All Crossroads Lead to Athens

ATHENS (Bloomberg) – In the abandoned building that once housed the Athens Stock Exchange, artist Teo is shuffling between the Fool, the Magician and the Devil in a Tarot card reading to divine the fate of the crippled Greek nation.

Above his head, a flickering electronic installation depicts share prices from 2007 near the market’s euro-era peak, before six years of recession and successive bailouts wiped about 48 billion euros ($65 billion) off the economy.

Temporary home to the Athens Biennale arts exhibition, the disused trading floor has become a mausoleum of former wealth and a hotbed of conjecture. Economists and artists have come together to tackle the question on all Greek minds: now what?

“Greece has become like a chemistry lab where the outcome of the experiment could be something completely new or something corrosive,” said Polydoros Karyofyllis, 43, the Co-Director of the Biennale, which runs until Dec. 1. “We see where science and statistics have led us so maybe it is time to look at art.”

The byword for the financial ordeal that threatened to tear apart the euro, Greece remains the biggest drag on the continent’s ability to overcome it.

With the economy 23 percent smaller and more than a quarter of the working population jobless, Greeks are girding for more pain just as fellow debt crisis victim Ireland stops relying on rescue loans.


On Nov. 5, Olli Rehn, the European Union’s economic and monetary affairs commissioner, said there were more signs the European economy had reached a “turning point” as efforts by governments and the European Central Bank foster a recovery. The same day, EU, ECB and International Monetary Fund inspectors in Athens were being heckled and pelted by coins.

“Greece today stands at a crossroads,” ECB Executive Board member Yves Mersch said on Nov. 8. “If the authorities fail to address the remaining challenges, they will put at risk what has already been achieved.”

Prime Minister Antonis Samaras, who survived a no-confidence vote on Nov. 11 with his parliamentary majority reduced to four, is trumpeting the first economic growth in seven years for 2014.

Tourists are back, as are investors. The Greek stock market is up 25 percent this year, paring its decline since 2007 to 79 percent. Greek bonds have gained 41 percent in 2013, more than anywhere else in the euro region, Bloomberg World Bond Indexes show. Ireland, by comparison, rose 11 percent.

Investors including Paulson & Co. and JPMorgan Chase & Co. put money into Greece this year as worldwide index compiler MSCI reclassified the country as an emerging market.


Yet there’s little cause for celebration among a population that has endured cuts to pensions and wages in return for 240 billion euros in rescue loans. Wages will have fallen by more than a fifth by next year and few households have access to affordable credit. Unemployment is at 27 percent and law-abiding taxpayers are struggling to find the money to pay new taxes.

As international inspectors haggle with Samaras over next year’s budget, Greeks have also been shaken by tit-for-tat violence between leftist groups and the anti-immigrant Golden Dawn party.

“Nowhere in the Eurozone is the disconnect between investor sentiment and economic fundamentals starker than in Greece,” said Nicholas Spiro, who runs his own company in London analyzing sovereign risk. “There’s an inescapable feeling that, not only haven’t Greece’s underlying fiscal problems been resolved, they’re being kicked into the long grass in order to keep the euro-zone show on the road.”


Gross domestic product declined 3 percent in the third quarter, the year-on-year rate of recession easing from 3.7 percent in the previous three months, the Hellenic Statistical Authority said Nov. 14. The economy’s lost output since 2007, based on the quarterly reports, exceeds the entire GDP of Croatia, the EU’s newest member.

The government must dismiss another 4,000 state employees by the end of the year to stay on track with the bailout plan. It needs to plug a budget deficit next year that the inspectors from the EU, ECB and IMF, known as the troika, said is four times the 500 million euros Greek politicians are claiming.

Creditors led by Germany have committed 496 billion euros to fight the debt crisis since 2010. Half of the money has gone to Greece, which preceded Ireland by six months in 2010 heading into a bailout program to repair the economy.

The Irish, who Prime Minister Enda Kenny said will leave their bailout program on Dec. 15, accepted wage agreements, job losses and ensuing drop in living standards with little protest.


They faced up to the reality of change in “a more sober world,” Frances Ruane, Director of Ireland’s Economic and Social Research Institute, told the audience at the Biennale. “You know that expression: don’t waste a crisis.”

Named Agora, the Greek word for marketplace, the Biennale evokes the gatherings of Greeks outside their parliament in the summer of 2011, which eroded support for then-Prime Minister George Papandreou and helped force a second bailout package and the biggest debt restructuring in history.

A rolling ticker on the event’s website mimics stock exchange trades, replacing companies with feelings. Uncertainty is up 1.31 percent, optimism is gaining 0.52 percent, relief 0.27 percent and disappointment has rallied 1.3 percent. Worry is outpacing all, with a 2.89 percent advance.

“There is plenty of worry, but that doesn’t preclude optimism,” said Alcestis Dimaki, 25, who is currently working at the exhibition and will resume looking for a job when it ends. “I love Greece and want to help, but there are no jobs. I may look overseas too, but that’s not my priority.”


The Biennale is dominated by the replica stock exchange board of price movements, a work by local artist George Harvalias that shows a day’s trading shortly before the exchange moved to bigger, newer premises in 2007.

National Bank of Greece, the largest bank, was quoted at 41.40 euros. Today it trades at a 10th of that price. Public Power Corp SA, traded at 20.76 euros, more than double today’s price, even after a 66 percent rally this year.

Coca-Cola Hellenic Bottling Co. SA, the world’s second-largest bottler of Coke drinks, is quoted at 32.24 euros. Today its main listing is in London, having fled the Greek exchange.

At the Tarot reading, artist Teo Moschopoulos, 29, said the cards showed one of the negative forces working against the Greek economy was the Fool, hesitant to take risks, with “no willingness to break norms, to break free of past patterns.”


“The magician talks about new beginnings, the much coveted risks the fool is not willing to take,” Teo tells the audience during his performance, which was designed to “leave this dark tunnel wiser” rather than predict the budget figures.

Across town from the Biennale, in the Grande Bretagne Hotel favored by visiting dignitaries, Costas Mitropoulos, the former chief of the Greek state-asset sales fund, was telling about 400 executives the same thing with the help of PowerPoint slides rather than cards.

At the PriceWaterhouseCooper’s presentation on “Practical Directions for fueling economic recovery in Greece,” Mitropoulos was blunt about prospects for growth.

As the debt Sword of Damocles swings over the country, the future will be won or lost on reviving investment in such things as roads, ports and airports, he said. To do that, Greece needs a “full overhaul of its perception of itself,” he said.

Greece had only two comparative advantages that could draw investment, he said. They were its location providing a trade passage between the east and Europe for goods and energy and as a tourism destination. To do that, he said, the architecture of the public sector has to change, echoing the demands of the so-called Troika of creditors.


“World markets will get bored with us at the end of the day,” said Mitropoulos. “Right now it’s sort of a relationship where they like us on Monday, they hate us on Wednesday, they are OK Tuesdays and Thursdays. The economy needs physical hard money being plowed into the ground.”

For his part, Samaras’ prime selling point to creditors is the return to growth next year, albeit 0.6 percent, and a budget surplus before interest payments a year ahead of schedule.

That, he hopes, will trigger a yearlong promise from euro area partners for more concessions on a debt pile that will be 176 percent of output this year. To keep receiving funds, and qualify for more, Greece needs to be faithful to a pledge to bring debt down to less than 124 percent of GDP by 2020.


“Quasi stabilization in Greece has removed a sense of urgency in facilitating a package of debt relief that both incentivizes reforms and stimulates investment,” Thanos Vamvakidis, a currency strategist at Bank of America Merrill Lynch in London, wrote in a note.

“If the rest of Europe does not make it easier for Greece to repay them, Greece may not be able to repay them.”

Samaras’ budget gains, however, have had little resonance with Greek voters. Opinion polls show his New Democracy party neck and neck with anti-bailout group SYRIZA, reflecting the tense electoral standoff of June 2012 that threatened Greece’s place in the euro.

“The current government is trying to impress Europe by playing the role of the model prisoner,” SYRIZA leader Alexis Tsipras said on Nov. 4 at a conference in Texas. The idea of a Greek recovery is “a piece of propaganda George Orwell would recognize as a lie,” he said.


The government’s five-seat majority in Parliament became four after New Democracy’s traditional adversary turned coalition partner PASOK expelled a lawmaker for voting with the opposition in the no-confidence motion. Rumblings from PASOK lawmakers about a sweeping property tax forced Finance Minister Yannis Stournaras back to the drawing board.

An attempt to change political fortunes by quashing Golden Dawn has had mixed results. The party remains in third position in polls, ahead of PASOK, which had a parliamentary majority until November 2011 when former premier Papandreou’s gambit of calling for a referendum on austerity led to his ouster.

“It is the end of the most acute phase of the crisis, but obviously there can be different views as to whether this economic stagnation will go on for many years without political consequences,” said Riccardo Barbieri, chief European economist at Mizuho International in London.

At the Biennale, the stock exchange building has been scarred with deep incisions in the walls by engineers in the course of testing the building while it lay unused. They fit the theme, said Karyofyllis.

On the first floor, a military junta-era poster, found while preparing for the exhibition, shows a delighted Greek with a mustache bursting through a wall of 1,000 drachma notes, the Greek currency before the euro.

He is holding aloft a 1970 “growth bond” promising steady income and tax-free interest of 6.5 percent, a rate not seen for 10-year Greek securities since April 2010.

“We’re making all these cuts to fix the economy and they create deep wounds, creating a new aesthetic,” said Karyofyllis. “Like a snake, we’re changing our skin.”