Why Greece is the next Big Thing!

By 2025, Greece could be one of the richest countries in the world; maybe the richest as indicated per capita GDP index.

Is this possible? Let’s use the example of Apple as a ‘turn-around’ story avoiding any other comparison because of the non-homogeneous elements of the two cases.

Today Apple is the world’s largest market cap company (Apple Market Cap.: $700B, 2015). Are you familiar with the fact that almost a decade ago it was merely generating profits? In 2003 the Share was trading at $1, having a Market Cap of $6B.

What we should be considering is what was the dynamic element of Apple’s success? Its Assets!

… And Greece has Assets!

Those who wish to downgrade the dynamic elements of the Assets of Greece while showcasing the debt status or past bankruptcies the country has experienced, I would suggest that this too is another one of its dynamic elements of success.

There are numerous examples of individuals who today are successful entrepreneurs – billionaires – and have in the past experienced bankruptcy or have been on the verge to do so.

The question is quite simple: If you were an investor or banker, would you invest in or lend money to someone who had previous experience of bankruptcy as well as knowledge of the mistakes that led them in that direction or in someone that has had only success without any experience in failure in their professional endeavors?

It is most likely that the majority of readers will discard the contents of this post. This is something natural when reading about forecasts that are opposed to the current psychological state, namely the probabilities based on the present situation.

In our previous post, we presented our forecast in 1999 concerning high probabilities of a financial crisis in Greece during 2007 and 2010. Our conviction concerning this probability was so intense that we moved our family from the country in time.

Another example was our forecast concerning the course of the Greek Stock Market. I was asked in 2000 by Greek investors (I was then working at a Private Bank) when the Athens Stock Exchange Index would recover to 6300 points (today around 800 points), my answer was in 120 years! No further discussions took place.

THE GREEK ASSETS

A brief reference to Greece’ s assets will be given here for readers to brainstorm. We will elaborate on each asset in the next blog posts. The order of the references are random as they are all considered of equal importance.

Feel free to assess them in your own order of importance.

* The Sun, the Sea & the Mountains

Words cannot describe this asset and of course, no price can be given. The facts speak for themselves: Coastline: 13’676 km (11th in the world – the coastline of Africa is 50’000km), 2’000 islands .

Imagine if a government dares to bring an innovative tax law, allowing wealthy foreigners to move to Greece and enjoy all the tax benefits that the Greek shipowners are entitled to. This, in combination with the excellent climate, the lifestyle and the international mentality (everybody speaks English!) while bearing in mind the increase in wealth in Asia, Arabic countries and Russia, would have great potential, in my opinion.

The benefits compared to the tax relief would be multiple: a positive switch in investor and market psychology (images on Instagram alone would have a huge impact), rapid increase in real estate, increase in tourism and immediate development of foreign investments with initial investors those who would have moved to Greece.

The Mountains: Impressive data: 80% of Greek land consists of mountains (one of the highest ranks in Europe): 413 > 1’000m, 53 > 2’000m. I will just mention one example here: In my hometown, Ioannina, during the winter season at a 30-minute distance from the city, you can enjoy skiing and during the summer months, again at a 30-minute distance, you can swim in the gorgeous blue Ionian Sea. This is quite impressive!

* The Glorious Ancient History

What is the value of the Parthenon, Delphi and all the other ancient monuments? Now, I am not referring to their historical or cultural value. I am referring to their value in money.

When the value of paintings is worth millions, can you imagine the value of these monuments? If you have pieces of art at home, they are considered assets in your tax declaration. Why can’t a country do the same?

I mentioned the trademark of the Olympic Games in my previous post (Interview – October 2009). If the Olympic Games took place every two years (every other time in Athens) and the commercial potential of the Games could bring in huge profits to the country.

Greece could even be entitled to the rights of every commercial exploitation of its history, for example, movies.

* Natural Reserves

This is an issue I will not analyse as you can find all the scientific information on the Internet for yourselves.

* The Visionaries

Greece has more visionaries than pragmatists. Many factors play an important role, which we will analyze in a next post. An appetizer: It is one thing to ‘contemplate’ while being close to the seas and another to live surrounded by mountains.

I would like to refer to my personal history visualization: in the 60s, my parents concerned about what we could produce in the rugged and mountainous Ioannina in relation to the rich plains of Thessaly, together with seven poultry producers envisioned the creation of a poultry cooperative. With the financial participation of a foreign institutional body and their know-how, a company that surpassed all expectations was founded . Today, an entire industry has developed in the region with a turnover exceeding 300M EUR p.a. and which directly and indirectly employs thousands of people.

* The Shipping Power

Greece’s merchant fleet ranks first in the world (2012) both in number of ships with 20% of the world’s fleet and app. 15% of the total capacity.

* The Geopolitical Position

Perhaps Greece is the only country that connects three continents: Europe-Asia-Africa! I believe that the Piraeus Port investment did not occur by chance and there are investment plans for further expansion in Greece.

* The Extra Virgin Olive Oil

Greece has the best quality in olive oil. Quantitative 85% of production is extra virgin, surpassing in quantity the productions of Spain and Italy. Unfortunately,  today it is estimated that only 40% of production operates a trade as a Greek product!

 Of course all these assets will never be able to produce positive results without the active participation of the people involved. The human factor is the most important element of the equation, the most valuable Asset!

As in the case of Apple, behind the excellent assets and the highly-innovative products are the people of Apple.

With the great contribution of the people – the team-, the Leader or the Leadership Team will set the first foundations, but will also take care to maintain the result.

For the achievement of success, society has to create strong bonds that will unite the people and realize that the future and the best interest of the country outperforms any ideological differences. This is where pragmatism is required instead of vision. The Greek crisis has actually allowed the enhancement of family ties and the strengthening of Orthodoxy along with the return to traditions. These are strong examples of such bonds. The more the crisis intensifies, the more people unite.

The role of the State is just as important. The business acumen of people increases as government consumption expenditures are reduced along with the number of civil servants, and continues to increase as public and private large investments are encouraged.

A typical example is the sheep and goat producers in New Zealand, when the state grants ceased to exist and after the negative reactions-frustration, entrepreneurship strengthened with the results we know.

Are you lucky?

Based on my personal experience, I find that the factor of luck combined with the right timing, plays a decisive role, even if someone tries to relieve the model of random events.

A typical example are the talent shows that we have been watching these past few years. There we find that there are thousands, if not millions of talents and yet, in the world music scene, for example, just a few dozen are successful. In their interviews, most of them refer to a sequence of random events that made them successful, beyond their undeniable talent and hard work. Only few have sought to strategically make advances in that direction since their childhood.

So who will take advantage of the wealth created in the country? Who will eventually invest in Greece?

The answer is simple. The very powerful investors, known as “Smart Money”, who realize exactly when the opportunity is given to enter and will allocate just a small portion of their vast portfolios. Time is not an issue; the risk is always limited and measured.

As far as time is concerned, it should be stressed that we determine 2025, based on a cyclical model of the financial crisis and the intensification of the crisis in recent times, not only in Greece but also in the wider region of the Eastern Mediterranean, Ukraine etc. The sooner the crisis will develop, the sooner “smart money” will find the entry point.

But above all, patience is required. Desert nomads in Arab countries were ‘sitting’ on the oil for thousands of years until they reached the right-time to take advantage of the business!

I do believe Greece will be the next big thing!

Thank you.
Thomas Mitsoulis
Economist – Financial Analyst