Pawnbrokers Prosper as Greece Struggles With Hard Times

Comment by MySatelite:

This article, which as Greek citizens we can acknowledge as true, is an answer to all those who a) say ALL Greeks deserve to pay as they have been thriving off black money for years (so how come they’re selling their jewelry instead of tapping into their fat bank accounts?) and b) believe Papandreou’s policies and now Papademos’s (the governor of Greece’s central bank who was involved in cooking figures to put Greece in the Euro over a decade ago) are geared towards saving the nation.

As for the illicit gold trade the article mentions, it pales in comparison to what Greek politicians have stolen from the Greek people. No Greek will ever feel inclined to walk down the path of justice as long as justice is never served in a prejudicial system that pretends to look after the welfare of the country but does so only in name.

In Greece’s Sour Economy, Some Shops Are Thriving

ATHENS — With all the contraction in the Greek economy, with employees laid off en masse and one in four small businesses forced to close, it might seem odd that new shops are springing up like mushrooms in Athens and other cities.

 But the stores — pawnshops and gold dealers — are thriving as Greeks who are short of cash give up jewelry and other valuables to make ends meet and pay new taxes. The authorities reported a veritable explosion in the sector, with 90 percent of the nation’s 224 officially registered pawnshops having opened in the past year.

While these entrepreneurs insist that their services are legitimate, the Greek authorities contend that many of the shops are concealing a rapidly expanding illicit trade in gold, and that much of it is being smuggled out of the debt-racked country, confounding efforts to curb rampant tax evasion.

Similar trends have been reported in other countries that were hit by recession. In the United States and Britain, weakening economies and turmoil in credit markets have helped gold dealers thrive. A decade ago, the same happened in Argentina, after its economic meltdown.

In Greece, new outlets are springing up on streets where bankrupt stores have been boarded up. Competing with old-school pawnbrokers who work out of tiny stores on side streets, the new professionals lease central locations, taking advantage of falling rents. They advertise in newspapers and on television, and slip promotional leaflets under doors and on car windshields. Many also accept cars, yachts and real estate from Greeks no longer able to finance affluent lifestyles.

Many jewelers have joined in, putting placards in their windows reading “I buy gold.” And there are signs of foreign interest. One Italian jewelry wholesaler, which has opened several franchises in Greece, accepts gold teeth as well as jewelry in exchange for cash.

Although most traders are reluctant to talk, those who do say they are just seizing an opportunity created by hard times and the high price of gold, roughly $1,600 an ounce.

“Gold is strong — so there’s a lot of interest in selling,” said Yiannis Spiratos, manager of a pawnshop in central Athens. “We’re just serving that interest.”

He said that 8 in 10 customers sold their goods outright, rather than pawning them. “Some sell their jewelry because they never wear it; many say they need the money to pay the emergency tax,” he said, referring to a new tax on property owners.

Outside his shop, a smartly dressed middle-aged woman said she had just sold some earrings and her husband’s gold watch. “He couldn’t do it; he was too embarrassed,” said the woman, who gave her name only as Anna. She said she had made around $1,500 from the sale, after visiting four other shops for quotes.

With an increasing number of Greeks considering cashing in their jewelry or family heirlooms, the country’s consumer protection agency recently published guidelines to protect people from unscrupulous dealers. It warns against traders promising particularly high prices and advises consumers to weigh their jewelry at home or to have it assayed at a laboratory run by the national association of goldsmiths. The warning followed a government order for stricter inspections of gold dealers to ensure they are licensed and operating legally.

“The crisis is an opportunity for many, and that’s O.K. as long as it’s legal,” said Nikos Lekkas, the head of inspections at the Financial and Economic Crime Unit of the Ministry of Finance.

But although most gold dealers obtain the required operating license from the police, few keep a log of their transactions, as the law dictates. Inspections of pawnshops and gold dealers in Athens indicated that 80 percent were guilty of tax evasion, depriving the government of millions, and possibly billions, of euros in lost revenue, according to the financial crime unit.

Tax evasion remains one of the biggest drains on the Greek state, accounting for about $58 billion annually, or 13 percent of gross domestic product. That remains a sore point with the European Union and the International Monetary Fund, which have lent Greece billions of euros to avert a default that could be catastrophic for the euro zone.

Inspections by the financial crime unit suggest that some shops are fronts for illegitimate businesses shipping large quantities of gold out of the country illegally. In one recent raid, the police stopped a car near the western port of Patra that was carrying a half ton of silver bars, but no official documents.

The authorities traced the cargo to a pawnshop near Syntagma Square, in the heart of Athens. They said the shop had shipped, in a separate delivery, an eighth of a ton of gold bars to Germany, worth an estimated $8.72 million, again without documents. Investigators said they also traced six Cypriot and German offshore companies to pawnshops and gold dealers in Greece.

There are also signs that some pawnshops are receiving stolen goods, particularly jewelry, which is hard to trace because it is quickly sold or melted down in foundries.

Most pawnshops deny working with foundries. The foundries themselves — whose number tripled during the last year, with 10 now operating in the Athens area — were tight-lipped. Several denied that they worked with gold and none were listed as doing so in Greek directories.

Some financial experts say the trade is much like any other, some of it legal and some not, with the only difference being the higher value of gold.

“Since the beginning of time, people have melted down or sold their jewelry when the need arises,” said Babis Papadimitriou, an economics commentator. “This is what Greeks are doing now.”


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