LIVING THE LOL IN CYPRUS

It's always good to be able to showcase the work of a successful friend. These days however the work of Alex Apostolides over at http://www.econcyma.blogspot.com/ is proving particularly useful. Alex specialises in the economic history of his native Cyprus, but also Malta, which is now making a thoroughly savoury name for itself by opposing Libyan sanctions.

Reading his latest post I realised I haven't followed the Cypriot economy very well in the past two years, lulled to complacency by my prejudices. They have been as follows:

• because Cyprus is a much smaller country, it is easier to avoid enormous amounts of administrative waste and corruption there than it is in Greece.
  
  
• because Cyprus has had British influences to those institutions which Greece borrowed from the French or Germans, it should be a more flexible economy than Greece in many ways and have a more flexible civil administration.
  
  
• the looming presence of a major national threat has focused the minds of Cypriots a little bit more on the greater good and made consensus a much more acceptable practice in their country than it is in Greece.

I have other prejudices of course that are not so positive. But the ones above allowed me to ignore economic news coming out of Cyprus in the conviction that our funny-sounding cousins would muddle through.

It turns out I am wrong. Over to you Alex! 

I KNOWZ, A MERGUR WILL FIX IT!

I love banks in my day job as a small business policy guy, mostly for the endless entertainment and stimulation they provide. I don't follow them in my private life though, so my knowledge is limited and often dated.

Yesterday, however, news reached me through a reader of this blog that the National Bank of Greece has approached Alpha Bank with a 'Proposal for a Friendly Merger' and been rejected for now while the Alpha board holds out for a better price. The announcement apparently followed about a month of negotiations (admitted in the proposal), and hence Alpha's rejection prompted cries of manipulation, especially in the States where EUR140m was reportedly lost by those who bought on the announcement.

I am in no position to assess these allegations. What I do know is that our Government weighed in almost immediately, with the Minister of Finance tellingly releasing a written statement in which he supports the NGB bid as a step towards the strengthening of the Greek banking sector. Immediately following the first rejection of the NBG bid by the Alpha board, unnamed Government officials commented to a sympathetic To Vima:

"Don't jump into conclusions regarding the fate of the NBG bid. The Alpha board only controls about 10% of shares"

To put it mildly, our Government is signaling that it wants the acquisition to work and will go out of its way to help. The idea is that consolidation is to be welcomed in our banking sector as a better capitalised sector should be able to support the economy and, I cannot help but add, continue to buy those much sought after Greek government bonds. As one person put it on Twitter:

I am personally very suspicious of M&A regardless of country or sector - the financial press generally gets very excited about them individually and I can't help but feel that the lack of M&A activity is treated by many as some kind of financial erectile dysfunction. However, M&A are on average not particularly value-adding events. Bank mergers are not clearly aimed at producing economies of scale and banks that make a point of growing by acquisition generally destroy value in the process. NBG is not the worst offender on record but up to 2007 they were pretty active.

While this drama plays out, let's go into the background, briefly, of this story.

Here's an OECD table from the time of the ridiculous EU Stress Tests, i.e. last Autumn . It shows that, at the time, Greek banks held Greek bonds to the tune of 223% of their Tier 1 Capital. This means that a 23% haircut, the (reasonable) amount the stress test applied to Greek bonds held on the trading books but somehow not the banking books of banks, would, in a pretty stressed market, have wiped out about 51% of the banking sector's Tier 1 Capital. How bad is that? It means most of our banks would be, well, not insolvent but definitely undercapitalised from a regulatory perspective. Certainly both NBG and Alpha would fall short of the Basel III capital requirement if they had to write off half of their Tier 1 capital.

With some sort of default or other on the cards, capitalisation is the only thing that matters right now. Not earnings, not synergies (a doomed word in M&A parlance), just capitalisation.

If we ignore the stress tests' convenient distinction between trading and banking books, NBG holds EUR22bn of Greek government bonds overall, while Alpha holds a mere EUR5bn. Applying the stress test haircut to both totals would cost NBG EUR5bn out of EUR6.7bn of Core Tier 1 capital and Alpha only EUR1.1bn out of  EUR5.7bn of its high quality capital.

UPDATE: One reader has pointed out that the haircuts are likely to be a little smaller than I assume above because the two banks did not necessarily buy their bond portofolios at par value. If they bought recently, they would have bought them slightly cheaper than thus and will therefore be carrying them at a lower nominal value. Thus I may be underestimating capitalisation in both banks by a small amount although the comparison still holds. 

Note also that 22% of NBG's funding comes from the ECB, as opposed to 14.5% (possibly less as they've since raised funds) of Alpha's funding.

The point here is that NBG would be insolvent in case of a sovereign default by Greece and possibly even if it had to mark to market right now, while Alpha is in much shallower shit, and hence in a position to negotiate. In the eyes of a cynic, Alpha is the bigger bank by a mile. It's a simple case of "Meet the Denominator".



Note the reversal of reality in the NBG people's original response to the first rejection:

"a single reed standing on its own' [ed: a popular Greek metaphor for a person with no friends/allies] is not best placed to deal with the crisis." 

This in my mind makes negotiations very difficult. A notionally insolvent bank is worth next to nothing. Promising Alpha's shareholders a bigger share of nothing should not make the merger more attractive, unless one is unable to see past promises to create Greece's biggest bank and Europe's '25th biggest bank' (which echoes Borat's praise for his sister). Then again, never say never: almost half of Alpha is owned by individual retail investors.

However, the bid's troubles do not end here.

The combined bank is supposed to have a core Tier 1 ratio of 10,7%, but as you can probably see for yourselves it stands to lose nearly half of that, EUR6.1bn out of EUR12.4bn, if it takes a 23% haircut on Greek bonds. This will not kill the bank but it will make it insolvent for regulatory purposes, and possibly for the markets' purposes as well.

It is likely that there is some benefit to be had in terms of capitalisation since NBG is more exposed to mortgages and credit card debt than Alpha, which is in turn more exposed to commercial loans. But let's not forget that in Greece's ongoing sovereign crisis, all of these losses are increasingly correlated: the benefits of diversification to the NBG/Alpha hybrid will probably be much lower than they look on paper.

One thing the merger will achieve, when it inevitably takes place, is to create a Greek bank that is way too big to fail and thus a good recipient of unprecedented bailout largesse from the Greek Government and beyond. Such a bank would receive help from somewhere even after a Greek default. Could this be the first of the tactical mergers I discuss in the scenario section?


UPDATE: Under IFRS, if NBG does take over Alpha, it will have to test Alpha's assets (including but not limited to Government bonds) for impairment (i.e. loss of value), which could force it to take a haircut immediately. However, don't hold out for a big haircut because assets will only have to be written down to their 'value in use' - the present (i.e. discounted) value of the expected cash flows from them. This means that NBG can decide for itself how much of a haircut it takes on Alpha's assets by marking 'to model' - i.e. its own estimates of the expected cash flows. In the case of Government bonds, for instance it could argue based on Greece's ridiculous credit ratings that we have a tiny probability of default - less than 10% over 5 years, as opposed to the market consensus of 'DUH!!!'.

IMF-0 NAIVE EGGSTRAPOLASHUN-1 (JUICY UPDATE)

A frequent reader has pointed out to me today that our new preliminary GDP figures are out and they are beyond bad. Turns out the actual year-on-year GDP fall as of Q4 2010 was not 4% as originally anticipated by the IMF and our Government, or 4.2% as per the updated forecasts in January, but a whopping 6.6%. These are important, if preliminary figures, because they involve very significant changes to the previously released GDP figures. They are also not seasonally adjusted, which could mean that the true figure will not be anything like 6.6%.

Whatever the reason, these figures are even worse than my own forecast of -6%, which as you will recall was a pretty pessimistic estimate, even for me. But the point was simple. To me, the recession hadn't reached a turning point in Q2 2010 and therefore a naive extrapolation of the Q2 situation was as good as any rigorous estimate; better, it turns out, because my super-simple calculation did not need to accommodate my wishful thinking. As I explained back in the summer, the sovereign crisis really was just the beginning.

This brings to mind the words of the academics assembled at this event. One said, with all the audacity of an idiot who's marinated in vapid FT discourse until they can just about spew it out again, "I'll let you in on a secret. The crisis? It's over." He then helpfully told me to stop worrying and learn to love Government intervention. I'll let you in on a secret, dear reader. Economics is voodoo-ish enough without Business Administration PhDs trying their hand at it.

But more to the point, both our Government and its taskmasters have once again got their communications all wrong. As I have seen in the UK (and as they will tell you in Latvia), a country will ultimately get through even a really deep recession because, eventually, people (especially Greeks, I am tempted to add) have to eat and drink and take island holidays and take their girlfriends out. They have children and buy bigger homes. They crash their cars and buy new ones. Eventually everyone tires of hearing about how gloomy the economy is; the 'economy' is just an abstraction after all. They reach a point where most can no longer point to a friend or relative who is worse off now than three months ago, and the recession is then over.

Unfortunately, our Government's and our lenders' tactic has been to conceal the scale and scope of our concessions (lest they create widespread unrest and destabilise the Government), so we have to go through the same cycle of despair and recovery every time a new announcement is made.

Anyway the latest data are useful in one more way - they finally make some sense out of the final days of our previous government. The conventional wisdom is that the previous Conservative government decided to throw all caution to the wind in 2009 and spend like never before in order to ensure re-election for itself. So far, so plausible, but why did they need to go above and beyond what Greek governments generally do?

The new data suggest that, just as I was being lectured here on the virtues of the big state and the end of the downturn, the downturn had reared its ugly head in Greece, with quarterly (not annualised) GDP growth collapsing to a terrifying -3% (see below) in Q1 2009.

At first I thought this might be a data glitch, and it may well be - goodness knows our GDP series has had as much work done on it as the late Michael Jackson's nose. However, this is now supposed to be based on primary sources. More importantly, when I checked my other 'bad news' indicators, they all spelled out the same thing: unemployment jumped and the gap in unemployment rates between graduates and school leavers, natives and immigrants, widened dramatically. Essentially, the private sector in Greece had a massive coronary.

I thought I'd santity check this against the records of the European Restructuring Monitor, which contains details of all restructurings large enough to affect over 100 jobs and make the newspapers. Filtering only for restructurings announced in Q1 2009, it reveals some pretty big fish went under:

The shipyards are of course a massively iconic (and thus hideously distorted) sector but I suspect it's the layoffs in the press that really frightened the Conservatives. Having exhausted all possible means of flexible working and straight exploitation (not a word I use lightly in an employment context), publishers were finally laying people off - there really was no future.

That's a little piece of economic history I did not know; it makes little difference beyond satisfying my curiosity. But it just goes to show how bad things can get when panicked governments go for the 'hire' button as soon as something bad happens.

U CAN HAZ TIPPING POINT

As you'll have guessed, I am beginning to worry a little about the possibility of civil unrest in Greece. I still don't think this is a likely outcome, but it's a high-stakes game.

One possible avenue for this nightmare scenario is the smoldering tension between the native population and the large number of immigrants (604,000 legal and 172,000 to 209,000 illegal ones, as estimated painstakingly here) living in the country. Greece got its first far-right parliamentary party in 2007, just as the golden age of immigrant labour had come to a close for our country, and its first neo-nazi local councillor in the 2010 local elections, the run-up to which was marred by racial tension in some parts of Athens.

More recently, 237 illegal immigrants (frequently rounded up to a symbolic 300, which matches the number of Greek MPs) occupied Athens' Law School, taking advantage of the iconic law prohibiting police from entering any Greek University grounds to launch a hunger strike in protest against the Greek state's unwillingness to acknowledge their long residence in the country as grounds for naturalisation. This inflamed the existing debate between Greece's large liberal left and its equally large nationalist population.

So far, so rubbish. But public debates are not fought on facts or argumentation, but on stubbornness and apologetics. As this brilliant paper demonstrates, public debates are ultimately won by the side that can call upon the largest number of unblinking, unwavering zealots. The trick is not to persuade the 'swing voters' or win the enlightened middle ground. It is to harden the new recruits to one's cause into zealots and sow the seeds of doubt in the hardliners of the other camp, force them to concede they may not be entirely right.

In that respect the two sides of the immigration debate are evenly matched in Greece. However, all of this could change rapidly, given the right sequence of events. For instance: one of our artistic darlings, Stelios Mainas, who, after a long acting career, found nationwide acclaim with 'The Island', lately the toast of Greek hostesses over 40, recently got seven kinds of sh*t kicked out of him by a gang of immigrants while wandering in the centre of Athens. His statements are particularly telling:

"I cannot believe what happened to me. They almost killed me. They were hitting me mercilessly for some time. I could not breathe. The feeling of despair I felt at the time was tragic. I would not want this to happen to anyone else. [...] It's logical that people who are crammed into a square metre would want to vent their anger on their fellow man. I was saved by two Greeks, the only ones in a crowd of 150-200 foreigners, and I say this without any national pride. The State should be present. I wonder how one can justify not looking after one's own."

Mainas is in fact a long-time champion of the immigrant cause, having recently taken part in a high-profile gig to support the Law School 300. He noted in further comments that his attackers could easily have been Greek, but that the centre of Athens has become extremely dangerous.

This kind of turning-point event, if repeated enough times, could trigger a backlash - by weakening the resolve of immigrant sympathisers as it becomes extremely clear that nice, decent and caring people with money and kosher politics can suffer at the hands of immigrants. If this happens, the far Right will smell blood very quickly and it's going to be a matter of time until things start getting ugly.

Update:

Getting the measure of anti-immigration sentiment in Greece is difficult but definitely worthwhile. The most recent Eurobarometer survey (carried out in Nov. 2010) suggests that 7% of Greeks see immigration as one of the two biggest problems our country is facing right now and 4% cite it as one of the two most important problems they face in their own daily lives. That's 840,000 and 480,000 Greeks respectively, a veritable army, and both of these figures have roughly doubled since the previous survey, carried out in May 2010. Of course many of these people are not racists, most of them don't mean to cause any harm, and many will be too old to be violent anyway.

According to the European Values Survey of 2008 (data available here), only about 3% of the Greek population (still a cool 360,000 people) had all of the following characteristics:

• Strongly agreed there are 'too many' immigrants in Greece
• Spontaneously mentioned they would not want to live near people of a different race
• Spontaneously mentioned they would not want to live near immigrants or foreign workers
• Did not spontaneously mention they would not want to live near far-right extremists.

Bearing in mind about a third of these are under 38 years of age, that still leaves 120,000 reasonably young people with some pretty worrying attitudes.

I think we can all agree these people are racists. Worryingly, 82% of them would have voted in a 2008 election, a bigger share than we generally see in the more moderate population. The interesting finding, however, is that most of the ones that would vote would not identify with our no. 1 nationalist party or even our major conservative party. Now, bearing in mind this is a very small sample, here's what the breakdown of the racist vote would have been, in 2008 (note that none of the racist vote would have gone to the Communist Party or the Coalition of the Radical Left, our two main parties on the Left): 

This is the current ruling party winning by a landslide, by the way. God only knows what these racist PASOK voters (hardly socialists, of course) are thinking now but I'll bet you they are avid Tro(ma)ktiko readers.

Then again, the number of anti-immigrant activists could rise. By far the strongest determinant of whether a Greek (or any other European for that matter) would say that there are too many immigrants in their country, was the perception of being 'a stranger' in their own country. It's about three times as strong an influence as the statement that immigrants are a 'threat to society'.  As of 2008, an amazing 43.4% of Greeks felt this way. This may sound like a lot, and it is, but it also means we're less worried than the Cyrpiots, the British, the Irish, the arguably distinct case of the Kosovars and of course the ever-tolerant Austrians.  See below (deeper shades indicate greater concern):

BEGGARZ, CHOOZERZ, MUPPETZ!

As anyone who's reading this blog knows I don't believe we can ever pay back our debt, regardless of how it is contorted to fit our ridiculously tight cashflow. From time to time, the IMF and EU also realise this, in the same way that people living their lives happily suddenly become aware of their own mortality and have a brief panic attack.

Usually people's reaction to this is a short-lived spurt of sexual activity, megalomania or escapism, and things then go back to normal. The Troika folks tend to react very similarly in economic terms. In this latest episode they've asked us to speed up our privatisation programme to deliver EUR50bn of proceeds by 2015, with EUR15bn of that delivered by 2013, up from EUR7bn as per our previous arrangement. Then one of their representatives went off-message for a second, to explain that a large number of scenaria have been examined by the Troika, including the selling of our electricity company, as well as beaches and whatever-have-you and that our ministry of finance have failed to offer any objection.

All of this prompted an amazingly intense response from the Greek Government, which has left me puzzled although it was a typically knee-jerk reaction. The Secretary General of our Socialist party, one Michael Kachrimakis, said:

'The representatives of the Troika have crossed the line. What they said yesterday are unacceptable and worthy of condemnation. We will not accept ultimatum-like suggestions or orders on how the assets of the Greek State, the wealth of the Greek People will be utilised. And we allow no one to wag their finger in the face of the Greek people in their own home. They should do this in their own houses.' 

Others went on the record as saying, in various closely scripted statements that the Greek government only answers to the Greek people, that we have debts but we also have pride, and all manner of other verbosities. One clever ex socialist Minister of Finance said the EUR50bn figure was very risky and our Minister for Infrastructure pronounced it impossible. I was particularly struck by this excellent statement by our Minister of the Interior:

"None of those who have an obligation to assist Greece in her efforts to exit this crisis should misunderstand what their role is. And the Greek people has given no spokesperson the authorisation to intervene in the political life of the land."

 
Then our finance minister finally conceded that our new target is indeed EUR50bn by 2015, EUR15bn by 2013. So that is that. This is of course a charade. The Troika does get to tell us what our policies are and that's plain fact. That is the deal. How being told to cut public sector wages or pensions differs from being told to privatise a good deal of public property is unclear to me, but presumably being told on air rather than behind closed doors is somehow demeaning.

Here's some news everyone: loss of sovereignty is demeaning. Being up to our neck in debt is demeaning. Everything else is trivia.

The IMF responded with this short almost-apology, presumably intended to save some our government some face. It didn't. But the spin operation behind all of this clearly worked. On Fbook, educated contacts of mine were rehashing the idiotic line: 'Troika demands the selling off of public property! Down with this sort of thing!"

Here is some context to all of this. Unemployment has exploded to 13.9% in the last recorded month, even reaching 36% for the under-24s - as one reader kindly brought to my attention. The theory is that disaffected youth tends to mean social unrest. In fact that's what the OECD seems to think caused the Greek riots in 2008. I think the moderating variable between unemployment and unrest is the education premium: the global evidence base suggests that economic concerns and even basic needs alone are not enough by themselves to cause social unrest.

So far, the differential is very substantial: male graduates have done much better than school leavers in the recession, which means that staying in education is still a good investment - therefore there is still some kind of hope. To me the brown stuff will really hit the fan when this curve reverses, which it still shows no sign of doing. However, as I've explained, it surely must. The returns to education are inflated by its use as a substitute for skills in the public sector, and with that out of the way, and layoffs possibly on the way, the returns should start falling.

In preparation for this perfect storm of unemployment and loss of hope, one of our army units stationed near Kilkis started drilling for riot control. The drill clearly anticipated included some very very unfortunate references to current politics, with 'rioters' linked in the drill script to the Coalition of the Radical Left, one of our smaller opposition parties. The Government initially denied knowledge of the drill but was then forced to admit it knew all along, but alleged that it was part of an international military drill against civil unrest, as though that was so much better.

Clearly this wasn't going to go away just like that, so our Government needs some kind of PR victory or damage control mechanism, double-quick. This latest bullshit stand-off was meant to provide this. It didn't. With the option default increasingly slipping out of reach, our ticket to Cairo is being processed.

I HAZ A DREAM

One of my Twitter contacts said at the end of 2010: may the new year mark our coming of age as a nation. I know how he feels. For me Greece will be much, much closer to maturity when the Greek equivalent of this is a popular website.

Keep fighting the good fight FullFact!

WE CAN HAZ STATEHOOD? PART II

I covered some time ago the rise and rise of the popular movement for the non-payment of road tolls in Greece. Already this has swelled to proportions substantial enough to prompt strong reactions from the Greek Government - which true to form involved mostly calling people names.

  

My feeling is that this movement is about to metastasize into something far more dangerous. Their very existence advertises to investors that the Greek state cannot honour any obligations arising from licences granted. I've no problem with a weak state mind you, but you'll probably find that citizens cannot opt for a strong state when they are on the receiving end and a weak one when they're on the giving end and this is what these guys are trying to do. It worries me even more that these people have been encouraged by their success so far to extend their campaign to public transport and even hospitals. Then again, compared to the tacit movement for not paying taxes, they are amateurs and their movement is merely a fledgling.

I suspect that this growing non-compliance movement is related to a phenomenon I discussed here. As the influence of regional clientelist networks wanes, political opportunists are trying to rebuild the client base in any way they can. I will not be altogether surprised if the main legacy of the non-payment movement is a new generation of clientelist politicians - perhaps even a single populist kingpin.

But back to our main topic: the refusal to pay tolls. Here the question is, how is this likely to play out? I strongly suspect the Skye Bridge in Scotland is the best example. 

  

Like Greece today, 1985 Scotland was a nation with limited sovereignty and a net receiver of subsidies from a population (the English) which many Scots were not too fond of (some tactful evidence here, some less tactful here). The Skye Bridge was built in response to pressure from local communities and entrepreneurs who felt that the Isle of Skye's tourist potential was being constrained by the limited capacity of the existing ferry system. They were told by the Government that they couldn't have a road for another 20 years unless they were willing to pay tolls for 27 years.

From the outset, the Skye bridge was especially controversial because it placed the Isle of Skye's only connection to the Scottish mainland in the hands of a private consortium. After it was delivered in 1995, the Skye Bridge soon became known as Europe's most expensive toll road and a massive popular movement came into existence calling for the abolition (not the renegotiation) of tolls. Refusal to pay tolls was commonplace and even the contractors' staff were known to make concessions for people they knew to be local residents. The Scottish locals' argumentation was remarkably similar to that of the Greek non-payment movement and they too received a reasonable amount of political support.  

Making non-payment a criminal offense (as opposed to a civil matter, a recipe we're about to try in Greece) did not help because local residents correctly calculated (as many of my compatriots also have) that no legal system can keep up with an entire population hell-bent on non-compliance. Unable to levy charges of any sort, the contractors decided to cut their losses and the UK Government was forced to buy the road back for £27m, in addition to the £33m paid in tolls over 10 years. The contractors wrote off about £100m in expected revenues and probably made a loss in real terms as construction had cost them £39m in pre-1995 money and maintainance had cost them another 3.5m of operating costs. This was obviously much better for the locals, who had now roped in pretty much every other taxpayer in the land to pay for something that benefitted almost exclusively themselves.  

Unfortunately, Greece cannot afford to buy anything back from anyone and I doubt the IMF will make an exception. I suspect that as more countries are faced with this problem, pressure will grow for Europe to step in and finance a low-interest buyback using some new Ponzi instrument. My favourite for this one are project bonds. The Commission will certainly welcome this, and they've even lined up a willing buyer - the European Investment Bank.  

[Barfs]

A COLLECTION OF ZEITGEIST VIGNETTES

I have now been back from Athens for some time and I thought I'd start sharing a small collection of real stories that capture something of the feeling of post-sovereign Greece. Bear with me as I post these one by one.

1. OTHER IMMIGRANTS

As I do whenever I visit Athens, I spent a good deal of my last break at the Pyramids (map), my shisha place in Metaksourgeio, which foreign readers may recall from this. It is owned by an old Egyptian immigrant (one of many that moved with the families back in the days of Nasser) and managed by one of his jovial younger compatriots. I've been visiting for over 10 years - in fact I was on my way back from one of my first visits there when I heard the news about 9/11. Surrounded by brothels, abandoned old homes and the occasional waft of urine-smell, it is a neighbourhood fixture. It has predictably defied our ill-starred smoking ban and I hear it has recently become the setting of a low-budget film.

As I waited for my order of shisha and Sprite with a banker friend, the manager approached and said excitedly:

"They say there's going to be a sweep operation. They'll get rid of all the immigrants except the Egyptians." 

I saw the reasoning behind this; the Egyptians had an existing wave of old, very settled and esteemed immigrants to integrate into. The others did not. I told him I was unsure this was the plan anyway; although the centre of Athens is teeming with illegal immigrants, the Government is far from expert at locating them. That's why they're still around in the first place. He was unfazed by my scepticism:

"I hope they get rid of all of them. These Moroccans, these Algerians, they need to go. They're not good."

The manager has generally always felt that the latest arrivals are the worst. Once it was the Iraqis and Kurds fleeing war; now it is the North Africans, flooding in due to the relaxation of visa requirements in Turkey. He's not racist by the way; I remember how back in 2001 he was more than happy to take on an obviously redundant Iraqi employee just to save him from going back into one of our notorious holding pens for illegals.  But he is socially pragmatic. The newest arrivals are always the most desperate, and his part of town is the most desperate place of all. But for this kind of open animosity to be taking root in the immigrant communities of Athens, you know they must be under pressure.

Remember this graph?

This is where the pressure is coming from. The golden age (such as it was) of immigrant labour in Greece was 2005, and you can read a very good review of how well that was working out (by one of my old professors no less) here. As new private sector jobs, especially in construction, dwindled, the gap in employment between immigrants and Greeks (for whom public sector jobs are effectively reserved) reversed and has been widening rapidly. The immigrants of Metaksourgeio were heavily dependent on contruction jobs: in the past when giving us directions some used to employ the Greek word δουλειά (work) to denote a construction site. It really was that simple.

Speaking of Egypt, my original shisha place was not the Pyramids but Ramses, which another Egyptian immigrant, Ahmed, co-owned with his rotund Cretan wife. I never wanted to leave Ramses but Ahmed gave it up and returned to his more lucrative venture of satellite dish installations (and possibly internet cafes with shisha?) to escape what he saw as a 'bad crowd' - male prostitutes, drug addicts, beggars, the lot. Ahmed was a very frank and endlessly engaging conversationalist, a university-educated horticulturalist and man of the world. His tales of Egypt (which he still visited) were sad but mostly angry. He once said to me:

"In Egypt, I can go to a square in the middle of any city and shout: 'f*** the Prophet, f*** the Book', and as long as I remember to add 'God preserve President Mubarak and his sons' no one will touch me."

I wonder what he makes of events these days. It seems to me that the Egyptians of Athens will happily jig on Mubarak's grave. On the other hand, and contrary to the Pyramids tip, it turns out new arrivals from Egypt are not that welcome. To be fair, there were no signs of an uprising back in January - not to my untrained foreign eye but not to many other people's eyes either. The possibility of a new wave of Egyptian immigrants simply didn't come up.

SPOT THE MISSING COUNTRY...

...In  this Eurostat publication entitled 'Structure of Government Debt in Europe in 2009'

#FAIL

MOBILITY STATZ FTW

I'll comment on this when I get the chance, but here's an amazing new study that ELSTAT just published and I've yet to see covered by the press back home.

Highlights:

• The average duration of a person's first job in Greece was about 4 years. 

• The typical amount of time elapsed between the end of a Greek person's studies and the beginning of their first job was 4 years (coincidence?)
• 11.4% took a part-time job as their first job.
• 50% of Greeks haven't worked in any way before the age of 22. 20% havent' worked by the age of 25.