You may think I am going to agree with George Osborne that it shows what a mess we would be in if it were not for his brilliant management of the economy. No!
There again you may think I am going to say something about borrowing too much. Well, sort of. But not really.
How big is Greece’s debt? It is about one and a half times the country’s national income. Not the Government’s: the whole nation’s. Eighteen months of everyone’s spending.
Is that bad? Most commentators seem to think it is far too high and “unsustainable” (whatever that means).
Now guess which country has a debt of two and a half times its national income?
Some banana republic? Some failed state? No!
So why have they not got a crisis? Why no emergency meetings with the IMF or other creditors? Why is it not a major issue in Japanese politics? Why is it not even on the news?
There are two answers. Both are important. Only one matters for you and I in managing our businesses.
First the one that doesn’t affect your business right now.
Japan is not in the Eurozone. It does not have to comply with some set of rules that might not be helpful. The Japanese Government can decide its own economic policies.
Secondly, and more importantly for us, it is because of GOVERNANCE. What I mean is that everyone, or everyone that matters in this situation, trusts the Japanese Government. If they think the level of debt is something they can live with, well OK. They have a budget and an economic plan and they believe it will work, so everone else seems to accept it. There is not believed to be widespread corruption in Japan. People believe the Japanese Government’s statistics and other published information.
What has this to do with us? Many businesses need to get a better understanding of their risks. Many need to take steps to control them. Others, however, are doing that pretty well, but they cannot easily prove it. They do not have a Risk Management system. They do not have a Risk Register or written Risk Assessments. There is a lack of evidence.
If your creditors, backers, insurers or partners want to know how well your business is run, and if they are worried about the risks you may face, can you show them how you manage the risks? Or do they have to take your word for it? Thati is al about governance.
If this is all Greek to you, or if you want to know more, or would like to chat about this, give me ring, or send me an e-mail
Don’t be part of a Greek tragedy.