Beware of Greeks Bearing Bonds?

Michael Lewis wrote an excellent article for Vanity Fair, Beware of Greeks Bearing Bonds (HT: Lambros). I highly recommend you read it carefully. Lewis is a gifted writer who knows how to get at the heart of the issue.

Over here, in the Land of Zeus, things are much like they have always been, except people are feeling the economic anxiety stemming from internal deflation. But while we only hear bads news coming out of Greece, let me share with you some good news.

I had a chat with an uncle of mine who is extremely well read on Greek economic matters. Here are some things you should bear in mind before you write off Greece:

• The Greek bailout had nothing to do with Greece. European banks were exposed to subprime debt and they wouldn't have been able to handle another major crisis like Greece imploding (no suprise there).
• While tourism and shipping still make up the bulk of the Greek economy, traditional and renewable energy are going to grow in the years ahead. Qatar is investing billions for natural gas production and Libya is now in talks to use Crete as a natural gas hub. A nat gas pipeline will be built connecting Crete to mainland Greece.
• Americans are investing billions (49%) in one of the largest solar farms in Europe up in northern Greece (we are talking gigawatts).
• The Chinese are developing the Greek ports, and will expand their use of these ports as a gateway to Europe.
• The Israeli-Turkish crisis has been a blessing for Greece. Israelis are flocking to Greek islands to vacation. Right here in Crete, I am seeing Israelis all over the place. Russian plutocrats are still vacationing in Elounda, Crete. A taxi driver told me one of them blew 300,000 euros where he booked a hotel for "an evening of fun".
• Greece is also enjoying an influx of Turkish tourists (the ones who make up the top civil service and hold European visas). Greeks have been visiting Turkey for years, and many Greek families on tight budgets still vacation in Turkey.
• The biggest problem Greece has is political organization and internal economic development. Small businesses are still finding it hard to gain access to credit, a widely spread problem throughout the developed world. Finally, the tyranny of insane bureaucracy is killing the Greek economy.

In sum, while everyone has written off Greece, Greek bonds, and the Greek stock market, I would follow the large Norwegian Petroleum Fund who recently gave a vote a confidence to Greek bonds, the Euro and Europe. Over the long-run, you will make money investing in Greece, but you will need nerves of steel to deal with the political and economic turbulence.

***UPDATE***

Petros Christodoulou, the director general of Greece's Public Debt Management Agency, talks about the outlook for Greek bonds.