A rich German drives into the village. He stops at the local hotel and lays a €100 note on the desk, saying he wants to inspect the rooms upstairs, before deciding whether to spend the night there. The owner gives him the keys and, as soon as the visitor has walked upstairs, grabs the €100 note and runs next door to pay his debt to the butcher.
The butcher takes the €100 note and runs down the street to repay the money he owes to the pig farmer.
The pig farmer takes the €100 note and heads off to settle his bill with the animal feed supplier.
The feed supplier takes the €100 note and runs to pay his drinks bill at the taverna.
The owner slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit.
The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.
The hotel proprietor then places the €100 note back on the counter so the German will not suspect anything.
At that moment the German comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves.
No one produced anything. Nobody earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism.
And that is how the Greek bailout package is supposed to work!
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The UK media has drawn attention away from the UK recession and its economic woes by highlighting the political confusion raging in Europe with a new French President questioning austerity, and the inability of Greece to form a government. However, from a European perspective on the ground, matters here are far more relaxed, with a firewall of billions having been built to protect the euro and prevent contagion spreading from country to country.
The Greek voters 'punished' the two main political parties by voting for minority parties, but as 77% of the electorate still wish to remain in the Euro, pundits in the know expect the new election, in June, to return a strong government that will continue with the Greek programme of cutting costs and making the country more competitive.
With the pound set to get even stronger this means a new build two bedroom detached home, in western Crete, costing 136,950€ just got a whole lot cheaper. Instead of costing you £123,378, a few months ago, the price has dropped today by a whacking £13,000 to a fantastic £109,560!
BUT WHAT HAPPENS IF GREECE GOES BACK TO THE DRACHMA?
There would be a short-term shock, as people rushed to put their savings abroad and there might need to be temporary capital controls to regulate the amount of money leaving the country.
Soon, though, the effect of cheaper exports would start to tell. That is what has happened in Iceland which, following a banking crash four years ago, is now comfortably outgrowing the eurozone.
Imagine, as you book your summer holiday, that the new exchange rate suddenly makes Greek resorts 40% or 50% cheaper than their competitors. Now imagine every business making a similar calculation when it comes to sourcing goods.
The blood-curdling threats being issued by Eurocrats should sound familiar. The UK went through precisely the same experience 20 years ago, when we were stuck with an over-valued exchange rate in the Exchange Rate Mechanism.
As in Greece, our leaders – all the main parties, the CBI, the TUC, the Bank of England – assured us that leaving the ERM would be disastrous. On September 11, 1992, John Major solemnly told us that withdrawal was ‘the soft option, the inflationary option, the devaluer’s option, a betrayal of our country’s future’.
Four days later, we left the system and our recovery began immediately. Inflation, interest rates and unemployment started falling, and we enjoyed 15 years of unbroken growth – until Gordon Brown came along and blew it away.
So with the savings to be made on your dream of buying a home in Crete, what price would you put on 320 days of sunshine a year and a quality of life which costs far less than living in the doom and gloom and cold of the UK.
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When the UK had to go cap in hand to the IMF in the seventies in order to borrow to survive, it was North Sea Oil that helped the nation.
Notwithstanding the agreed EU loan package, Greece too can at last see a light at the end of the tunnel with the discovery of natural gas and oil.
Currently eight of the world's largest seismic survey companies are bidding for exploration. Two will be awarded contracts by end April to begin exploratory drilling before the end of 2012. Substantial hydrocarbon deposits have been identified in the Ionian Sea, near Corfu and another south of Crete.
It is anticipated Greece will begin earning a revenue stream from these deposits prior to 2020.
Greeks are lazy good for nothings!
For nearly six years Greece has had to endure the longest recession in history. Unemployment stands at over 20%. Savage austerity measures have slashed wages and pensions in an effort to reduce sovereign debt. Despite this the Greek people are struggling to move forward, notwithstanding the UK media purporting to show Greeks as lazy good for nothings.
Research carried out by the OECD - the respected Organisation for Economic Co-operation and Development, has found this image of Greeks to be untrue.
Statistics by the OECD have revealed the average German works a total of only 1,390 hours per year. In Spain it's 1,654 hours while in Portugal it's 1,719, but the average Greek works a massive 2,119 hours per year!
The ONS - the UK government's Office for National Statistics confirm that the average worker in Britain only works 1,888 hours per year.
That means the average Greek works more than six weeks a year longer than his counterpart in the UK.
Greece sees the light
With an abundance of sunshine, Greece is seeking to export power generated by solar panels before 2015.
In the coming weeks the Energy Minister, George Papaconstantinou has confirmed Greece will adopt legislation to simplify planning and aims to connect its first 300 megawatt plant by the end of next year as part of the Greek Helios solar-energy project.
Named after the ancient God of the Sun, Helios is a 20 billion investment aimed at installing 10 gigawatts of solar panels in Greece by 2050. Based on current solar energy prices in Germany the project has the potential for generating a revenue of 80 billion euros for Greece over the next 25 years. The electricity produced will be exported to other European Union nations and will also help Greece meet the EU objectives for renewable energy targets in Europe and low carbon economies by 2020.
Greece is doing great!
With the UK sovereign debt standing in excess of 1 trillion pounds - and still not being markedly reduced - Greece should be applauded for the steps it has taken to redress its sovereign debt.
Did you know, with current sovereign debt and borrowing needed to prop up major banks, plus the debt of pension funds such as the Post Office to be addressed - the UK borrowing percentage of GDP is the same as Greece!
While the UK has been dilly dallying, savage austerity measures have been introduced in Greece and an EU Taskforce established to support the implementation of structural reforms to modernise the country's bureaucracy.
So what has that accomplished?
Over two years Greece has achieved an annual rate of fiscal consolidation averaging 4.2% of GDP - the highest level recorded in the developed world over several decades.
Greece ranks number two in terms of the degree of adjustment happening in its economy during 2009 - 2011, according to figures released by Euro Plus Monitor.
The stereotype of Greece criticised as the lame, lazy duck of the EU is now no longer true.
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There's no doubt Greece has been made the scapegoat of Europe, being pilloried in the media spotlight with half truths and distorted facts. Much of the media coverage refers to - bailout, aid, financial assistance - all giving the impression that cartloads of cash is arriving in Athens for a great giveaway.
The reality is somewhat different. Shut out from international markets, the Greek government was forced to borrow from Germany, France and others, rather than from banks and investors that would normally have bought government bonds. Greece was able to borrow from these countries at about 3.5%. As Germany borrows on the market at around 2% it makes a whopping 75% profit when lending to Greece. With Germany advancing 8.4 billion and France 9 billion, these countries stood to make about 600 million euros in profit.
But the 130 billion bailout will help all that won't it? The short answer is no. Nearly 94 billion will go to pay interest, recapitalize banks and private sector payments to restructure borrowing.
POT AND KETTLE!
Greece was never the only one. Too many governments - the UK included - allowed sovereign debt to get out of hand. In 2012 the UK will spend £705 billion to help keep public services going - but will raise only £5,750 billion in tax revenue. That gap, plus existing borrowing, means the country's deficit is well over £1 trillion - equivalent to every man, woman and child in the UK owing £16,400. Yet the UK government has not yet introduced savage austerity measures such as those being endured by the Greek people.
As Greece makes valiant efforts to reform - just as the UK had to do in the 1970's - Greece should not be treated as the pariah of Europe, when there are so many other countries in a similar position.
GREEKS ARE LAZY!
Well look at the facts. The average German works only 1,390 hours per year, while the average Greek works 2,119 hours per annum. So who's lazy?
The Greek people are enduring tremendous hardship with increased taxes, salaries and pensions cut overnight and the minimum wage slashed to less than £500 per month - that's nearly 30% less than the minimum wage in Spain and 50% of that in the UK. The 'Troika' of lending bodies to Greece have crushed the country into accepting cuts so deep that Greece will experience a depression far deeper than that of the infamous Great Depression during the 1920's in America - the world's worst ever economic downturn.
SO WHAT DOES THAT MEAN TO ME?
The austerity measures affect the incomes and pensions of locals and in the longer term, with lower wages, this will gradually drive down the cost of living. As you probably have capital and pensions based in sterling this should mean you get even more for your money.
Crete is the location which accounts for 85% of overseas buyers in the Greek property market. As it's cheaper to live in Crete than it is in the UK - even now - that can only be better for you. Coupled with a far better quality of life and not to mention 320 days of sunshine and no more freezing cold winters, you owe it to yourself to turn that dream of yours into reality - and check out the best value for money when buying a home in Crete.
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Recent events have painted a picture of Greece and its people as being greedy and lazy good for nothings, but is this a case of a pot calling the kettle black? Go back three years and the UK banking system was in meltdown, people were up to their necks in debt, maxing out on credit cards as if there was no tomorrow. That was never the case in Greece. It's a cash society so there was never the same level of personal debt and banks didn't have to be bailed out by tax payers either. Yes, the Greek government did borrow more than it should - but then so too did the UK. All countries have to borrow money in its daily business and it's confidence that enables them to secure realistic rates of interest. Unfortunately the markets turned on Greece and raised their lending costs so much that compound interest inflated borrowing repayments beyond sustainable levels.
In a desperate fight to contain the country's solvency the Greek government introduced a whole raft of measures to reduce sovereign debt.
Tax thresholds were slashed from £10,300 down to £4,300. VAT was raised to an eye watering 23%. All pensions above £860 a month were cut by 20%. Public sector wages were chopped by 20%, while employees of state-owned enterprises had wages decimated by 30%. 'Solidarity' payments of 1%-5% of annual salaries were deducted in lump sums. If you owned a car with an engine size of over 3 litres you had to pay a one off 'Solidarity' payment of approximately £450 and the latest move has been the introduction of a property tax. Based on the size and location of your house, typically on a two bedroom Snobby, this amounts to around £250 per year, levied on the electric bill.
All this and a typical salary in Greece is only around £1,100 per month. Not only that, but unemployment stands at 18% and that does not include the forthcoming wholesale reduction in public sector employment.
As with all things in the world of politics, it's the man in the street who ends up standing there in disbelief, having to pay for the mess created by politicians. While for the most part austerity measures do not really effect ex-pats, for Greeks times are hard - and will probably remain so for some time to come as the government grapples to stimulate growth, while a battered and bruised population is forced to dig ever deeper into their pockets to help fund it.
After all said and done, for Brits wondering whether to make that move to the sun, don't believe what the UK media says about Greece. Far better to listen to someone who actually lives there! Crete is still a safe place to live, the weather is wonderful, the crime rate is low and your UK pension buys you a far better lifestyle compared to the doom and gloom of having to live in the UK.
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