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Comment by discardorama | Hacker News Reader

Ignorance alert: I'm no economist nor an European.

Since Greece's economy has been in the doldrums for a while, I'm wondering why don't European powerhouses (like Germany) move some manufacturing there? Greece is a popular tourist destination; so how come I'm not hearing of lots of outside money moving in to buy hotels, resorts, etc.?

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Greece is quite corrupt by western standards. Their previous minister for defense is serving jail time for bribery. Politics and society are based on clientism and patronage rather than rules and an independent legal system. This is why tax compliance is so low. Even the ownership of land is murky (they've spent 20 years and 100m of EU grant money attempting to build a basic land registry with little to show for the money). So without connections it's quite a hostile environment to operate a business.

Edit: seems I'm getting downvoted for some reason. So here are some links: http://openeurope.org.uk/blog/reforming-greece-easier-said-d... http://www.nytimes.com/2013/03/05/world/europe/former-greek-... http://www.transparency.org/cpi2014/results

The current minister of finance in Germany had to resign after accepting 100,000 DM from an arms dealer, and is director of The Institution for Growth which he suggested 50B in Greek assets be transferred to. More blatant corruption would be hard to find. Yet somehow he has the chutzpah to lecture Greece on financial probity.

https://www.kfw.de/KfW-Group/About-KfW/Vorstand-und-Gremien/...

I know you are being rhetorical but even New York Times would agree the Greek government is more corrupt than the German government. Some level of corruption is inevitable in every ruling class; an old Chinese saying is that pure water has no fish: no one will work in a graft-free institution. Your rhetorics is not helpful at the current critical juncture; cooler heads must prevail. It is far more important to consider whether the existing economic, financial, and political arrangement is sustainable and whether Greeks may be better off with a clean slate. A massive European aid program is necessary in any case and the current level of Greek debt is unrealistic. Why not acknowledge the facts and spend money on people to help them get back on their feet and at least reap political good-will, which is sorely lacking right now. Muddling through has not worked so far. If a fourth bailout becomes necessary, it will be a political earthquake with strategic implication for the rest of the world. God, I hope it does not come to pass.

> Why not acknowledge the facts and spend money on people to help them get back on their feet and at least reap political good-will, which is sorely lacking right now.

Because giving Greece more free money will not make the Greeks reform their country. Debt relief would just mean that they could borrow more money on the market and let the party continue.

Debt relief (even more than the huge amounts they've already received and squandered) is very much in the cards and has been all the time, if only they would reform.

"Debt relief (even more than the huge amounts they've already received and squandered) is very much in the cards and has been all the time, if only they would reform."

Debt relief has been discussed, but has been blocked by the German government, even despite the German finance minister admitting the debt was unsustainable...

http://uk.mobile.reuters.com/article/idUKL8N0ZP3P720150709?i...

"Europe's legal set-up therefore gives government leaders sufficient space to strike a debt restructuring of some kind for Greece if they want to. The issue is how far they go with any reprofiling as part of a potential deal with Greece.

German Finance Minister Wolfgang Schaeuble said on Thursday the IMF was correct in saying Greece's debt was not sustainable without a haircut, but he added: "I think the leeway we have ... is very low.""

I know you are being rhetorical but even New York Times would agree the Greek government is more corrupt than the German government.

I was trying to point out the moral relativism at work in painting Greece as a hotbed of corruption, and Germany as paragon of financial virtue.

What I think is not helpful here are moral arguments over debt full stop. Nation states are neither moral nor people, and you can't 'teach them a lesson' which is the basis of much rhetoric around Greece at present.

> and is director of The Institution for Growth which he suggested 50B in Greek assets be transferred to. More blatant corruption would be hard to find.

That is /highly/ misleading.

https://en.wikipedia.org/wiki/KfW

"It is owned by the Federal Republic of Germany (80%) and the States of Germany (20%).[3] It is led by a six-member Managing Board headed by Ulrich Schröder, which in turn reports to a 37-member Supervisory Board. The chair of the Supervisory Board changes annually between the German Federal Ministers of Finance and Economic Affairs; the chairman for 2015 is Wolfgang Schäuble.[4]"

Other members of the supervisory board (from the list you linked to) are members of the German parliament, trade union leaders, other federal ministers, ministers from various German states, etc.

That is /highly/ misleading.

I disagree, I think it's highly improper that he even suggested money be given to an institution in which he has influence (currently Chairman of the Board), and which disburses money to German companies (Germany being one of Greece's creditors so not a neutral third party). Particularly given his history of fraud and corruption.

If money/assets are to be held in escrow, they should be held at a completely neutral third party.

Greece wants access to other people's money. Those people can demand pretty much what they like -- if Greece doesn't like /that/ they can borrow on the free market (and pay dearly for their CCC- rating).

Collateral must always be placed where those who lend the money can get at it if the borrower breaks the terms.

Germany was in no way alone in wanting collateral and the rest of the Northern EZ was fine with having Germany/Luxembourg in control of the "Treuhandfonds". But it could also have been placed in Hamburg or Helsinki and they would still have been okay with it.

(It was, as you might know, not to be placed directly under KfW but under the IfG in Luxembourg probably precisely so that it was not under Germany's /direct/ control.)

It should in no way whatsoever have been placed in Athens under Greek management, though!

Can we at least agree on that?

You are getting downvoted because you hurt the feelings of many HNers by saying something truthful.

So are you ;)

1) It's expensive. Greek industry itself has moved to the balkans, and china. Many greek businesses run through cyprus to survive (low tax).

2) laws not being enforced in places where they should.

3) lets just say, the greeks have been spoiled by a decade of easy lending and dont have the greatest work ethic.

4) Many hotel chains have been sold in the past decade. Tourism doesn't make as much as you think.

> so how come I'm not hearing of lots of outside money moving in to buy hotels, resorts, etc.?

In the leisure industry that'e been happening big time on the Premium level for the last 10 years and now slowly at the Luxury level.

As for European/Global industrial powerhouses it's always been the red tape and government agency middle men that has been the main friction for moving in.

Whats happening is that these hassles are being removed as Greece gets more in line with European regulations.

Corruption.

It's not a coincidence that money had vanished. German manufactures will face extortion that will draw away any perks provided by low cost of living.

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