Welcome to the avant premiere of our new film!

Tuesday, August 5th, 2008

“Greece 1999 – Romania 2008: This reminds me of something…”

The set and script of the film:
1999, Greece. It was a hot summer, probably one of the hottest in the last 20 years, in terms of temperatures. But it was for sure the hottest summer in the recent history of Greece, in terms of economy. The stock market was in an “upwards wave” since the spring of 1998, but that summer almost every day we had new records coming. The artificial wealth spread in the Greek society was beyond any expectation. Almost 2 million Greek families (out of estimated 3 million) were gambling in stocks, receiving almost every day an +8% in their incomes, as prices were going higher and higher.
2008, Romania. The summer is not really hot, in terms of temperatures. But it is by far the hottest summer in the economic history of Romania since 1940 (at least). It is the first time that so many Romanians, not just elite, have money for consuming. It is the first time that people break all records in any possible category of consumption. Some hundreds of thousands of Romanians have received high salaries the last years (for sure much higher than the recent past). An endless number of Romanians have properties with an artificial price of hundreds of thousands, or millions of euro. The discussion is not for downtown properties, but for millions of properties with low value in reality, but with crazy prices asked and 0 transactions for months. These prices have been raised all the previous years, but the big madness was in 2007, when people were changing the prices every day or week.

The secondary roles:
1999, Greece. The arrogance of Greeks (in all parts of society) had reached the highest possible limits. Peasants, shepherds, doormen, taxi drivers, all kinds of people, who had been doing all kinds of professions, had left their jobs and either they became stock brokers, opening thousands of new companies (even some small villages of 1.000 people in rich agricultural areas had 3 – 5 stock trading offices) or becoming “professional stock investors” (meaning… living without working). All day they were in front of computers, checking the prices, “analysing”. The rooms of these stock trading companies were full all day by hundreds of people, who were watching the prices changing in big screens (the first ones introduced in the Greek market), drinking their coffee, from 11.00 to 15.00, the hours of the “game”. Everyone knew “a story”, “a secret”, “someone in the system who knew a lot”, “the magic connection”. Tens of thousands abandoned their work. All of them were refusing to sell a stock, to cash out some of their profits. They were just trading stocks like crazy and in many cases the others were following the “leader” who had made the biggest profits last week. Usual success stories of profits between 500% – 10.000% were spread between the investors and all of them were searching “the next train to success to catch up”. The headquarters of the stock market in Athens had the nickname “The Temple”.
People were buying any newspaper that had “orange pages” (the economic pages) without to understand what it was written there, they just wanted to read any new rumour and to show off to the others as “intellectuals who read the press” (Financial Times made that year the record of sales in the Greek market. I’ll be damned if even 1 in 10 of the new readers was able even to read one article). They all “knew” how big the prices would become, they were sure for the future, spending money like crazy, using their apartments as mortgage so as to take loans from the banks and gamble even more in the stock market. People with a normal life were buying very expensive cars and yachts, while going on vacation to the most expensive places. Even the divorces were higher, with thousands of men in the age of 45 – 55 abandoning their wives for a younger girl.

2008, Romania. In all the hotels of all the cities, you can see people with maps, showing properties. In half of all discussions in all coffee places and restaurants you can hear people talking about lands and properties in general. You travel in the middle of nowhere, they show you agricultural lands and they ask you for 10 – 20 euro / sq. m., for something that can not be developed not even in 20 years. You talk with villagers that do not know how to count until 100 and they ask you crazy prices, because “the neighbour is doing the same”. (at least like this they learned some more mathematics, so as to count the new huge prices they ask, that’s something, no?). Tens of thousands of people move around with a huge arrogance, without really working, searching for the next victim, trying to speculate, to take a rumour and make money out of it.
Employees change jobs every few months, asking more and more money, sometimes before they will even get used to their new environment. As unemployment is around 1%, there are tens of thousands of people who receive salaries that 3 years ago they would not even be able to DREAM about them, but now they are not satisfied and they still want more. Thousands of (not rich) men have bought VERY expensive presents to women, from jewellery to cars and more.
Needless to say that this year Romanians spent more money than ever. People, with salaries of 1.500 euro / month, go to “tour of Spanish coasts and Portugal”, investing 3 - 4 salaries on their vacation. The sales of cars break all possible records and cars which are considered as “high profile” in other countries, here they are considered almost… normal. People talk about hundreds of thousands or millions of euro like they talk about 1 or 2 euro. Owners of properties, from an old, not renovated apartment in a block with red bullet (dangerous to fall in an earthquake) to an agricultural land between “nowhere and somewhere”, from a nice patrimonial villa to a commercial space, are asking for incredibly ridiculous prices. They don’t even discuss something “more realistic”, or they get insulted when someone tells them that the “stupid foreigners with endless money and no questions for the cost” are history. Between you and me, how can they wake up? In the country where money is the king, they hear around them stories for profits between 500% - 20.000%…

The protagonists:
Greece, 1999. The Greek “big businessmen” were also out of control. Moving around by helicopters, trying to show their wealth in any possible way, buying the most expensive villas in the Greek islands. The Cuban cigars hit historical high numbers of sales, with the rich ones lighting their cigars with banknotes, real money. Most of them were trying by all means to have more and more companies in the stock market; they were spending all their day in the stock trading and not in their core activity. Companies with assets of couple of millions of euro were imported in the stock market, with their owners announcing huge plans to conquer the world. The capital increases of the companies were super trendy; some businessmen collected even hundreds of millions of euro by hungry investors who wanted more and more profits.
The serious businessmen, with low profile and strong values, were presented as “old fashioned” and “soon to be abandoned”. Every “big respectful businessman” was describing a bright future and was sure that the market would continue to go up, or if it would be down for few months, it would come up again. All these when he was talking in public, with journalists begging for a word (when you receive black salaries so as to write lies, sometimes you feel the need to justify this money). Meeting a “big businessman” was more difficult than meeting a minister, or the Prime Minister himself. Some of them brought bodyguards even from USA, or China, or directly from the protection team of European or American Leaders (so as to… be able to go and eat their special beef filet safe, sure that the cow will not attack to them).
Romania, 2008. Many Romanian (new) tycoons, after having bought all possible cars / apartments / villas to show off, after being in the media for their relations with cheap starlets or serious ladies (to who they bought presents from apartments, one week shopping in Paris for as much as she could spend, up to God knows what), are treated like small Gods by the majority of the people. Why? Because they simply have money, it doesn’t matter how (and if) good or intelligent they are. They move around and almost all of them receive treatments like they are kings at least (without mentioning their private armies, for “protection”). Their way of spending money is almost… “Russian”, to start from paying 10 – 20 times bigger tips than the rich foreigners, up to anything else you can imagine. Some of them are really desperate to present their wealth in public, spending sometimes in one day the amount of money that a normal person will earn after 10 – 15 years of well paid work.
In business, most of them are involved in Real Estate. So the majority DEMANDS huge prices for selling something, they propose humiliating (as most people say) collaborations, they want all benefits for them, most of the times based on the… strong argument that they will give the chance to someone to have the honour to be partner with them. For this honour he should not care for big profits (or profits the first years). Usually they have bought properties in so many places that many times they don’t even know them (as they claim). The approach of most of them is that there is a problem now that all the people have “woken up” and they ask for big prices. But when they do the same (or worse), they find it normal. Because they are not “just” people…

The crisis / problems:
Greece, 2000. The stock market had started trembling since September 17, 1999. But the Government interfered in the gambling, giving orders to state institutions to buy stocks every day, so as to maintain the prices in good levels. People were not selling and cashing out, expecting the prices to go higher again, as their “sources” had promised them even higher profits. The elections of that year were based on the governmental dilemma “you want us, so as the stock prices to start rising again, or them, with who you will risk losing your huge profits?”. The Government won again, but of course nothing stopped the fall. “Why?” people were crying in televisions and radios, searching for the most inventive conspiracy theory, so as to explain the obvious truth which they were refusing to see: Because when a price is not justified, sooner or later it will return back to reality. No one wanted to realize that a company without profits is a dead company and the sooner he should sell its shares, the safest he would be. No one was searching for the reasons; no one was trying to find the signs of the “hurricane” approaching. No one? No, sorry, it was just 90% of all these “investors”…
Romania, 2008. The prices have been frozen for several months. In many cases, they have been fallen, officially by 10%, in reality much more. NOONE is selling anything to anyone when he is asking a ridiculous price. Thousands of owners still go from agency to agency; proposing properties with prices overestimated sometimes more than 200%, offering to these agencies big commissions (added extra on the price) if they find the stupid investor. Whoever really wants to sell, he has to… land down to reality, making the transaction in a real price, far away fromexaggerations.Almost all people don’t really (want to) know why this is happening, but they keep saying that from the winter the prices will go up again. They don’t care to crosscheck why someone would pay their super big price, they refuse to understand the basics of economy, or they prefer listening to the voices which sweeten their ears. Lately they started checking in daily basis all the real estate editions and supplements and they appear in meetings trying to justify their big prices based on what they saw there… “yes, but in that area, someone is asking THAT price, so its normal for me to ask THIS money”. They don’t wake up to understand that without to expect a good profit, no one invests just to make them rich. Too bad for them…

The end of the film:
Greece, 2003. The prices started going down for 3 years, non stop. The losses were up to 99%. Tens of thousands of families lost all, with properties under liquidation so as to pay their debts, hundreds of thousands of families lost 10 – 20 years of hard work, many described their loss as “the money I collected in all my life”. The typical example says: Someone bought stocks with 5 euro / stock. He refused to sell at 50 euro. Then 40, 35, 25, 18, 10… He was saying “if I sell now, I lose THIS amount” (meaning he would have less profits). He finally sold either around 2 – 3 euro / stock, or he still has the stocks today, having a value of 0.30 – 0.60 euro / stock.
The vast majority of the normal people remember the late ’90s and the year 2000 as the last years they enjoyed a very high level of life, which was artificial. They felt rich and spent money they didn’t have (later on they tried to maintain the same level of life by borrowing money from the banks, in consumer loans or credit cards, like the rest of the world, but it didn’t work for most of them). The second villas were abandoned, the expensive cars were sold, and busy social life was replaced with careful moves and counted expenses. The examples of thousands of “ex-rich and big” who returned to their real world, back to their cows in the villages, their taxis etc (or became again electricians, plumbers, builders, farmers) helped a lot of people to wake up, even late. Many of them realized what they did in the past and this is why when the market was up again almost all of them remained passive, being afraid to invest again.
Almost 70% of the “big businessmen” didn’t survive when the prices went down. They lost all. Many people were saying “it’s impossible to lose all, when you have 3 – 4 billion euro”. Well, they did lose all, as most of the money was artificially created and really spent in stupidities. Also, it was found out that there were many lies in the stories of the journalists, who were exaggerating regarding the real financial status of these people. It was proved that they bought many companies (paying huge prices) without any reason, just adding loses to their core business (which was also abandoned for years). Yachts, helicopters, giant villas and private jets were lost or resold for minor amounts. Huge projects and investments were abandoned, as they didn’t bring any profit. Their expensive girlfriends found new sponsors (but even these girls accepted less benefit, as people stopped being so generous anymore).

What happened to our Greek… heroes? Who survived?
- The serious businessmen who didn’t forget their business, who invested the money in real assets, who planned and saw their business multiplying profits in the next years. These leading companies, the banks included too, are the ones which are the columns of the Greek economy today.
- Also the big crooks, who left the stupid thousands of shareholders (who “knew all and had guaranteed sources”) with useless stocks, while they exported the money from their companies to all possible destinations.
- All the ones who sold fast, or sold with less profit, or accepted a fair price for their portfolio. They had a plan, with a beginning and an end, not waiting for more and more profits to come. These ones re-invested their money to something else and now they have doubled or tripled their real portfolio.
- The ones who didn’t invest, or avoided all exaggerations. No one is forcing anyone to invest in something SUPER expensive, so as to hope after to become even more expensive and to find a stupid to resell it.
- The ones who realized that the market never ends. They invested in REAL values and even if for a period they were in losses, they returned back to profits, because their chosen companies produced great results.

You don’t tell us the end for Romania? What will happen here?
From September you will have more feedback, stay tuned! But I am sure that you get the main idea…
PS. Many of my readers will accuse me for exaggerating, or for not describing all the truth. I know, it is really very difficult to see ourselves in the mirror (tell me about it, I always start diet and I keep getting fatter). But this is the reality I lived in Greece some years ago and this is the environment I perceive around me in Romania today.
Ofcourse there are also serious people everywhere, in both countries too. But they represent the minority of the society today, this is why I usually refer to the majority. And unfortunately I have endless numbers of examples so as to justify my words…

Welcome to the avant premiere of our new film!

“Greece 1999 – Romania 2008: This reminds me of something…”

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