the office on Monday morning because the Greek air traffic controllers are still on strike would be a nuisance, and there are plenty of resorts in neighouring countries wanting my money.

On the other hand for those of us who have few commitments, it's worth keeping an eye on which direction prices move during the course of this year.

Having personally experienced the consequences, I can say strikes can definitely disrupt travel in Greece. 14 hours on a 330 ATH-JFK plus an unplanned night in Queens is an example. That said, Greece is a country best enjoyed at a leisurely pace and, in my opinion, not in Athens. Also, as others said, prices are not cheap. It's still a good trip, though.

Greece is expensive because the country uses the euro. The euro is very expensive vs the dollar, hence Greece's prices are forced to be set at a rate perceived as high by US visitors.

Actually Greece is expensive because the tourism industry got greedy.
Just like it did in Spain.
It became part of the culture along with not paying taxes and expecting the rest of Europe to pick up the tab.
I love Greece and I've been going regularly for 30 year but from about five years ago it became quite sad to see how grasping,greedy and unfriendly previously delightful people had become.
My family and I decided to give it a rest last year for this very reason so it will be interesting when we go back this year to learn if the economic crisis has had any impact on prices.
Despite what a previous poster has written the very first thing you do if your tourism industry is suffering is lower prices.The second thing is improve service.
Just look how Croatia has rebuilt its tourist industry after the ravages of the civil war.

Actually Greece is expensive because the tourism industry got greedy.

An industry can't "become greedy"; only individuals can. To be greedy is normal, not only for business owners but for the vast majority of humans. What keeps greed in check on a free market economy is competition. The question we should therefore be asking is whether there's a healthy level of competition in the market, and if not why not.

Actually Greece is expensive because the tourism industry got greedy.
Just like it did in Spain.
It became part of the culture along with not paying taxes and expecting the rest of Europe to pick up the tab.
I love Greece and I've been going regularly for 30 year but from about five years ago it became quite sad to see how grasping,greedy and unfriendly previously delightful people had become.
My family and I decided to give it a rest last year for this very reason so it will be interesting when we go back this year to learn if the economic crisis has had any impact on prices.
Despite what a previous poster has written the very first thing you do if your tourism industry is suffering is lower prices.The second thing is improve service.
Just look how Croatia has rebuilt its tourist industry after the ravages of the civil war.

+1 ^

They need a wake up call and most probably a step back to their old currency so that in addition to a default on most of their debts (and certainly all of their privately-held debts) they can also devalue. The days of massive cheating on a national scale by falsifying financial data so that they can "borrow" more and more and "pass the sweets" are definitely over.

They don't need a bail-out, what they need is a strong kick in the rear with the words "go to work and pay your taxes" attached. It's the only way forward, really...

Plus in the long run I don't think they are going to cut it in the tourism industry. I mean I cannot think of a single reason why I would want to go there over a dozen other places with much better service, accommodation standards, and everything else. I would like to see their tourism numbers and compare them to the likes of Egypt for example.

+1 ^

They need a wake up call and most probably a step back to their old currency so that in addition to a default on most of their debts (and certainly all of their privately-held debts) they can also devalue. The days of massive cheating on a national scale by falsifying financial data so that they can "borrow" more and more and "pass the sweets" are definitely over.

They don't need a bail-out, what they need is a strong kick in the rear with the words "go to work and pay your taxes" attached. It's the only way forward, really...

Plus in the long run I don't think they are going to cut it in the tourism industry. I mean I cannot think of a single reason why I would want to go there over a dozen other places with much better service, accommodation standards, and everything else. I would like to see their tourism numbers and compare them to the likes of Egypt for example.

Best answer I've heard. Cookie for you!

Good interview with a German economist in Monday's Der Spiegel that address the issue of how the EU bailout efforts have artificially raised prices and wages.

http://www.spiegel.de/international/europe/0,1518,816410,00.html

Isn't Greece expensive because it's mostly an "island" nation which have inherently higher costs? You can't just truck cargo over the water. And there's probably a lot of things that have to be imported into the country since there's not much that's manufactured there.

Isn't Greece expensive because it's mostly an "island" nation which have inherently higher costs? You can't just truck cargo over the water. And there's probably a lot of things that have to be imported into the country since there's not much that's manufactured there.
:confused: You must be looking at different maps.

If Greece wasn't on the Euro they're currency could be devalued.

The Euro should just tank already...I've been waiting months now for its demise.

As the saying goes...Socialism works well until you run out of other peoples money.

:confused: You must be looking at different maps.

If Greece wasn't on the Euro they're currency could be devalued.

What does the Euro have to do with it? Slovakia is on the Euro and is relatively inexpensive, for example. And if Greece went back to the Dracma and devalued it, how would that make things less expensive overall? Where do their energy sources come from? Their manufactured goods? If they come from outside their borders, then they still have to convert those Dracmas into that other country's currency.

The Euro should just tank already...I've been waiting months now for its demise..

Every time I see comments on tv such as "will the Euro collapse?" I always assume I'm watching 'The Comedy Channel' due to the ludicrous nature of such questions. ;)

Contrary to all the hype and the vicious attacks on the Euro by the global financiers, the Euro is here to stay and it will remain as one of the worlds most-respected currencies. Of course global banks would like nothing more than for the Euro to fall apart, so that they can then go back to their old days of making money on every single cross-border payment, every single transaction, etc. Imagine how much money banks were making when every single country in Europe had their own currency. All that trade, tourism, etc... and banks making money everywhere, on everything. And now most of that is gone due to the Euro. :) No wonder they're upset and keep attacking the common currency... :D

The Euro should just tank already...I've been waiting months now for its demise.
Bear in mind that the EUR/USD exchange rate is pretty closely correlated to the value of the US stock market. As the dollar strengthens, the values of equities fall.

As the saying goes...Socialism works well until you run out of other peoples money.
You know, I've never understood why people continue to quote this phrase. Unless you're literally cutting the cheque from your own account, it is always other people's money. Always. That's what taxes are. Conservatives spend other people's money. Liberals spend other people's money. Every government spends other people's money. I guess we have to conclude that the people who quote the phrase above don't really grasp how taxation and government spending actually work.

You know, I've never understood why people continue to quote this phrase. Unless you're literally cutting the cheque from your own account, it is always other people's money. Always. That's what taxes are. Conservatives spend other people's money. Liberals spend other people's money. Every government spends other people's money. I guess we have to conclude that the people who quote the phrase above don't really grasp how taxation and government spending actually work.

It also requires socialist goverments to have zero self control or moderation.

And now most of that is gone due to the Euro. :) No wonder they're upset and keep attacking the common currency... :D

^ Best analysis ever of the Euro-crisis! :D

+1 ^
They don't need a bail-out, what they need is a strong kick in the rear with the words "go to work and pay your taxes" attached. It's the only way forward, really...



I don't completely agree with that. The official IMF's data showed that Greek do work and pay their taxes.

Greek taxes were more than a third of gross domestic product, near the European average.
In Greece there are more small entrepreneurs per capita than anywhere else in Europe.
Government is not bloated in terms of employees – at a fifth of the labour force, it is about the European average.


Yes, Greece desperately needs reforms. Needs to fight corruption, and increase the competition and be more productive.

I don't thing that Greece is that expensive, for example a room at IC Athens for a random date will cost you $172 per night incl taxes.

Now, if you want to go to Santorini which is almost every year in the TOP 10 destinations of the world is another thing.

In Greece there are more small entrepreneurs per capita than anywhere else in Europe.

That's not necessarily a good thing. It could be an indicator of under-developed corporations.

That's not necessarily a good thing. It could be an indicator of under-developed corporations.

Indeed, many of those are. That's why I mentioned the need of reforms and fight the corruption.

Just to clarify, that I didn't tried to defend Greece by saying that everything works as it should be. Obviously Greece is far away from this. I just thought that the above comment was correct :

"go to work and pay your taxes"

Government is not bloated in terms of employees – at a fifth of the labour force, it is about the European average.
When you say "government", do you mean the public sector?

The public sector and the state-owned assets are notoriously unproductive and bloated - surely you know that the average employee of the (state-owned and financed) rail company makes €65,000 per annum, and that it is still less expensive to pay for every passenger to take a taxi to their destination than to run this particularly inefficient example of social welfare?

When you say "government", do you mean the public sector?

The public sector and the state-owned assets are notoriously unproductive and bloated - surely you know that the average employee of the (state-owned and financed) rail company makes €65,000 per annum, and that it is still less expensive to pay for every passenger to take a taxi to their destination than to run this particularly inefficient example of social welfare?

Yes, I do mean public sector. (Sorry it was a copy.paste from FT (http://www.ft.com/cms/s/0/48b55f8a-57d3-11e1-b089-00144feabdc0.html#axzz1mU5yJku9) which was the only available in English for those data).

Yes, I am aware about the scum with the railways (at least they don't get bonuses for the losses they make, like the bankers;)). IMF/EU/GR are doing efforts in order to sell such companies but of course it is very hard to get rid of those.

I think that this example (of the railways), summarise with the best way what I said on my first post. That Greece needs reforms that will stop the corruption and will increase the productivity and the competition.

If you're going for the Mediterrenian experience, I would strongly suggest Albania. It's very cheap. See: http://www.lonelyplanet.com/albania/travel-tips-and-articles/76164

I don't thing that Greece is that expensive, for example a room at IC Athens for a random date will cost you $172 per night incl taxes.


Not a great example. Though I have stayed there many times, it is not a great IC property. What does a similar room at the Grande Bretagne cost?

Not a great example. Though I have stayed there many times, it is not a great IC property. What does a similar room at the Grande Bretagne cost?

Last time (Dec 2011), I paid 240E/night which is $320 and this must be the most expensive hotel in Athens. I was on the cheapest room and got an upgrade to a Parthenon view room.

I wouldn't think that hotels are that expensive in Greece, you can certainly get luxurious hotels at top prices but there are thousands of other hotels that can do it for less.

http://www.thomascook.com/search/?&trail=62010%3AGreece_-_Any%3A19010%3A2%3A19012%3A2_0_0_17&dbTrail=&pageId=Rel55-435053&sortingBy=PRICE&sortOrder=ASC&expand=&searchId=1330141688234



PS I also agree that IC is not that great but thought to make a comparison with a chain hotel. Although I am not sure if you can get a cheaper IC. Also, this property offers Parthenon views.

Maybe Hilton could be a better example as it also offers views of Parthenon and I would consider it as a really good property. It starts from 200E/night. It's a similar price with the Hilton Istanbul.

Greece is plagued with frequent transport strikes, so unless you have rental car reservations made far in advance, be ready to pony up around US$350/day.
Yes, that is how much I paid for my Hertz rental.

I don't completely agree with that. The official IMF's data showed that Greek do work and pay their taxes.

Well, they certainly got their data wrong. You only need to see some live pictures from Greece to notice that people prefer to go on some "work avoidance scheme" (aka rioting in the streets) that to actually go to work.

As for taxes, good luck getting a fiscal receipt for many things.

Bottom line is that Greece doesn't deserve any help. They stole and cheated their way into this problem by falsifying financial data on a national scale (something that would land you in prison if you did it on a local scale and fiddled with corporate books to extort loans). Bottom line is they shouldn't attract any respect or compassion for the situation they are in.

Time to revert back to the Drachma and stay there, unless decades of austerity is what they want.

You only need to see some live pictures from Greece to notice that people prefer to go on some "work avoidance scheme" (aka rioting in the streets) that to actually go to work.

Assuming of course that over 10 million people are all the same. How many actually rioted? How many were at work that day?

Bottom line is that Greece doesn't deserve any help. They stole and cheated their way into this problem by falsifying financial data on a national scale (something that would land you in prison if you did it on a local scale and fiddled with corporate books to extort loans).
(My bold)

Completely agree, Greece as everyone else in this world does not deserve help if had the same behaviour in the past. Don't forget though that countries with much worst behaviour got helped for free, not with loans.

IMHO, you have to be extremely naive if you believe that all the world is suddenly trying to help Greece. It is naive to think that EU/IMF or Germany really want to help Greece... Would have been help, if they were doing it for free.. It's not help when you sell to someone money, it's just business.

Assuming of course that over 10 million people are all the same. How many actually rioted? How many were at work that day?

And how many of them were actually Greeks is another issue... with a quick google search you'll find out that a significant percentage were from different countries. For example, 7 of the rioters that got arrested were Germans.
Also many people from Italy and Spain came to Greece in order to "demonstrate" during those dates.

I wouldn't think that hotels are that expensive in Greece, you can certainly get luxurious hotels at top prices but there are thousands of other hotels that can do it for less.


You could say the same about many European capitals. Personally, I find Athens and much of the more traveled parts of Greece expensive. On the other hand, certain areas that are less travelled by tourists are decent value and far more interesting than Mykonos/Santorini/Kos etc.

IMHO, you have to be extremely naive if you believe that all the world is suddenly trying to help Greece. It is naive to think that EU/IMF or Germany really want to help Greece... Would have been help, if they were doing it for free.. It's not help when you sell to someone money, it's just business.
Well... help in the same way that Massachusetts's taxes subsidise the economies of Mississippi and Alabama. It's not so much business as it is this agreement that you signed up to, see. ;)

For example, 7 of the rioters that got arrested were Germans.
What beautiful irony. :D

Completely agree, Greece as everyone else in this world does not deserve help if had the same behaviour in the past. Don't forget though that countries with much worst behaviour got helped for free, not with loans.

IMHO, you have to be extremely naive if you believe that all the world is suddenly trying to help Greece. It is naive to think that EU/IMF or Germany really want to help Greece... Would have been help, if they were doing it for free.. It's not help when you sell to someone money, it's just business.

Oh right, so now Greece should be upset that people are bailing them out instead of just throwing money at them? I think the word "ungrateful" comes to mind now... How about earning that money by working twice as hard and paying it back? Not going to happen though, is it? :)

And how many of them were actually Greeks is another issue... with a quick google search you'll find out that a significant percentage were from different countries. For example, 7 of the rioters that got arrested were Germans.
Also many people from Italy and Spain came to Greece in order to "demonstrate" during those dates.

Hmm, so now it's other people who are running all the riots in Greece and preventing people from getting to work? :)

On a more serious note, people are in for decades of austerity if they want to stick to the Euro, and things are not going to get any easier.

An industry can't "become greedy"; only individuals can. To be greedy is normal, not only for business owners but for the vast majority of humans. What keeps greed in check on a free market economy is competition. The question we should therefore be asking is whether there's a healthy level of competition in the market, and if not why not.

well said.

7 of the rioters that got arrested were Germans.


And they should riot haha

Plus in the long run I don't think they are going to cut it in the tourism industry. I mean I cannot think of a single reason why I would want to go there over a dozen other places with much better service, accommodation standards, and everything else. I would like to see their tourism numbers and compare them to the likes of Egypt for example.

My jaw has gone slack at this comment - can't cut it in the tourism industry? My family and friends have been travelling to Greece for decades, staying in beautiful family owned island properties with unspoilt beaches, and gorgeous sailing, fresh seafood restaurants and friendly welcoming people. Do I find Holiday Inns littered across the islands - no, but that doesn't mean there isn't fantastic (if relaxed) service, clean (albeit without flatscreen tvs) accommodation and on balance is a lot safer than Egypt, for example. That isn't even starting to mention the rich history, Knossos (best weaved with the tale of the minotaur, ideally not just before bedtime should the small child have a vivid imagination!), Santorini, accompanied by the legend of Atlantis, or the beautiful limestone caverns covered with stalactites and stagmites which I find breathtaking every time I see them.

My jaw has gone slack at this comment - can't cut it in the tourism industry?

Neo-liberal race to the bottom.

My jaw has gone slack at this comment - can't cut it in the tourism industry? My family and friends have been travelling to Greece for decades

I'm sure there's not a single country out there that doesn't have people who have been travelling to it for years.

You happen to like Greece, I happen to see no reason for going there over so many other places. I would even take Turkey or Egypt over Greece each time if I absolutely had to travel somewhere in the vicinity.

Don't think Greece can cut it in the general tourism sector, and the state of their economy suggests that countries with booming tourism sectors like Egypt have put a dent in Greece's growth. Then again the living conditions, service standards, etc. are so low I'm not surprised other countries are taking over the holiday traffic. Plus the Red Sea is gin clear, in an absolute league of its own.

Greece is so diverse, I can't help but think you must have been to some of the grottier parts. Certainly the seas in many parts of the Aegean / Med are crystal clear and warm, perfect for diving or just floating around on. The sailing is sublime.

I'm very fussy when it comes to things like cleanliness of hotels, good service, and attitude, and I've honestly never had an issue in Greece. Maybe I just pick good resorts / islands/ hotels.

I also love how secure I feel on the Greek islands , usual sensibilities apply of course. I'm not sure I'd say the same for Egypt right now - and I am sure the instability, recent bombings and kidnappings of tourists are not helping their tourism industry.


My jaw has gone slack at this comment - can't cut it in the tourism industry? My family and friends have been travelling to Greece for decades

I'm sure there's not a single country out there that doesn't have people who have been travelling to it for years.

You happen to like Greece, I happen to see no reason for going there over so many other places. I would even take Turkey or Egypt over Greece each time if I absolutely had to travel somewhere in the vicinity.

Don't think Greece can cut it in the general tourism sector, and the state of their economy suggests that countries with booming tourism sectors like Egypt have put a dent in Greece's growth. Then again the living conditions, service standards, etc. are so low I'm not surprised other countries are taking over the holiday traffic. Plus the Red Sea is gin clear, in an absolute league of its own.

If you're going for the Mediterrenian experience, I would strongly suggest Albania. It's very cheap. See: http://www.lonelyplanet.com/albania/travel-tips-and-articles/76164

Pretty hard to take that article seriously when it mentions Syria as one of the top 10 to visit and that it is off "the naughty list". Sure thing.

They don't need a bail-out, what they need is a strong kick in the rear with the words "go to work and pay your taxes" attached. It's the only way forward, really...
:td:Do you work for Fox News? :D

That is a very simplistic (and wrong) approach, based on a false assumption. If you think Greeks just don't pay taxes and that's the reason for all this then it's not even worth having a discussion, because you are completely off track.

I don't completely agree with that. The official IMF's data showed that Greek do work and pay their taxes.

Greek taxes were more than a third of gross domestic product, near the European average.
In Greece there are more small entrepreneurs per capita than anywhere else in Europe.
Government is not bloated in terms of employees – at a fifth of the labour force, it is about the European average.


Exactly. But I guess some people don't like to let facts get in the way. :)

When you consider taxes, the bottom line is that the tax system is decided upon by the government/parliament. In order to get a position in the government/parliament you need to be pretty big into politics, which means you have to "invest" in a party, and when you get there you need to get your money's worth. Nobody in power has an interest to come up with a FAIR tax system, because it would ultimately require them (and their donors) to declare and pay taxes on their assets as well, which is, as we all know, inconceivable. That, btw, applies to most countries, including the US.

The main source of the problem in Greece is the fact that the government lied. Mind you it wasn't the people- not the small hotel or restaurant owner that you want to punish. Spain is also in a pretty dire situation but they don't like to talk about that because Spain had a very conservative spending policy, a budget surplus in fact, and a very low dept-to-GDP ratio. But if you start talking about that you reach the inevitable conclusion that the problem lies with the flow of capital (and the broken capitalist system we are all a part of), and well... we can't have THAT conversation.

You know, I've never understood why people continue to quote this phrase. Unless you're literally cutting the cheque from your own account, it is always other people's money. Always. That's what taxes are.
Well put! ^

Well... help in the same way that Massachusetts's taxes subsidise the economies of Mississippi and Alabama. It's not so much business as it is this agreement that you signed up to, see. ;)


What beautiful irony. :D
Yup... HERE (http://www.theatlantic.com/business/archive/2012/05/the-difference-between-the-us-and-europe-in-1-graph/256857/) is an article about that.

I really wish people had some idea about the situation before they started repeating the crap they hear on Fox News.

:td:Do you work for Fox News? :D

That is a very simplistic (and wrong) approach, based on a false assumption. If you think Greeks just don't pay taxes and that's the reason for all this then it's not even worth having a discussion, because you are completely off track.

The main source of the problem in Greece is the fact that the government lied.

:td: Do you work for the Greek govt's PR dept.? :cool:

Nobody said it was just about paying taxes, that is only a small part of the entire picture. It's the whole system and society in general that takes the blame for this dire situation.

Everyone wants a free ride, everyone was perfectly happy living above their means, not working too hard, lots of free time, massive gov't handouts. It even turns out Greece had the largest amount of pensioners above 100 years of age it seems.... until the EU decided it was time for a clampdown and suddenly those numbers dwindled. :D Of course fat pensions in general and early retirement were also a national trademark.

To some 4-4-2 is a football system, but in Greece it was a way of splitting up due taxes: 20% of whatever was due was actually paid to avoid suspicion, 40% went into the pocket of the person representing the tax office, and the last 40% was what the person saved by participating in this crude system of ripping off the country from the inside.

If the problem was as simple as "the government lied" then changing the government and dicing up the debt would have solved everything. But it won't, because Greece is not competitive, it's economy is quite primitive and has nothing going for it apart from what tourists leave behind, and there's simply not enough money being generated by the tax system to keep the freebies and handouts going.

Everyone is going to have to realise that those days are over unless they want a strong kick up the behind from their European Union overseers who will throw them overboard from the Euro currency if they go back to their old ways...

Nobody said it was just about paying taxes, that is only a small part of the entire picture.
We agree on that.

It's the whole system and society in general that takes the blame for this dire situation.
That I disagree with.... sort of. :) Yes, it is systematic. But when you consider "the system", it's hard not to wonder who is in charge of this system and who has the power to change it. It's not the small business owner or the waiter/waitress. It's the people in charge. What then is their motivation for not righting the wrongs in this system?


To some 4-4-2 is a football system, but in Greece it was a way of splitting up due taxes: 20% of whatever was due was actually paid to avoid suspicion, 40% went into the pocket of the person representing the tax office, and the last 40% was what the person saved by participating in this crude system of ripping off the country from the inside.
I like that 4-4-2 analogy. :)

If the problem was as simple as "the government lied" then changing the government and dicing up the debt would have solved everything.
The government lied about their financial situation and borrowed too much. The debt is there. The reason for the debt is in fact that government.


But it won't, because Greece is not competitive, it's economy is quite primitive and has nothing going for it apart from what tourists leave behind, and there's simply not enough money being generated by the tax system to keep the freebies and handouts going.
Right, but let's take this a step further. In countries where people pay what they are supposed to in taxes they don't do it because they're nice, and by contrast the Greeks are just evil. Instead people pay taxes because they have to, because there is a system in place that is much harder to circumvent, and those who do get caught breaking the tax law are punished. The nature of the system motivates people to just pay their taxes. (One could argue that even in the "right" systems those who owe massive amounts of taxes - big corporations - are awarded various tax breaks, thus effectively and legally cheating. But that's a different story.) The broken tax system in other countries (many, many other countries) is intentionally left broken by politicians. There are 2 reasons for that: (a) politicians don't want to pay taxes themselves, and (b) those who sponsor these politicians don't want to pay taxes either. If we consider that, then it follows that the political system itself, i.e. the system that allows entities (both corporations and people) with large amounts of money to have a disproportionate influence on politics (including on the tax system), is broken.

Everyone is going to have to realise that those days are over unless they want a strong kick up the behind from their European Union overseers who will throw them overboard from the Euro currency if they go back to their old ways...
I disagree. Punishing the Greek people is not the answer, IMO. 2 reasons:
(1) Countries like Germany want to reap the benefits of EU but they don't want to pay to sustain it. They want Greece as a market (to sell their products there, from VW cars to Volksbank loans) but when it comes to standing by the Union which they pioneered (in order to sell their products), then they get all pissy. (Not to mention that Greece has forgiven a massive WW2 debt from Germany.) (Sidenote: what would happen if Massachusetts got all pissy and stopped sponsoring Missouri and Alabama? :D)
(2) Let's look at another example: Spain. The issue there is neither evil people refusing to pay their taxes nor an irresponsible government. The source of the problem is the unfair flow of capital permitted by a broken capitalist system, one that allows a housing bubble that ends up screwing over hundreds of millions of people for the sake of very few who are very rich and who are relatively unscathed. THAT, IMO, is the problem.

You say "punish the Greeks!"; I say "change the system". :)

One thing I have observed is that I have yet to hear, from anyone even remotely connected with Greece, any sort of a suggestion of a solution to the current situation, other than what is already being proposed. What is the alternative to the current austerity measures other than default? Of course no-one likes the solution imposed by the rest of the world, but what is the alternative? I haven't heard it from anyone.

Unfortunately, the Greek economy is simply incapable of generating the wealth that it needs to support the size of its state. In its current form, the economy does not function properly. These facts are not in dispute.

What sort of a solution are the popular (and populist) parties suggesting? I would be very curious to know. For real.

I disagree. Punishing the Greek people is not the answer, IMO. 2 reasons:
(1) Countries like Germany want to reap the benefits of EU but they don't want to pay to sustain it. They want Greece as a market (to sell their products there, from VW cars to Volksbank loans) but when it comes to standing by the Union which they pioneered (in order to sell their products), then they get all pissy.

You say "punish the Greeks!"; I say "change the system". :)

What I'm referring to as a "wake-up call" and a "reality check" is what you're calling "punishment?"

This isn't about punishing anyone. Even with the debt cancelled the Greek way of life is simply unsustainable. If I start eating at top restaurants everyday and fly Suites aboard SQ each week, racking up an enormous debt, then even if you cancel my debt I still need to realise or be told that I cannot afford such a lavish lifestyle. Is it fair if I then say, "hey, this is punishment!".

Greeks cannot afford early retirement, fat pensions, the gov't sprinkling money from the sky at everyone, etc. Kind of sucks that they found out the hard way, like running into a brick wall, and it's never nice when an entire country is stripped of its dignity and pride by becoming the epicentre of ridicule in the financial media, but if we take all that aside then the problem still remains. Greeks needs to face reality and make massive cuts and changes to their way of life, not just because of the debt but because they cannot afford to continue like this...

Greeks cannot afford early retirement, fat pensions, the gov't sprinkling money from the sky at everyone, etc. Kind of sucks that they found out the hard way, like running into a brick wall, and it's never nice when an entire country is stripped of its dignity and pride by becoming the epicentre of ridicule in the financial media, but if we take all that aside then the problem still remains.

Again, you fail to understand the situation. Greece is NOT in this situation because of fat pensions and early retirement. As long as you continue that false assumption there is no point in discussing solutions.

One thing I have observed is that I have yet to hear, from anyone even remotely connected with Greece, any sort of a suggestion of a solution to the current situation, other than what is already being proposed. What is the alternative to the current austerity measures other than default? Of course no-one likes the solution imposed by the rest of the world, but what is the alternative?

This is not the time for austerity and deficit control. The priority should be to stimulate the economy by pumping money into it. Very important: this money needs to be spent on projects that help low-to-medium income people, not corporate executives. I am all for being efficient, but instead of randomly laying off public employees like it's going out of style and cutting their pay, re-structure the education system and make sure that teachers are compensated properly. Build/fix schools and hospitals, fix the infrastructure, but again, it's very important that this be done honestly and correctly. By that I mean instead of the largest chunk of money being shared between the executives of company in charge of a construction project and the politicians who awarded the project to them, that money should end up in the pockets of the people employed to work on that project.

What this approach does is create jobs, which in turn stimulates spending. The tax revenue increases from both income tax and VAT. On a plus side you end up with new/updated schools, hospitals and infrastructure.

While you're at it, restructure the tax system to make it fair for everyone.

The international community (IMF, EU) should for the most part forgive the debt that Greece owes. So some private entities get all pissy - let THEM eat cake.:p Instead of conditioning bailout money with austerity measures, make sure the money is instead invested correctly.

Examples where this approach worked: Great Depression, the Marshall plan.
Examples where austerity and deficit control yielded positive results: none.

There´s no way Greece can ever sustain it´s current standard of living. No matter what their currency is. Devaluing their currency isn´t going to boom exports, as they have no exports, other than tourism. Their biggest industrial producer is coca-Cola Hellenic, a local Coke-bottler.

They canno´t compete in Feta-cheese production with countries known for cheap labour, plenty of arable land, like the Netherlands, Germany and Denmark, unless they´re given exclusive rights to the name "feta". That´s why most Europeans nowadays buy something called "salad-cheese", instead of Feta.

Go figure. Now the Greeks want to nationalize banks. Guess what? Most wealthy Greeks have sent their monies abroad years ago and the ones footing the bill will be the average greek. And I´m pretty sure they´ve been working as hard as most of us. But, in the grand scheme of things it´s not only about working hard, it´s about being born in a rich country, and Greece isn´t one of those.

Again, you fail to understand the situation. Greece is NOT in this situation because of fat pensions and early retirement. As long as you continue that false assumption there is no point in discussing solutions.

That's exactly the problem, not sure why you keep hiding from the truth and looking for imaginative excuses to this bankrupt nation's situation.

The essence of the problem has been excessive spending on a social level, from over-hiring by the gov't to fat and early pensions which the country cannot afford. The only reason Greece was able to sustain this "money for the people" approach has been because it obtained further funds to keep the handouts going by falsifying its financial data.

Had they not cheated and lied their way into getting their hands on more money, they would have hit the brick wall much earlier. And they would still have to do massive spending cuts and changes to their way of life to stay afloat.

The priority should be to stimulate the economy by pumping money into it.

What economy? Seriously...

There is nothing to stimulate. Greece's exports are of the same size as those of Lithuania, a tiny nation of just 3mln inhabitants and certainly not known for shipping products abroad.

Heck, even Turkey's exports are five times larger than Greece's. 5X!

You want people to come and invest, do business in Greece? Look where they stand when it comes to economic freedom: http://www.heritage.org/index/ranking

Can't find them? Oh, they're 116th, behind most of Africa (incl. Nigeria).

Seriously, the buck stops here. Germans (and they're not the only ones funding this) are not going to work until they're 67 just so Greeks can keep getting bailed out, or rather constantly kept on economic life-support, and sit outside and enjoy the sun at the age of 63.

It's just not going to happen. You cannot spend what you don't have/earn. Time to get the boot from the common currency it seems...

Examples where austerity and deficit control yielded positive results: none.

Perhaps Sweden in the mid 1990s?

I´m surprised nobody has an answer to the original question of this thread !

This thread has rather moved to an "attempted" analysis of what went wrong with Greece´s finances but not really any answer to the OP´s question ...

I´d say I have at least one simple answer:
Since the government has raised various taxes to raise as much money as possible this affects also the tourism industry.
When taxes are raised those can´t always be neglected but need to be passed on to the customers.
In many tourism related businesses there´s no margin left to absorb those taxes. And that´s the case in Greece unless the Government finds a solution for that (I doubt they will...)

IMHO it is going to be rude awaking in Greece when the EU stops the money flow.

Again, you fail to understand the situation. Greece is NOT in this situation because of fat pensions and early retirement. As long as you continue that false assumption there is no point in discussing solutions.
Greece is in this situation because its outgoings have exceeded its incomings, for a very long time.

Greece is in this situation because it borrowed money far more cheaply than it should have done, for a very long time.

Greece is in this situation because its economy is among the most closed on the continent of Europe, and the vested interests are fighting tooth and nail against opening it.

Greece is in this situation because it lied to get into the European Monetary Union.

Every time I read people's defences of the economic situation of Greece, one theme always comes through: it's someone else's fault. It's the fault of Goldman Sachs for pushing Greek debt. It's the fault of the ECB for lending Greece money. It's Germany's fault for not wanting to keep the taps running. It's never the fault of the Greek populace, magically, even though they weren't complaining when the taps were running at full blast, even though they never questions where the money was coming from and how it was going to get paid back, and even though they were living far beyond their means.

This is not the time for austerity and deficit control. The priority should be to stimulate the economy by pumping money into it.
Whose money? The Greek economy doesn't generate a level of wealth anywhere near what it consumes.

Again, you fail to understand the situation. Greece is NOT in this situation because of fat pensions and early retirement. As long as you continue that false assumption there is no point in discussing solutions.
No, those things are not the cause per se, but they have contributed towards the current problem, and moreover they are symptomatic of the thinking and overall practices that have led to the current situation, so people use them (perhaps sloppily, perhaps not) as a convenient shorthand.

I enjoy this is a thread, and I join the sentiment of those who have grown to love Greece the country yet repelled by the rampant money grab, to revisit in different times.

My sadness is that it will never be a return to the gentle calm Drachma days, but possibly instead to a resentful post Euro exit economy.

Greece is doomed.

A rapid exit from the euro, a return to the drachma and hyper-inflation, a breakdown in civil law and a return to army rule with politicians unable to form a workable coalition.

On the plus side I've just booked a couple of weeks in the Cyclades.:D

I have just returned from Santorini (Aug 12)and I found the Country very different from a few years back. It is more expensive than the UK (except London) thier prices just seem casually expensive, there is no mention of cents - everything rounded up to a euro. There is no 3.5 Euros, its always a rounded up price ie 4 Euros. Most staff/waiters seem to be Albanian so I guess they are not on the books - no wonder thier economy is down the toilet so they don't pay tax to the greek Government - and we have to bail them out. They don't seem to care about thier customers. The Greeks seem to be sailing into S**t creek and they have thrown thier paddle at the EEC. At the Petrol Station most only accepted Cash and no cards were accepted. They want to hide thier money.

With €4 for a delicious 'pita gyros' and a beer, me and the group were very pleased every evening!!! :D

When I was in Greece (Corfu) last year, on the surface there was no way of telling the country is in such a deep crisis. Everyone was still very friendly and life seemed to go on as normal there. It was only really when you specifically asked them about the crisis, you'd hear what was different. Most Greeks I spoke to realised very well that at one point this was coming though.

This is not the time for austerity and deficit control. The priority should be to stimulate the economy by pumping money into it. Very important: this money needs to be spent on projects that help low-to-medium income people, not corporate executives. I am all for being efficient, but instead of randomly laying off public employees like it's going out of style and cutting their pay, re-structure the education system and make sure that teachers are compensated properly. Build/fix schools and hospitals, fix the infrastructure, but again, it's very important that this be done honestly and correctly. By that I mean instead of the largest chunk of money being shared between the executives of company in charge of a construction project and the politicians who awarded the project to them, that money should end up in the pockets of the people employed to work on that project.

What this approach does is create jobs, which in turn stimulates spending. The tax revenue increases from both income tax and VAT. On a plus side you end up with new/updated schools, hospitals and infrastructure.

While you're at it, restructure the tax system to make it fair for everyone.

The international community (IMF, EU) should for the most part forgive the debt that Greece owes. So some private entities get all pissy - let THEM eat cake.:p Instead of conditioning bailout money with austerity measures, make sure the money is instead invested correctly.

Examples where this approach worked: Great Depression, the Marshall plan.
Examples where austerity and deficit control yielded positive results: none.

^

^

Who's going to pay for this largesse?

Seriously, the buck stops here. Germans (and they're not the only ones funding this) are not going to work until they're 67 just so Greeks can keep getting bailed out, or rather constantly kept on economic life-support, and sit outside and enjoy the sun at the age of 63.


That's not the reason why the Germans will do it; it's because it will be even more expensive for their banks if the Greeks are not bailed out; while they are clamouring for moral rectitude from the Greeks, it is actually more important to protect the balance sheet of German banks. As to the retirement age in Germany, the German demographic winter (fertility rate: 1.3 birth per woman) will have a far greater impact than a Greek bailout.

Source: http://www.prosumer-report.com/blog/2012/07/20/germany%E2%80%99s-demographic-dilemma/

By 2035, Germany will be the oldest country in the world, with every second inhabitant over age 50. It is already the second oldest country, with the lowest birth rate in the EU.