Friday, January 12, 2018

Driving Ms. Hellas

Another alternative data set which better follows Greek economic conditions than headline GDP figures.

First-time vehicle registrations are up in 2017 for the fourth year in a row, now higher than 2011 levels.  More significantly, the rise comes from pricier automobiles (+22.1%) and trucks (+14.6%) rather than cheaper motorcycles, which were down 28.2%.

 While still very far from the unsustainable debt bubble days of 2000-08, the rise is indicative of core economic growth precisely because of the absence of auto loans.


  1. Hell, what is thies piece about? It make for some uncomfortable reading.


    1. OK, the article is a mishmash of truths, half truths and outright falsehoods. Something akin to "lies, damned lies and statistics".

      The mountain of debt owed to the state by taxpayers is 90% very old and completely uncollectible, it has been there for decades. Lots of it comes from annual penalties and interest accruals, too. Something like 85% of it is due to just a couple thousand entities and individuals. Basically, it's a very large and very meaningless number. The Tax Authority should clean out its books, but then again it would be open to stupid accusations of "favoritism" by populist politicians.

      Strikes: right now strikes can be called by union leaders, without holding a workers' vote. By American standards, therefore, every single strike was basically a "wildcat" strike. This was obviously a major drawback to industrial relations and, thus, investment conditions. It was high time it was changed... in some other EU countries, for example, it takes a 75% majority to strike.

      Electronic auctions are definitely NOT "at the push of a button". They address a very serious and long-standing problem in Greece, where auction "scavengers" would blackmail and/or disrupt the process held in lower courts.

      And last, but not least, the writer exhibits awesome lack of bond market knowledge: just because the Greek 2-year yield is lower than the US doesnt mean it is less risky. For one, this is a cross-currency situation, where euro rates in the short end are still negative... i.e. wrong to just compare interest rates.

      For a real credit risk comparison, look at Credit Default Swaps: Greece is around 335bp, the US at 18bp.

    2. Hell, much obliged for those clarifications. Caveate lector.

      " .... half truths and outright falsehoods. Something akin to "lies, damned lies and statistics"."

      Eh - you mean Fake News, Alternative Facts, and Trumpy tweets. Gottcha!

      On subject of Bonds - is there a difference between Gov Bonds and Corporate Bonds? That is, is one more or less financially 'risky' - or what? Thanks.


    3. Government bonds are obligations of the State and are backed by the full tax and other revenues of the country. Sometimes, even State assets may be mortgaged to back the bonds. As such they are theoretically more secure than corporate bonds - but, it depends on the State, of course... Right now, Greece has a much lower credit rating than, say, IBM.

      Corporate bonds are obligations of the corporate legal entity, and come in many flavors.. they may be subordinated to other obligations, mortgage bonds, etc.