Are Greek Protesters Smoking Crack?

by Victor Cheng

I’m writing this article on my way home from Milwaukee, Wisconsin. I spent a week here meeting several dozen CEOs who run mid-size businesses in the area.

The weather and people were great (actually warmer than San Francisco go figure!) and I discovered entire new industries I didn’t even know existed.

In my conversations, the topic of economic woes of Greece came up.

Here’s the gist of the Greek economic crisis.

The government borrowed a ton of money, gave it away to its citizens. Lenders wised up to this and refused to refinance government debts. Now Greece doesn’t have enough cash to pay loans that are due in the next 30 days (and can’t refinance those loans because their credit rating is now shot).

Meanwhile, Greek workers are protesting in the streets because they don’t want the government to cut back on entitlement programs.

Here’s my favorite one:

When you turn 59 years of age in Greece, you get paid a pension (sort of like our Social Security) that pays you 90% of your salary for life.

How can Greece possible afford to do this?

It can’t.

What I find quite galling is how Greek citizens are protesting the inevitable financial cutbacks.

This is a like a bunch of teenagers living it up and enjoying the party, and then complaining that they have a hangover the next day — and protesting because of it.

Hey, if you’re willing to enjoy the benefits, you need to be willing to deal with consequences. Pure and simple.

The Greek protesters are completely divorced from reality.

It’s not illegal to be a dumb politician.

It’s not illegal to vote for a dumb politician.

But if you do, don’t complain about it later.

In short, the Greek protesters are in complete and utter DENIAL.

It’s pretty hard to solve one’s problems, if you deny they actually exist. This is true for consumers and CEOs a like.

The ability to brutally confront the factual reality of one’s current situation (or predicament as the case may be) IS a serious competitive advantage in today’s economy.

And trust me when I say this ability is extremely short supply.

Don’t let denial get the better of you. Just man up (or woman up) as the case may be, and deal with it.

Comments

{ 6 comments… read them below or add one }

Bill Faherty June 3, 2010 at 5:37 AM

I agree with your assessment of the Greece / Greek situation. It sounds similar to exactly what is happening in the USA today. The bigger question is what does one do to prepare for what is looking more and more like the inevitable in this country? Buy gold? Go to cash? Pay of all debts? One of the problems is it seems that those who end up being prepared get bulls-eyes on their backs by those who did not. Crazy times we are living in.

Karin H June 3, 2010 at 5:59 AM

Hi Victor

Every crisis has a cause, but blaming the Greece protesters for being unrealistic is not really fair.
In many countries you pay a lot of tax on all your hard work, which is partly used for pensions entitlement (and in many cases you as employee pay in to the same savings-pot) when you’re old enough to start enjoying the fruits of all your hard work.
Now these saving-pots are (almost) gone, their own savings and hard work is rendered useless. Wouldn’t you protest in some way?

Who are more to blame are those who were supposed to take care of the saving-pots, they like so many in other countries (USA, UK etc come to mind) thought it was a never ending story of wealth.

Tax rates in Greece, after a quick google search: http://www.worldwide-tax.com/greece/greece_tax.asp

Karin H (Keep It Simple Sweetheart, specially in business)

Victor Cheng June 3, 2010 at 10:21 AM

I’ve posted some additional comments I received via email from a reader from Greece:

Hello! I am from Greece, an avid reader of your ideas.

Most of your email was true and insightful, but you have some facts wrong.

First up, most money was not given to people, as the debate is raging here, it was given certain people, with political ties.

I strongly agree that there is fault on the hands of those who voted for our politicians (never having voted them myself), but corruption is_really_ high here, I suspect that more than 30% of the debt never was provided to the public (information is scarce here), but only to the select few.

About that 59 with a grand pension, that is usually given to public workers who have influential unions, and reached their positions through corruption mechanisms, and they are really a lot. We have about 800k public workers, and estimations of at least 800k more that are indirectly paid with government projects etc. (many of those projects corrupted, and really inefficient).

Imagine those numbers in an 11million country, they are HUGE. Usually private workers leave work older than 65, with a pension of about 60%.

Victor Cheng June 3, 2010 at 10:29 AM

Karin,

I hear your point on the taxes designed to fund entitlements like a pension. The problem in Greece, US, and Japan is the numbers don’t work.

Its unfortunate the protests did not happen earlier and weren’t directed at the actual underlying problem of the numbers don’t add up, rather than the more visible and more recent symptom of that problem — cutting entitlements.

In the US, I don’t see people protesting in the streets about the impending bankruptcy of Social Security…. but wait 20 years and they will, but by then it’s too late. Much easier to fix major economic policy issues while they are still small.

As for protesting, I generally assume that most of the taxes I pay (especially Social Security), I will never receive back end. My assumption is my Social Security benefits will be zero. The numbers point in that direction.

I suppose I could protest, but personally choose to put that energy into building my own retirement savings that say trying to fix the whole social security systems which really seems just very daunting to me. (Not to mention total political suicide for anyone willing to actually take that problem in a realistic way)

-Victor

Terry Racciato June 3, 2010 at 12:47 PM

And this is different from the current Obama’s administration objectives how? Other than the fact that they are further down the path of socialism that we seem hell bent on taking. I think of the lady in Chicago the night Obama was elected joyously declaring that she now would no longer have to pay her rent, and wondering where she should line up to start getting her fair share of the free money………..

Daniel - Romania June 6, 2010 at 10:31 AM

The situation in Greece is OK, other European countries play unfair too, for example ROMANIA.

I live in Romania, and here most people go in pension at 50 years old, especially policemen and army officers, but also many other people who are ill, or get a medical paper they are ill. So at about 5 millions workers and over 11 millions pension people!!!

While a worker gets 300 USD wage, a pensioneer gets over 500 UDSD!!!

And the Govern still makes the same thing, and the country will crash in few months, too.

Greece is the happy side…. the dark is still hidden. Romania…

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