Greece matters!
In our report this month our Managing Partner, Ken Marlin, writes about why Greece matters – see his commentary below:
I am worried about Greece. I am not worried about Greek clients, we do not have any. We have worked with information technology companies in 26 countries – but we have never had a Greek client, buyer or investor for one of our clients. Italy, Ireland, India yes; but not Greece.role
Personally, I feel bad for the Greek citizens but, from a business perspective, I am not directly affected by Greece’s economic problems, although I know that they are huge. As I write, the news reports that Greece is about out of cash and that it owes creditors something like $350 billion (about 175% of its GDP) which it can not possibly pay back – ever. Its banks are closed, ATM withdrawals are limited, unemployment is over 25% and climbing, and people with brains or money are looking to get out. The ECB has stopped lending because Greek leaders have declined to make cuts that will drive down the economy further, at least in the short run. But, from a purely business perspective, Greece is a tiny country with 0.3% of the world’s GDP. There are plenty of small countries with problems: Iraq, Afghanistan, and a lot of African countries have their own significant challenges. Besides, Greece’s problems are largely of its own making: its politicians have been spending more than they should for decades, half the population is on the government payroll, corruption is rampant, and tax evasion is a sport. 75% of government workers retire by 61 – some as young as 45.
I am worried because if Greece defaults, a 60-70% probability according to some, that can lead to flight from the Euro, an increase in Russian influence in the Balkans, and perhaps contemplation of further defaults by Italy, Spain, and Portugal (all of which also have large debt burdens). And that is not good for business.
Almost half of our buyers and investors come from Western Europe (the Eurozone) and a large portion of the rest are dependent on the Eurozone for a large portion of revenues. An unstable Europe may cause many business leaders to hesitate to trade cash for the uncertain promise of what is to come. I do not envy the task of Mario Draghi, head of the European Central Bank, but I certainly am rooting for him to find a way to keep the Eurozone stable. Anything else is bad for a lot of folk around the world, including us…
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