Another week is gone. Very soon another month comes to an end. And on August 18, 2015, DNotes will be 18 months old (1&1/2 years). It will be great if DCEBrief is ready for launch. It is possible but may not be likely because a lot more work needs to be done. I will try to focus on it this week as much as possible and can use all the help I can get.
This past week has been particularly challenging. I don’t remember the last time I went to bed at 10:00 p.m. and the next thing I knew was 6:00 a.m. Guess I maxed out both physically and mentally. Daylilies in our gardens are at their peak bloom and a lot of them are one of a kind we created a few years ago. They are stunning but take a lot of hard work, just giving them minimum care. I hope Joe will have time to take a few pictures at the farm and share them with us; 38 acres of gorgeous daylilies with thousands of our own creations. That is easily 100 times more than what we have in our gardens.
I must have responded to over 300 emails last week. Quite a few were the result of my participation at the Inside Bitcoin convention in Chicago and the Chicago Bitcoin Meet-up. Most of them were from my LinkedIn network, which interestingly enough are getting an increasing number of requests from the media. Although most of them are just curious, that is still a very good sign.
Greece financial crises have been on my mind all week. Frankly, it is very frustrating and depressing to think that there are viable business solutions but since DNotes is still in its infancy, for all practical purposes, we are not in any position to be of help. Now that the European Union and the European Central Bank “own” Greece, adopting a digital currency is totally out of the question. I appreciate that at one point CCTV was interested to interview me on that interesting possibility. The interview is now on hold.
In my opinion what we have seen is the worse of mankind in exploiting the helplessly weak party on a large scale with no regards for the financial hardship and desperation of millions. I am deeply troubled and fear that its negative implications will be far reaching, affecting everyone worldwide in varying degree. This was what I said a few weeks ago, “This is a very sad and tragic situation. The rich may end up losing a vacation home in a foreign country but many of the less fortunate are at risk of losing their entire life savings, while being too old to rebuild their nest egg. It is even more depressing when no viable political solutions exist to give Greece’s citizens any hope of rebuilding their financial future”. This is how I feel about today, “There will be so many restrictions in the final agreement, it is going to be like forcing a patient in intensive care to donate blood”.
It is a harsh statement. The facts remain that political solutions are meant to bring relief to the creditors while squeezing those who can least afford to give up more. A better business solution would be to issue a “ground halt” on all payments due over the next three years with zero interest accumulation. Bring in volunteer entrepreneurs worldwide to work with local business owners and focus on viable business solutions. The European Union, ECB, IMF and other international organizations should focus on working with the Greek government to develop the most favorable business environment to promote local and international business and trade. A significant amount of the “relief funds” should be allocated to assist new business development. Adopt a digital currency like DNotes and make Greece the world headquarters of digital currency and blockchain technology.
The situation in Greece is awful, it's equivalent to having a heart attack following 20 years of poor diet and lack of exercise. I have so much sympathy for the Greeks situation, but this was always going to be the conclusion.
Historically it has been the young who are punished by economic turmoil - in the past when a nation or group owed another too much money, the young would be sent to war; today the economic burden incurred by one generation are passed on to the next. This is not only crippling to the poor, but also to the young: there is now massively reduced opportunity for youth in Greece (50% youth unemployment...), and of course by all definitions that is considered 'poor'. DYNA is correct when he stated that the negative implications are both far reaching and tragic, and not just because people may lose their savings, careers and happiness, but because both the Greeks and the EU's political leaders have ensured that recovery for Greece is nearly impossible. I believe that most here are already familiar with the debt situation in Greece, so I will focus on another aspect that I find worrying.
Demographic change from emigration overseasJust like can be seen with Mexico, tyrannical and corrupt Governments find it favourable when their citizens leave overseas to earn income in a foreign country, and send large amounts of it back home in remittances. This means that there is a giant influx of money from former citizens into the country for the Government to play with via short-term GDP growth, without needing to provide any public services to them. There have been several mass exodus's of Greek citizens from Greece to other countries, and some of the most recent include more than a million migrating to Germany from the 50's to the 80's and in 1982, the remittances were 382 million dollars per year which was more than one QUARTER of Greece's Gross National Product...
This is such a crucial point to understand about Greece and other places that experience brain-drains as a result of hostile Government taxes and regulations. Some provisional study has suggested that it is the people with the most intellectual potential that leave the most, and the fastest. I would almost go so far to prove that it is empirically known that the most intelligent people in a country drive economic growth. It is not the 'average IQ' that matters the most, but the 'peak IQ' of a country, or 'how bright' the best in your country are, that drives economic growth. Greece is especially hostile to achievement with high taxes and punishment for free-market activity. Intellectual capability is also an extremely hereditary trait, so when the intellectual elites that drive economic growth are encouraged to leave, they take all the future economic growth with them because they are likely to have the more intelligent children. We are talking 1 million Greeks in Germany alone from 1950 to 1980... and a sixth of Greece's population moved to the USA. The EU's freedom of movement through the union has not helped Greece hold onto its brightest.
"The first wave of emigration was spurred by the economic crisis of 1893 that followed the rapid fall in the price of currants - the major export product of the country – in the international markets. In the period 1890-1914, almost a sixth of the population of Greece emigrated, mostly to the United States and Egypt." -
http://www.migrationpolicy.org/article/greece-history-migrationIt normally takes a generation for these demographic changes to be realized, when the remittance payments cease. The hostile economic environment Greece has today, will further entrench this demographic reality. Greece needs its best and brightest for recovery, we need to encourage them to stay!
For this reason, I love Alan's (DYNA's) plan for Greek recovery. I do not claim to know what is the best 'detailed' approach to fix Greece, but Alan's loose approach is pretty bang on. While Alan's proposed halt on payments at zero interest may appear unfair to Greece's much poorer neighbours who are struggling with much lower standards of living (and I agree with them), it is probably the best means to achieve recovery if every step is incorporated together:
1. Cease all payments of Govt debt to international banks / EU, provide 3 year inflation adjusted amnesty.
2. Reduce taxes, bureaucracy, red tape and all other infringements to free-market activity to encourage Greece's best and brightest to stay in the country, and more to the point, be more compliant with the country's tax payments.
N.B. When taxes are less progressive (flat-rate) and lower, tax dodging via trust funds and overseas accounts decreases, often leading to higher Govt tax intake.
3. Massive drive to encourage new business activity with new investment and skills transfer from top entrepreneurs world-wide as Alan (DYNA) suggested. Digital Currency could play a massive role here. Specifically, foreign nations with Greek heritage can mentor and help rebuild Greek economy.
4. Look for digital currency integration as an alternative to the EURO, giving consumers a choice on how they wish to hold their life savings. Digital currency has positive value and will always be fully funded in a wallet account, rather than a bank, where only 2% of the money supply actually exists (so when more than 2% of the total money supply is demanded... well... you saw what happened at the ATM machines when the money didn't exist...)
N.B. Digital Currency would also lower transaction costs for trade through elimination of merchant fees, increase economic activity (estimated at 1% reduction in end user good prices - also lifts quality of life through increased purchasing power.
5. Hopefully get partner bank to work with Digital Currency, or many!!! This would mean financial integration world-wide, and mean Greek's can borrow from the world market (financial competition). This difficult goal would mean that there would exist a free-market that Greeks could borrow from, rather than being subject to the incentives to over-spend provided by their local government / ECB's decisions to lower / increase interest rates. The finances would also be very simple to move around with the zero-fee's offered by Digital Currency.
Change the culture, change the regulatory environment, change the money. Greece needs to hold onto its best and brightest and stop the brain drain, the aforementioned points will help achieve this. My own country NZ has endured a brain drain for several decades, because there is so much more wealth and opportunity in neighbouring Australia (and we can live there without special visa's). Only recently did this trend begin to reverse, NZ has become more competitive in many areas, including becoming probably the worlds most business friendly nation (Heritage foundation rates us 3rd I believe). We still lag behind in quality of life and average income, but the progress New Zealand has made is positive. Greece could look to NZ as a model to follow.
There is much more, but I prefer to leave this loosely written to spur further ideas. I'm so happy with how DCEBrief.com is shaping up.
