Welcome to my blog, I am a Professor in the Department of Management of Culture Environment and New Technologies of the University of Patras, Greece(*).

My research focus on Keynesian behavioural economics and global finance for achieving economic prosperity; innovation in public policy engineering; the impact of culture change in modern capitalism; enriched individual decision-making and well-being for crisis prevention. Besides my academic career, I have advised policy makers in Europe, Africa and Asia on how culture change constitutes an important aspect of modern economic and social engineering.

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Superstars Markets and Culture Change

The political Economy Of Status

‘Global inequality represents the challenge of our age. The Political Economy of Status demonstrates that rising inequality involves profound cultural, psychological, and philosophical changes because it is interlinked with the meteoric growth of superstar markets – that is, markets for positional goods, which now permeate most economies. Consequently, taking on inequality will require not just smart economic policies, but moral leadership.’ – Gary Dymski, University of Leeds, UK
The political Economy Of Status

Why Greece Could Have Returned To Financial Markets Much Earlier

Latest Blog Post

A few weeks ago Athens persuaded private holders of about €30 billion in Greek debt to swap short maturity bonds for five new ones of longer maturity so as to improve market liquidity and push yield rates down before the country emerges from bailouts in August 2018. Actually, the 10-year bond dived swiftly below the 5% threshold within a week to reach 3.8%. With the return to global financial markets, the Greek government has sought also to maximize political gains before the scheduled 2019 elections through the communication of a “success story”.
Why Greece Could Have Returned To Financial Markets Much Earlier
19 December 2015

Welcome

Welcome

Welcome to my blog, I am a Professor in the Department of Management of Culture Environment and New Technologies of the University of Patras, Greece(*).

My research focus on Keynesian behavioural economics and global finance for achieving economic prosperity; innovation in public policy engineering; the impact of culture change in modern capitalism; enriched individual decision-making and well-being for crisis prevention. Besides my academic career, I have advised policy makers in Europe, Africa and Asia on how culture change constitutes an important aspect of modern economic and social engineering.

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18 November 2019

Superstars Markets and Culture Change

The political Economy Of Status

book

‘Global inequality represents the challenge of our age. The Political Economy of Status demonstrates that rising inequality involves profound cultural, psychological, and philosophical changes because it is interlinked with the meteoric growth of superstar markets – that is, markets for positional goods, which now permeate most economies. Consequently, taking on inequality will require not just smart economic policies, but moral leadership.’ – Gary Dymski, University of Leeds, UK
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26 January 2018

Why Greece Could Have Returned To Financial Markets Much Earlier

Latest Blog Post

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A few weeks ago Athens persuaded private holders of about €30 billion in Greek debt to swap short maturity bonds for five new ones of longer maturity so as to improve market liquidity and push yield rates down before the country emerges from bailouts in August 2018. Actually, the 10-year bond dived swiftly below the 5% threshold within a week to reach 3.8%. With the return to global financial markets, the Greek government has sought also to maximize political gains before the scheduled 2019 elections through the communication of a “success story”.

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Welcome

Welcome to my blog!

Welcome to my blog, I am a Professor in the Department of Management of Culture Environment and New Technologies of the University of Patras, Greece(*).

My research focus on Keynesian behavioural economics and global finance for achieving economic prosperity; innovation in public policy engineering; the impact of culture change in modern capitalism; enriched individual decision-making and well-being for crisis prevention. Besides my academic career, I have advised policy makers in Europe, Africa and Asia on how culture change constitutes an important aspect of modern economic and social engineering.

 

My research methodology aspires to be eclectic and open-minded, pragmatic and anthropocentric. My goal is to create the best possible public policy solutions that challenge one-sided, short-lived and often ideological structures that harm personal and social well-being. My recent book, The Political Economy of Status: Superstars, Markets and Culture Change analyses the impact of status markets on the behavior of post-modern individual and its social effects including inequality. This approach challenges the image of culture as being unrelated to economic welfare. In fact, media fascination with superstars and consumption goods amplify positional concerns for all, distort the aspirations and decision-making of the middle class and cause relative deprivation. Building on themes first identified in institutional economics, my approach analyses extensively the behavioural evidence from modern cutting-edge interdisciplinary research including psychology, sociology and anthropology and contributes constructively and imaginatively to a new genre of economic analysis that proposes redistributive culture change policies targeted to assist the underprivileged in modern capitalism. My research has been funded by NATO, the European Commission and the Greek Government.

 

* At the Rank of Assistant Professor

The political Economy Of Status

Latest Blog Post

Why Greece Could Have Returned To Financial Markets Much Earlier

Latest Blog Post

A few weeks ago Athens persuaded private holders of about €30 billion in Greek debt to swap short maturity bonds for five new ones of longer maturity so as to improve market liquidity and push yield rates down before the country emerges from bailouts in August 2018. Actually, the 10-year bond dived swiftly below the 5% threshold within a week to reach 3.8%. With the return to global financial markets, the Greek government has sought also to maximize political gains before the scheduled 2019 elections through the communication of a “success story”.

Those developments come into sharp contrast with the pursued objective of a nominal debt haircut in spring 2015 when then finance minister Yanis Varoufakis called for various changes in European monetary architecture through the issue of Eurobonds to resolve the Greek crisis. He sought a New Deal-type of solution via an international debt reduction conference reminiscent of the 1953 German arrangement of its post-war debt and perpetual bonds. All those proposals were rhetorical exercises because they shared the same fatal flaw, that is, they depended on the willingness of international lenders to concede favors without achieving any fiscal discipline on the part of the Greeks. Finally, Varoufakis and his team pushed for an unconventional double system of domestic payments with a shadow currency, contrary to ECB rules, which was massively risky for liquidity and would inevitably result in a Grexit and a return to drachma, while its possible implementation would have strained democracy in the country with unpredictable consequences.

Today, the government cites the return to markets, which it did not pursue in 2015, as the right path. Prime Minister Alexis Tsipras admitted in a Guardian interview a few months ago that the plan of Varoufakis was “vague, weak and ineffective.” While the Greek negotiation of a third bailout topped Harvard’s ‘worst tactics’ list for 2015, a large part of the Greek public has remained since then massively resentful about the financial losses caused by “game of chicken” superficial policies and subsequent capital controls.

Diverting from this impassioned chapter in recent Greek history, we here highlight instead a policy lesson that was never discussed before: that back in 2015, the option of a return to international financial markets, which is now central to seizing political and economic gains, was wide open. However, blind with maximalist posturing and wasting time with vain plans, the Greek government failed to capitalize on this path because the blame was conveniently put on “others”, that is, on lenders.

In retrospect, the return to financial markets was the sensible approach to follow although it would have involved the adoption of structural adjustments dictated by the lenders. Was there an alternative path to liberate the country early on from lenders’ demands in return for their financial support lines? In my view, there was further room for maneuver through the issuance of structural adjustment-linked bonds based on policies determined by the Greek government alone.

In February 2012, Greece issued GDP-linked securities, which did not pay a principal and for which payments based on growth in a given year would not be made until the following year. According to a 2012 Morgan Stanley report, under the condition that the nominal GDP equaled or exceeded a threshold or reference nominal GDP, annual payment – which would not exceed 1 percent of the notional value of the bonds – would depend on the weighted difference between GDP growth rate and the reference GDP growth rate.

More than a surplus

During 2016, the Greek government proved that it could produce a budget surplus, which is the key consideration for the return to markets. Ideally, however, there was also space for pro-active policies, even during the period of negative growth rates if the government had looked on the necessity of eliminating clientelism through structural adjustment measures. These could have included those generated from the rationalization of the budget and productivity gains from restructuring the highly under-performing public sector including downsizing, reorganization and incentivization of civil servants and their institutions to contain complacency and absenteeism from work.

The expectation of realizing a fiscal buffer of such structural and mainly real economic gains in combination with avoiding fiscal losses arising from disastrous negotiations would inevitably contribute to budget surpluses and resolve the problem that deferred payments for GDP-linked warrants were not possible because of small negative growth rates in GDP during the period 2015-2016.

Specifically, economic gains from budget surpluses could exceed losses from small negative growth rates in GDP. This favorable balance and the underlying cash flows could be used as an additional benchmark, on the basis of which deferred payments could be made to financial investors until GDP growth turned positive after one or two years.

Technically, by adding up budget surpluses as a separate factor to GDP growth alone in the payment formula synthetic structural adjustment/GDP-linked securities could be produced allowing for proper weights on the budget gains.

Those gains could be used to make feasible deferred payments to international financial investors, which are standard for vanilla GDP-bonds even in the case of low real GDP growth rates, or of slightly negative rates of approximately 1% as was the case during 2015-2016 since the final return on the synthetic bond could have been positive. Actually, GDP growth rates might have been positive earlier if the country avoided the capital controls that confrontational negotiations and a nonsense referendum caused and was committed instead to a fast return to positive growth. In that case, a weighted average of expected growth rates for two or three years ahead could suffice to produce a positive threshold to make GDP-linked securities functional, but it is doubtful whether this expectation would have been taken seriously by international investors without prior evidence that Greece was on the right track and capable of generating economic gains from structural policies.

No structural pain, no gain

Evidently, this type of solution was out of the mindset of the government because of the political cost associated with structural adjustments. This does not undermine the fact that financial engineering variants could have helped liberate the Greek government from superfluous memorandum demands of international lenders. Overall, it does not make sense therefore to call a country bankrupt and incapable of being involved with financial markets, if it manages to raise funds because international financial markets conventionally hold expectations that its debt is effectively serviceable with the aid of international lenders.

A lesson for all social democratic forces in Europe today, which confront conservative establishments on various fronts, must be that policy proposals must be quite focused on producing pragmatic outcomes in a way that takes into consideration market dynamics rather than relying on tentative methodologies.

Financial markets do not reward only profits but also economic gains arising from components such as productivity growth. Attention cannot be diverted from sound economic reasoning. This message produces solid implications for the management of the public sector. It shows also that fear of high finance is unwarranted. Even within a progressive agenda, smart policies can be developed and evaluated favorably by financial markets. This synthesis is more suitable for producing an advantageous mix of justice, prosperity and growth rather than the narrower alternative of focusing on redistribution efforts alone in the hope that magically they will fix everything somehow in the end.

This pragmatic lesson was not the case with the bitter episode of the so-called “Athens spring” that has turned out more like a case of “Athens autumn” to the Greek public. The adoption of ambiguous voluntarist and populist policy objectives by the Greek government in early 2015 generated disastrous outcomes. Regrettably, the idiosyncratic fusion of those aspirations with misguided thinking, or (conventional) ‘wisdom’ during the 2015 negotiations produced a major incident of unconventional ignorance worth remembering for a long time.

 

Article published also in socialeurope.eu

having your name next to a nobelist is  always a good snapshot

Dr. Theodore (Thodoris) Koutsobinas is currently a professor in the Department of Management of Culture Environment and New Technologies of the University of Patras, Greece(*). He taught as an assistant professor at Regent’s American College of Regent’s University in London, as a visiting assistant professor at the University of Gothenburg in Sweden and as an associate lecturer at Athens Economics and Business University, the University of the Aegean and the University of Patras in Greece. His main courses have been in economic theory and microeconomic behaviour, macroeconomics, monetary economics, global financial markets, international business, political economy and culture economy.


Theodore Koutsobinas conducted Post-Doctoral studies as a NATO fellow at Cornell University, Ithaca, NY in the United States. He holds a Ph.D degree in Economics from the New School University in New York City, NY in the United States and he is a graduate of the Department of Economics of Athens University.

He has substantive professional experience (over 25 years) in different areas of expertise. He worked as a Senior-Expert for European Union developing research in technical assistance programs to developing countries in Europe, Africa and Asia. He also worked as an advisor to the Ministry of National Economy in Greece and to the President of the Securities Exchange Commission in Greece. He also has experience as an analyst for an investment bank in NYC, as an E. Europe economic advisor to the Bank of Macedonia-Thrace (now Bank of Piraeus-Greece) and as an advisor on leading-edge financial issues to some of the biggest Greek corporations. He has substantive management experience having served as a member of the board of directors of OTE (Greek Telecommunications), AMEL (Athens Metro) and Greek Post-Savings Bank.

* At the Rank of Assistant Professor

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