Mind the bubbles
Locked in the sixth year of a gruelling recession, debt-wracked Greeks are desperate to see some light at the end of the tunnel. The country’s politicians naturally tend to respond to this need with the usual clutter of overly optimistic predictions and positive statements, but the country is at a point where politicians need to be very cautious. People will no longer tolerate empty promises and the cultivation of excessive expectations that cannot be fulfilled with any degree of certainty.
Some government officials are, for example, wrong to insist that growth will come in the last quarter of the current year, or the first quarter of 2014. The Greek economy has obviously hit rock bottom and it will, at some point, begin to recover. But what is the point of making predictions that will soon be forgotten if they come true? And what is the point of making predictions that will backfire, should they not materialize?
The same goes for the cultivation of overambitious expectations about what is going to happen in the wake of Germany’s federal elections later this year. Let’s keep our expectations low. The International Monetary Fund (IMF) and Germany are certainly set for a clash over a Greek debt restructuring, but any prediction on who will prevail is risky and unwarranted.
Meanwhile, we also need to be wary about the course of the stock market. The worst thing that could happen right now is a speculative bubble on the local bourse that would hit small investors and benefit a small minority of big players. Greek society would not put up with finding out that, once again, a few were reaping benefits as the others were left out of the party.
The country’s politicians also need to maintain a responsible stance and to fully explain all the risks involved in any investment effort in the current economic and political environment.
The Gazprom flop on Monday dealt a heavy blow to Greece’s ambitious privatization program and demonstrated the dangers and pitfalls hidden in the effort of the coalition government to lift economic sentiment in the country. The shape of the economy depends on the mood of the market – this has been more than evident in the past few weeks.
The conservative-led government has a very delicate balance to maintain. That said, it is hard to explain the self-defeating pessimism of the doomsayers from the leftist opposition.
We don’t need bubbles and we don’t need disasters either. After all, reality will continue to linger for years in that scary grey zone that justifies neither unchecked optimism nor doom and gloom forecasts.
