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I just wanted to weigh in quickly while reading more in depth later.

The lost competitiveness story for Greece has always rung hollow for me as well since Greece's two biggest sectors, accounting for half of GDP, are shipping and tourism. Third is banking, though it is smaller.

Nonetheless, all 3 sectors have improved since Greece joined the EU.

I have read numerous times since the crisis started that the euro has caused a loss of competitiveness in Greek tourism, as Greece is losing to cheaper destinations such as Turkey.

But until the recession, Greece was showing a marked increase in tourists over the previous decade. In other words, the euro brought more visitors. So, higher prices AND more tourists? How can this be a bad thing? Only if those increased number of tourists are somehow spending only on hotel, and spending much less on food, drink, trinkets, etc. Highly improbable, I should think.

Take it from me, who travels to Greece often enough, the numbers are not down and the prices are indeed much more expensive than before. I once made the mistake of grousing about 10 euro umbrella rentals on the beach, and the all-inclusive luxury resorts that seem to take customers away from the small family establishments, only to be ridiculed for preferring the dirty hippy days of the 70s and 80s. I admit to it and still liked it better then, but in no uncertain terms, the Greeks in the tourist trade do not.

Until the recession, shipping in Greece experienced its best decade ever. On Wall Street, you actually had traders following something called the Baltic Dry Exchange Index which tracks shipping rates. The costs of hiring a ship skyrocketed. Lots of Greek companies were pulling in dough. Again, they became very competitive.

In banking, Greek entities diversified and brought back notable profits from Turkey.

In short, by all appearances, it would seem that the euro has been very very good for Greece.

I imagine that Greece's agricultural sector has been hit; Greece still produces a notable amount of cotton, and that can't be a good thing when you're part of the euro.

As well, Greece has never really had much foreign investment; the presence of multinationals is negligible. So, it would not seem that Greece has suffered from international corporations uprooting for cheaper territory elsewhere. The largest international corporation is Coca-Cola Hellenic and it employs about 45,000 people.

About the IMF's 75% social spending figure (it adds gov't worker pay and pensions together), I have written on ET in the past about this number, and how funky it seemed to me. I will note however that Eurostat has the same exact number. If you take the number of Greeks taking a pension, assume a very high pension (20k a year) and add the number of Greek gov't workers, assume high salaries (25k a year) you still get to only half of the figure listed by Eurostat and the IMF. So, one can assume that buried in that statistic is a host of other costs which inflate it beyond the actual amount of money that makes its way to the citizenry. The IMF's numbers do agree however with Eurostat's numbers.

by Upstate NY on Tue May 25th, 2010 at 09:25:54 AM EST

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