Jason Manolopoulos, το «επαχθές χρέος της Ελλάδας» μια «δεξιά» ματιά

O Jason Manolopoulos είναι ο συγγραφέας του βιβλίου για το «επαχθές χρέος της Ελλάδας». Πρόκειται για μια «δεξιά» ματιά, σε θέματα, που κυρίαρχος είναι ο «αριστερός λόγος». Και αυτό είναι το ενδιαφέρον της μελέτης.

Ο Jason Manolopoulos  είναι συνιδρυτής και γενικός διευθυντής επενδύσεων του hedge fund "Dromeus Capital", το οποίο δραστηριοποιείται σε αναδυόμενες αγορές και έχει εργαστεί στο παρελθόν για λογαριασμό των Barclays Capital, Merrill Lynch, Marathon Asset Management στο Λονδίνο και Rosbank and Trust Investment Bank στη Μόσχα. Είναι Έλληνο-Καναδός, με σπουδές στο Λονδίνο και μόνιμος κάτοικος Γενεύης.

Δημοσιεύουμε τον πρόλογο του βιβλίου του

PREFACE
As the global recession began in 2008, the Greek economy featured high levels of public debt, a large trade deficit, undiversified industries, an overextended public sector, militant trade unions, widespread corruption, uneven payment of taxes, an overvalued currency, consumers expecting rising living standards and euro membership based on inaccurate data. Yet in February 2009, the European Union’s economics commissioner Joaquin Almunia observed:

The Greek economy is in better condition compared with the average condition in the eurozone, which is currently in recession.

When the head of one of the most powerful economic institutions in the West is making a statement so out of line with reality that it bears comparison with pronouncements on production targets by the Soviet Union, something is seriously wrong. We have to ask some very big questions of the institutions that run our affairs, and we have to ask questions about beliefs and decision making, as well as analysis and data.
This book tells the story of an international economic crisis in which a small country played a crucial role. At the time of writing, it is not clear whether the impact will be cataclysmic, representing the beginning of the end of the good way of life for Europeans, or whether it will force a mere adjustment to the living standards of the old continent. The reasons are micro and macro, national and global. Not a single constituency emerges well from this story; Greek politicians, Greek society, trade unions, leaders of the European Union, the IMF, the world’s investment banks – each and every one has scarcely put a foot right in a collective display of hubris, miscalculation, overambition, deception, mis-selling, folly and, in some cases, sheer greed in a saga that has continued for decades.
Here are the headlines of the crisis:

• The single European currency, the euro, consists of 17 dissimilar economies, and has failed to create a unified currency area. The difference between surplus and deficit nations has widened, in a repeat of earlier experiments.
• The dramatic announcement of 9 May 2010, including an unprecedented liquidity package of more than €750 billion and the abandonment of the European Central Bank’s independence through bond purchases, confirms that the euro was mis-sold as an enterprise to the continent’s citizens.
• The ‘peripheral’ countries of the eurozone face years of severe austerity measures with an uncertain chance of success, placing strains on their political systems and even on public order.
• The aggregate sovereign debt of Europe is now measured in trillions of euros, at a time when the continent faces a demographic squeeze, with expensive pensions liabilities and an ageing society. The world’s rising economies, especially in Asia, are set to eclipse the old continent.
• Greece has been allowed to borrow in excess of €300 billion, despite a largely unreformed economy, overreliance on mid-tech industries, a chronically inefficient and corrupt public sector and an unreformed political infrastructure with immunity for politicians guilty of financial crimes.
• The global economy has been damaged by an orgy of leverage, in which rent-seeking investment banks have turned money into a commodity, creating destabilising investment bubbles and excessive levels of government debt.

This was no act of fate. Nor was it even unprecedented – I will look at some strikingly similar crises from the recent past, and ask why no lessons were learned. The convenient phrase ‘in hindsight’, which we have often read from policymakers following the near-collapse of the European Monetary Union in 2010, is dishonest; these people were warned, implicitly and explicitly. Their piloting of the single currency, the Exchange Rate Mechanism, was a failure. Instead of learning from this, the EU’s leaders built a bigger version of the same, and dismissed reasoned, intelligent critiques of their plan, all widely and publicly aired. The policy errors made in Argentina in the 1990s were repeated, in tragicomic fashion, in Greece in the 2000s. This begs some big questions. We have to stop applying policies that have failed in theory and failed in practice. If medicine had kept pace with economics, we would still be using blood-letting and mercury.
While researching this book, in seeking to cover all significant dimensions – from Greek history to the foundation of the European Union to the contemporary international bond market – I have been struck by the influence of the psychological dimension, and how it is often overlooked. In the investment world, the discipline of behavioural finance is starting to inform us that markets, and the people who shape them, are often not rational, and that an understanding of psychological biases can shed light on how real markets behave. They also affect policymakers and the economists who advise them. These biases appear to contribute to systemic, repeated errors, such as:

• Extrapolation from recent data to project into the future, assuming a level of continuity that is often not present.
• Misdiagnosis, by identifying patterns that do not exist, or exaggerating the level of knowledge held by policymakers.
• Overly confident projections and explanations.
• A tendency to exaggerate the impact of policy intention, and the degree of control of policymakers, as seen in phrases such as ‘too big to fail’.

These psychological dynamics are often hidden behind a wall of data, charts and calculations, yet the politically most important indicators are crude. There is an almost exclusive reliance on the headline GDP growth figure as the key measure of economic performance. This is used to sustain some dangerously misleading statements, such as that of Almunia. It fails to distinguish between debt-fuelled spending and sustainable economic development. This is a symptom of a wider problem, which is to confuse data for performance, and regard behavioural economics as no more than an amusing sideline or a fad. This means that high-risk behaviour – whether it is by reckless investment banks, property developers or national politicians – is not taken into consideration in economic analysis or planning. For example, many commentators have asked me why the collapse in confidence in the affordability of Greek government debt was so sudden in the autumn/winter of 2009–2010. To me, a more telling question is: why did the illusion persist for so long that it was safe to lend such vast sums to such a small, dysfunctional economy?
In looking for answers to what supported the dangerous build-up of debt at the time, one comes across vague metaphors rather than reasoned assessments. For example, the single currency was supposed to act as a ‘shield’ against default; or else it was a ‘train’ leading inexorably to economic development. Faith in these special qualities, which turned out to be illusory, could be every bit as strong in an investment bank analyst, or a commissioner at the EU, as in a grassroots campaigner for European monetary union.
Most analyses of the eurozone crisis are couched in the formal language of economics. This book addresses that dimension, but also delves deeper. I intend to consider the historical background of the particular decisions made, and the psychology that shaped them. In particular, notable cognitive biases are observable. There may be a tendency to think that the elites are immune from such primal psychological forces. This saga illustrates graphically that they are not. So in addition to the well-known political and institutional actors in the eurozone drama, I would like to introduce a supporting cast. These are the cognitive biases that have influenced policy – and which, in my view, have often diverted it from a rational course. For example, confirmation bias refers to the tendency to notice and to emphasise material that confirms your beliefs, and to overlook or downgrade evidence that contradicts them. Herd behaviour, or groupthink, the tendency to follow the herd, is common in both the investment and political communities. Illusion of control, a tendency to overestimate one’s degree of influence over external events, is a common trait of central bankers and organisers of currency pegs. Overconfidence bias, the tendency to let the wish become the father of the thought, has been common in European Union elites.
These biases have played more than an incidental role. They have helped to shape an avoidable crisis.
We spend much time analysing the fallout of economic crises, and devote insufficient attention to understanding their causes. The process of building high levels of debt is more enjoyable for politicians, their electorates and the banks than reining in such activity. Future generations will not thank us for the excesses of the current age. They may even start to look up the definition of the ‘odious’ debt. This is a legal theory, established in the 1920s, which holds that national debt incurred by a government for purposes that do not serve the best interests of the nation should not be enforceable. Such debts are held to be personal debts of the unrepresentative regime that incurred them and not of that country’s population. Could the Greek people cite this, given the off-balance-sheet manipulations to the national deficit a decade ago that had the effect of increasing long-term debt costs? Could the Irish, given that they have been handed the bill for fraudulent banking activity which benefited an unrepresentative elite?
And above all, given the decade-long encouragement of borrowing by unelected European Union commissioners and their refusal to impose sanctions for breaching the deficit and debt limits of the Maastricht Treaty, could the future populations of the EU begin to challenge whether they should pay the colossal bill that the older generation has accumulated? The rush to monetary union and the failure to consult and hold referendums may come back to haunt the EU’s leaders.
These are extreme scenarios, but the point is that the extreme nature of the current crisis is still not being fully communicated by political leaders to their electorates due to the psychological nature of its creation. New narratives are being told, such as ‘we will return to growth swiftly’, or ‘your sacrifices will not be in vain’. In the final analysis, behavioural economics is neither a trendy concept nor a fad, it is all there is, because behaviour also determines economic outcomes. Understanding this requires a conceptual leap for our political and institutional leaders, and they do not have much time in which to make it.