Sunday, 3 April 2011


Readers will by now be tiring of my prophesies of a managed Greek default, with the IMF as administrator. If you're new or have missed a few posts, just try the Nightmare Scenaria tag and you're A-OK.

Public opinion will, I believe, slowly converge on the inevitability of default, through many different paths. It is already doing so. I don't think there's any point writing about this. Sure, a lot of my regular analysis will go on but what I would really like to write about from now on is TEH DAY AFTER TOMORROWZ: it seems to me that neither the Greek people nor the Greek political system are ready for the actual implications of default, which, lest we forget, is almost outside living memory even in a population as aged as that of Greece (last proper default was in 1932, so anyone who had just barely started to manage their own money by then was born at the latest in 1916, and will now be 95 years old).

Although I will continue to mine the news flow for cues, the questions I feel particularly drawn to are as follows:
  • What are the prospects for civil unrest in Greece post-default? 
  • What, if anything, will be the source of Greece's competitive advantage post-default?
  • How can Greece keep the default from resulting in a catastrophic rise in poverty levels?
  • What will default mean for the balance of political powers in Greece?
  • What will happen to the Greek banking sector post-default?
  •  How are Greece's economic policies likely to change within a near-federal Europe?
  •  How will migration flows be affected by a Greek default?
  • What entrepreneurial and rent-seeking activities will benefit from a Greek default?
My baseline scenario is for a major restructuring within 2012, with a ca. 30% haircut, probably followed by another restructuring by 2016, with a smaller further haircut (15-20%). I assume that Greece will hold on to the Euro, but the governance of the Eurozone will change beyond recognition. The macro variables for Greece I will probably have to figure out as I go along.

If you'd like to see any other particular 'DAY AFTER 2MORROWZ' topics discussed here, please leave a comment below.

Otherwise, stay tuned. 


  1. Andreas Eriksson5 April 2011 at 09:29

    Hi dude,
    Personally I'm most interested in the inevitable changes to Greek society and way of life; and also what entrepreneurial and rent-seeking activities will benefit from a Greek default.

    Great work as always.

  2. @Andreas Always good to hear from you. I think we can do that btw. I've got some European evidence showing how Greek values and lifestyles changed in the times of relative plenty. As for opportunities, that will be interesting; can't promise very robust work on this one.

  3. Manos I'm a Microbiologist ( opened my lab last year) and I wonder what to do with all the public servants who are used to practicaly prescribing test to themselves since they don't pay for them. Is it wise to keep the contract with the state and execute those tests?

  4. Er... Yorgo I'm not familiar with the extent of this practice so I can't guess how much it is affecting your business.

    I also don't like giving personal financial advice. I suggest you consider a) how creditworthy the state is b) how much precisely in lost time and effort it costs you to reclaim the costs of these tests and c) how much you're making NET out of this sort of client. This should tell you all you need to know, but I can't make any decisions for you.

    What I would say 100% definitely is that I trust you're giving out valid receipts.


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