Greece: Tourists and investors are back

Tourists are back, as are investors. The Greek stock market is up 25 percent this year, paring its decline since 2007 to 79 percent.

Tourists are back, as are investors. The Greek stock market is up 25 percent this year, paring its decline since 2007 to 79 percent. Greek bonds have gained 41 percent in 2013, more than anywhere else in the euro region, Bloomberg World Bond Indexes show. Ireland, by comparison, rose 11 percent.

โ€œGreece has become like a chemistry lab where the outcome of the experiment could be something completely new or something corrosive,โ€ said Polydoros Karyofyllis, 43, the co-director of the Biennale, which runs until Dec. 1. โ€œWe see where science and statistics have led us so maybe it is time to look at art.โ€

In the abandoned building that once housed the Athens Stock Exchange, artist Teo is shuffling between the Fool, the Magician and the Devil in a Tarot card reading to divine the fate of the crippled Greek nation.

Above his head, a flickering electronic installation depicts share prices from 2007 near the marketโ€™s euro-era peak, before six years of recession and successive bailouts wiped about 48 billion euros ($65 billion) off the economy.

Temporary home to the Athens Biennale arts exhibition, the disused trading floor has become a mausoleum of former wealth and a hotbed of conjecture. Economists and artists have come together to tackle the question on all Greek minds: now what?

The byword for the financial ordeal that threatened to tear apart the euro, Greece remains the biggest drag on the continentโ€™s ability to overcome it. With the economy 23 percent smaller and more than a quarter of the working population jobless, Greeks are girding for more pain just as fellow debt crisis victim Ireland stops relying on rescue loans.

Athens Hecklers

On Nov. 5, Olli Rehn, the European Unionโ€™s economic and monetary affairs commissioner, said there were more signs the European economy had reached a โ€œturning pointโ€ as efforts by governments and the European Central Bank foster a recovery. The same day, EU, ECB and International Monetary Fund inspectors in Athens were being heckled and pelted by coins.

โ€œGreece today stands at a crossroads,โ€ ECB Executive Board member Yves Mersch said on Nov. 8. โ€œIf the authorities fail to address the remaining challenges, they will put at risk what has already been achieved.โ€

Prime Minister Antonis Samaras, who survived a no-confidence vote on Nov. 11 with his parliamentary majority reduced to four, is trumpeting the first economic growth in seven years for 2014.

Investors including Paulson & Co. and JPMorgan Chase & Co. (JPM:US) put money into Greece this year as worldwide index compiler MSCI reclassified the country as an emerging market.

Endured Cuts

Yet thereโ€™s little cause for celebration among a population that has endured cuts to pensions and wages in return for 240 billion euros in rescue loans. Wages will have fallen by more than a fifth by next year and few households have access to affordable credit. Unemployment is at 27 percent and law-abiding taxpayers are struggling to find the money to pay new taxes.

As international inspectors haggle with Samaras over next yearโ€™s budget, Greeks have also been shaken by tit-for-tat violence between leftist groups and the anti-immigrant Golden Dawn party.

โ€œNowhere in the euro zone is the disconnect between investor sentiment and economic fundamentals starker than in Greece,โ€ said Nicholas Spiro, who runs his own company in London analyzing sovereign risk. โ€œThereโ€™s an inescapable feeling that, not only havenโ€™t Greeceโ€™s underlying fiscal problems been resolved, theyโ€™re being kicked into the long grass in order to keep the euro-zone show on the road.โ€

Shrinking Economy

Gross domestic product declined 3 percent in the third quarter, the year-on-year rate of recession easing from 3.7 percent in the previous three months, the Hellenic Statistical Authority said Nov. 14. The economyโ€™s lost output since 2007, based on the quarterly reports, exceeds the entire GDP of Croatia, the EUโ€™s newest member.

The government must dismiss another 4,000 state employees by the end of the year to stay on track with the bailout plan. It needs to plug a budget deficit next year that the inspectors from the EU, ECB and IMF, known as the troika, said is four times the 500 million euros Greek politicians are claiming.

Creditors led by Germany have committed 496 billion euros to fight the debt crisis since 2010. Half of the money has gone to Greece, which preceded Ireland by six months in 2010 heading into a bailout program to repair the economy.

The Irish, who Prime Minister Enda Kenny said will leave their bailout program on Dec. 15, accepted wage agreements, job losses and ensuing drop in living standards with little protest.

About the author

Avatar of Linda Hohnholz

Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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