Tag Archives: Greece

11.16.2012 | Pooches and Prosperity

Chloe and Gus, my daughter’s miniature Pomeranians, consume organic dog food and use wee-wee pads, they visit the vet, the groomer, and enjoy their treats and toys. Because of Chloe and Gus, my cats, and the dogs in 1 out of every 4 households in the US, we have a growing pet industry.

I started listing the discretionary spending that supports Chloe and Gus after reading about the Euromonitor Dog Index for 53 countries. Here are some facts that connect pooch spending to prosperity:

Averaging one dog in every 4 households, the US has the world’s largest pooch population. But Norway does the most per capita pup spending at $639 while Switzerland and Australia ranked 2 and 3.

In the developing world, Brazil, with a more affluent urban population, has the most small dogs per capita. But the biggest proportional increase in dog ownership was led by India, and then the Philippines, Venezuela, Russia, and Argentina. Still though, while dog ownership in India rose 58% during the past 5 years, they have only 4 dogs per thousand people. By contrast, dog ownership in the Middle-East is much less popular. In Saudi Arabia and Egypt, with only 2 dogs for every thousand people, dog ownership is rare and typically relates to big dogs and security.

Finally, the financial woes in the euro-zone appear to have affected dog ownership. France, with a sagging economy and Greece, on the brink of economic cataclysm, have fewer dogs than 5 years ago.

Our bottom line: Chloe and Gus are much more than family dogs. Dog ownership can be an indicator of a country’s economic growth and decline.

Sources and Resources: My facts on dogs are primarily from the Atlantic article and from a marketplace.org report. You might also enjoy this Bloomberg article on a NJ legislative proposal for mandating doggy seat belts and Governor Christie’s response. Finally, these econlife links look at aspirational purchases in the developing world.

This chart is from the Atlantic article cited above.

Please note that this post’s conclusion was edited after it appeared.

Posted by: adminEcon
Tags: Brazil, developed nations, developing nations, Dog population, dogs per household, economic growth, emerging markets, euro zone, Euromonitor, France, Greece, large dogs, pet food industry, pomeranians, small dogs, urbanization
Comments (1) Add a Comment

10.26.2012 | A New Greek (Economic) Fuel: Olive Oil

The Greek government needs its newest bailout infusion. But in return, austerity would include (among many other requirements) cutting certain civil servants’ salaries by as much as 35%, raising the retirement age again but this time to 67, and plunging the number of associate professors at public universities from 15,226 to 2,000. The Greek Parliament has to decide before November 12.

This takes us to olive oil.

In a March 2012 report, the consulting firm McKinsey & Company proposed a development plan for Greece that would be spearheaded by an Economic Development and Reform Unit. Industry by industry, specific changes were proposed. Looking at what McKinsey suggests for olive oil as a prototype example, do you think the Greeks can leap from their current crisis to economic growth during the next decade?

Here are the broad goals and then the olive oil plan:

Broad Goals:

Focus on tradable sectors
Attract foreign and domestic investment
Generate more productivity
Ensure tax compliance
Create employment opportunities
Simplify bureaucracy
Expand the court system

Olive Oil:

Although Greece is the world’s third largest olive oil producer, Italy is the main beneficiary. Because Greece sends its olive oil in bulk to Italy where it is packaged and marketed, Italy enjoys a 50% premium from the price of the retail product. McKinsey suggests that instead, Greece has to add to its factory capacity at home, develop a “cachet” for the “Made in Greece” label, and sell directly to targeted markets abroad. North America, the UK, Germany & Austria, and the Balkans would be top priority markets. (The McKinsey chart below is interesting.)

Reading the report, you start to realize that while Greece has immense economic potential, the chasm between their current plight and jumpstarting economic development is massive. In addition, since the report was issued, Fage moved its headquarters to Luxembourg and Coca-Cola switched its main stock market listing to London.

Can olive oil and tourism, feta and yogurt help to fuel the Greek economy?

Sources and Resources: My current facts about Greece receiving its newest tranche are from this NY Times article. Thinking of the future, the McKinsey report resounds until, I suspect, it connects to Greece’s political and economic problems. As a counterpoint, you might want to look at this Business Insider slide show detailing the impact of a “Grexit” and this econlife post about Greece.

From McKinsey, “Greece 10 Years Ahead,” p. 49:

Posted by: adminEcon
Tags: "Greece 10 Years Ahead", austerity, bailout, drachma, EC, ECB, euro, euro zone, Fage, Greece, Greek economic development, Greek feta cheese, Greek olive oil, Greek tourism, Hellenic Coca-Cola, IMF, Italy, Mario Draghi, McKinsey & Company, retirement age, tranche
Comments (0) Add a Comment

10.13.2012 | Luxembourg Yogurt?

For this Greece update, some past and current information…

Soon after the euro was launched on January 1, 2002, a €76,000 bank heist near Athens became the first major euro robbery. Near Athens also, with the new currency launch, it took 3 staff members to figure out how a customer could pay for a cheese pie. And everywhere in Greece, the transition was slow because the Greek Economic Ministry had supplied only one sixth of all Greek businesses–50,000 out of 300,000–with euros.

Looking back further, since its independence in 1829 to 2006, Greece has had 5 defaults or debt re-schedulings that occupied a total of 50.6 years. In This Time It’s Different, economists Kenneth Rogoff and Carmen Reinhart say that few nations break out of a serial default pattern.

Fast forward to 2012.

Greek yogurt maker Fage is moving its headquarters from Greece to Luxembourg. Coke’s second largest bottler, Hellenic Coca-Cola (EEEK on the Greek Stock Exchange) is relocating its Greek headquarters to Switzerland and switching its primary stock listing to London. Both wanted a lower and more stable tax environment, greater access to financing, and less exposure to a Greek financial calamity. Predictably, other firms located in Greece have responded to the ongoing crisis with modified business behavior and contingency planning.

Meanwhile, overall Greek unemployment remains near 25%, close to 50% for youth aged 15-24, its debt is still more than 150% of GDP, and unless Greece gets its next bailout transfusion, its government will soon run out of money. Still the WSJ reports the odds of Greece leaving the euro zone are down.

Your prediction?

A final economic thought: In the euro zone, countries with different economic conditions lack the flexibility to respond to their own special needs. They share monetary policy and cannot target their fiscal policy (government spending, taxing and borrowing) to high or low unemployment and inflation.

Sources and Resources: Illustrating the extent of Greece’s dysfunction, this 2002 BBC article that specifically describes the introduction of the euro in every country was fascinating and if you do not have the Rogoff/Reinhart book, This Time It’s Different, this paper provides an excellent summary. For current information on Greece and the corporate exits, here and here are Greek newspaper articles, here is a European perspective, and here, the WSJ talks about how Citi analysts have lowered the chance of a “Grexit” from 90% to 60%.

Posted by: adminEcon
Tags: Carmen Reinhart, default, euro zone, euro zone bailout, Fage yogurt, Greece, Greek debt, Greek unemployment, Hellenic Coca-Cola, Kenneth Rogoff
Comments (0) Add a Comment

10.10.2012 | Video Game Economics

Sometimes a virtual world can show us some economic reality. Here is the story:

There once was a Greek economist who, for many years, happily wrote papers and taught classes, in (he said) his “academic cocoon.” However, as the euro-zone calamity started to unfold, word of his expertise spread. He understood the dynamics of a single multi-nation currency, of balance of payments issues, of unfunded debt. He had the knowledge that would attract national governments, central banks, major universities…

…and video game developers.

This Greek professor, Yanis Varoufakis, received an email from the president of Valve, the Half-Life games maker, saying, “Here at my company we were discussing an issue of linking economies in two virtual environments (creating a shared currency), and wrestling with some of the thornier problems of balance of payments, when it occurred to me this is ‘Germany and Greece…’ Would you be interested in consulting with us?”

Dr. Varoufakis soon said that the offer was “an economist’s dream-come-true. Think of it: An economy where every action leaves a digital trail, every transaction is recorded; indeed, an economy where we do not need statistics since we have all the data!”

By contrast, in the real world, we calculate the unemployment rate for a labor force of close to 150 million people, with statistics from just 60,000 households. Or, we use econometric models that are based on hypothetical theories and a cascade of statistics that Dr. Varoufakis believes are “hocus pocus” because their bias reflects their creator. He says that the only way to judge macro policy is to actually–not theoretically–rewind history. But we cannot go back to 2009 and live through those years without an $800 billion stimulus or QE1 and 2. We can’t see whether the 1930s economy would have rallied without the New Deal.

So, believing that he could gather economic insight about the real world from observing and manipulating the virtual world, Dr. Varoufakis said yes. In addition, his website says that he currently is a Professor of Economic Theory at the University of Athens and Visiting Professor at the Lyndon B. Johnson Graduate School of Public Affairs at the University of Texas at Austin.

Our bottom line? Whether real or virtual, economies are tough to simulate.

Sources and Resources: Through a slew of blogs ranging from WSJ.com to the Washington Post and Dr. Varoufakis himself, I learned about why video game developers need economists. Here also, is Valve’s help-wanted ad for an economist. Their requisites resemble what the President and Congress look for in a Federal Reserve chairman.

Similar to reality, these graphs are from the Washington Post:

Posted by: adminEcon
Tags: econometric models, economic simulations, Eveonline, Greece, inflation, prices, Valve Corp, video game economists, video games, virtual economies, Yanis Varoufakis
Comments (0) Add a Comment

09.30.2012 | Who Works the Hardest in the Euro Zone?

I just discovered a surprising statistic.

In the euro zone, judged by hours per week, the Germans are not nearly the hardest workers. Instead Greece, with an average of 42.1 hours is close to the top of the list. By contrast, for 2011, the average German devotes 35.5 hours to a job and the Netherlands, with the lowest time, is 30.5.

Greece????

The reasons that Greeks work long hours relate to where and who. More Greeks are in agriculture where longer hours prevail. Also, in Greece, people tend to work full time or not at all while in Germany there are more part-time opportunities. Finally, more women work in euro zone countries and women tend to work less.

This takes us to a predictable conclusion. Although Germans work less, they are much more productive. A Greek worker generates €20.3 per hour while Germans produce more than double at €42.3. In 2011, at €51.8 an hour, the Irish topped the productivity list and their low corporate tax seemed to be the reason. Attracting multinational firms, they became a magnet for the world’s best technology, technology that boosted Irish productivity to relatively stratospheric levels.

A definition: When we look at productivity, we are comparing factor inputs-land, labor and capital– to the value of the goods and services they create. More output from less input means a more productive economy. It also means resources are then freed to do other work and produce still more.

Sources and Resources: Many thanks to the Brussels WSJ blog where I first saw the Greek German worker hours/productivity comparison. For up-to-date information and analysis on worker hours and productivity, Eurostats has easily accessible data.

Euro Zone Labor Productivity Per Hour Worked

Legend (euro per hour worked):

Lighter yellow: 4.8-10.8
Darker yellow: 10.8-20.2
Lighter green: 20.2-39.2
Dark green: 39.2-46.2
Darkest green: 46.2-68.7
Gray: No data

Productivity per Hours Worked in the Eurozone

Posted by: adminEcon
Tags: capital, employment, factor, Germany, Greece, Ireland, jobs, labor, land, multinationals, productivity, technology, working hours
Comments (0) Add a Comment