Sizable cuts in production costs will be a major issue in the economy in coming years, as, particularly at the present juncture, the rate of return on invested capital is coming under pressure. Cost cuts mean lay-offs, pressure on suppliers to reduce their prices, trimming indirect labor costs (mainly social security contributions) and pressure for lower company tax rates. Greece is only just now entering this phase. In recent years, attention has – quite rightly – been focused on the huge cost of the broad public sector, which remains a major issue and will have to be tackled right after the next election due next year. However, the electoral cycle is not favorable to the needs of enterprises. We should have, logically, begun an effort toward restructuring the business sector at least two years ago. This did not happen, largely because of the stock market exuberance which concealed the real problems of hundreds of enterprises. Now that the repercussions of the global crisis are reaching Greece, the necessary adjustment will take unexpected forms, unknown in our experience. The main features of the problematic situation we are facing are the following: Company incomes are falling as turnover declines; the cost of production remains the same or is on the rise; debt servicing is becoming more difficult, despite lower interest rates; and the risk and costs of new investments are increasing. Such problems inevitably spill over onto banks. Their forecasts for future bad debts are rising as more firms declare the inability to continue. The fall in investment and the stagnation in the economy mean a drastic fall in bank business. Commission income from stock market business has crashed. At a global level, banks are dealing with this situation in practically the same way with mass lay-offs in the analysis and money market departments, renegotiation of remuneration packages, sell-offs of non-core activities, voluntary retirement programs, cutting down on growth plans and new investment in order to reduce amortizations. The strategy of cost reduction is described in a key word for all enterprises: downsizing. How easy is it for Greek enterprises to move in this direction? Not at all. Electrical goods chains, which paid dearly for their expansion, may be shutting many of their stores but banks cannot do the same. A UBS Warburg analyst noted in a recent report on the European banking system: «High inflation, combined with an inflexible cost structure supported by strong and militant unions, leaves little leeway for controlling costs in an environment of lower revenues.» These problems are well known in business circles. But no one is expecting any improvement; the pressures exercised on the government for various reasons make unlikely the adoption of any measures that would facilitate the salvation of enterprises with an orderly, gradual and controlled reorganization of production costs and the rationalization of the market. Once again, the political cycle becomes an obstacle to necessary adjustments in the economic cycle. The same circles, however, note something else which has its own, separate, significance; they find that many businessmen who have shown leadership in the past now appear weak, with a lack of imagination and stamina, dependent on political or political-business interests. And for the first time in recent years, there is talk of a renewal in leadership in these enterprises. They are seeking ways of making enterprises independent of politicians. They see social conflict coming and dream of rejuvenating business ethics.