GLOBAL MARKETS-World stocks ease with euro on Greece worries


Tue May 15, 2012 2:19pm EDT

* Euro at four-month low vs dollar

* World stocks edge down on Greece political pressures

* Greek euro exit fears weigh on markets

By Caroline Valetkevitch

NEW YORK, May 15 (Reuters) – World stocks slipped and the
euro fell to a four-month low against the dollar on Tuesday
after Greece said it would hold new elections and worries
increased about its possible exit from the euro zone.

Gold touched a 4-1/2-month low, with the euro’s weakness
unnerving investors over the profitability of holding
euro-denominated assets.

The political turmoil in Greece kept pressure on markets.
Investors have been concerned that long-lasting problems in the
euro zone and a likely recession will hit global growth.

Greek politicians again failed to agree on a new government,
nine days after an inconclusive election. After Greece’s
president said the country will hold new elections, the euro
slumped and investors fled to the safe-haven dollar.

The Greek news “triggered the fall through $1.2800 and it
looks like they can’t compromise so they will have to hold
elections,” said Boris Schlossberg, director of FX Research at
GFT in Jersey City, New Jersey.

“They are running out of money ahead of elections, so expect
European leaders in the next few days to put enormous pressure
on them to come up with a workable government along with some
sort of extended schedule for the bailout.”

The euro fell for the fifth of the last six sessions on
chances left-wing politicians opposed to Greece’s international
bailout could win the June elections.

The euro was down 0.6 percent at $1.2744 after
touching a session low of $1.2731, the lowest since Jan. 17.

The MSCI world equity index fell 0.6
percent, while the FTSE Eurofirst index of top European
shares ended down 0.7 percent.

U.S. stocks marginally higher after a slight bounce early in
the session on positive economic data on regional manufacturing
and national homebuilder sentiment.

A gauge of homebuilder sentiment rose to the highest in five
years this month. Separately, the pace of growth
in New York state manufacturing rebounded, the New York Federal
Reserve said.

Data also showed U.S. retail sales rose 0.1 percent in
April, coming in under expectations, but the SP retail index
climbed 1.1 percent.

The Dow Jones industrial average was down 7.42
points, or 0.06 percent, at 12,687.93. The Standard Poor’s 500
Index was down 1.25 points, or 0.09 percent, at 1,337.10.
The Nasdaq Composite Index was up 11.08 points, or 0.38
percent, at 2,913.66.

Among other global economic news, Germany kept hopes for
growth alive when it reported that strong exports had helped its
economy grow 0.5 percent in the first three months of the year,
ahead of market forecasts.

Germany’s performance offset zero growth in France and
recession in Italy and Spain, leaving the whole 17-member euro
zone economy stagnating but not in recession.

Some of the optimism from the German GDP data was dispelled
after a business survey by the ZEW Institute taken in the first
two weeks of May showed a big dip in sentiment since the latest
bout of political instability in Greece and the renewed concerns
about Spain and Italy’s banking systems.

The upbeat German data helped Brent crude price, with Brent
June crude up 54 cents at $112.11 a barrel. The German
data raised hopes that Germany would steer the way through the
European debt crisis.

In the precious metals market, spot gold was down 0.1
percent at $1,555.69 an ounce and earlier hit its lowest since
Dec. 30 at $1,547.99. It is down nearly 7 percent in May so far.

U.S. Treasuries prices eased as traders booked profits from
an eight-week run-up primed by worries over the outcome of the
European debt crisis.

The benchmark 10-year U.S. Treasury note was
down 2/32, with the yield at 1.7757 percent.

While U.S. yields rose, benchmark rates remain below the
technically important 1.8 percent level and not far off the
seven-month low of 1.76 percent touched in overnight trade. Last
week Treasuries yields fell for the eighth consecutive week.

“We’ve come a long way fairly quickly and were a little
overbought, so I’m not surprised to see (the price losses),
although I don’t see this as a reversal to the recent trend,”
said David Coard, head of fixed-income sales and trading at The
Williams Capital Group in New York.


Greece, Again

It is shaping up to be another long, hot summer, and not just because of global warning. As has been widely noted, the austerity backlash in Europe began in earnest this past weekend. And Greece is once again the epicenter, at least for now. The Greek political system appears rudderless, which is calling into question the nation’s resolve to complete the conditions of the last bailout package. Moreover, there are open calls for Greece to renege on the deal:

Greece’s Syriza party leader Alexis Tsipras, charged with forming a government, told his pro-bailout counterparts they must renounce support for the European Union- led rescue if there is to be any chance of forging a coalition.

Tsipras said he expected Antonis Samaras of New Democracy and Evangelos Venizelos, the former finance minister who leads the Pasok party, to send a letter to the EU revoking their pledges to implement austerity measures by the time he meets with them tomorrow to discuss forming a coalition. Samaras said he would not do so, and would support a minority government if necessary.

The Troika can’t be particularly optimistic about Greek resolve whatever government finally holds together. Also note that in the coming days, Greece is faced with some real debt management decisions. From Bloomberg:

The government taking office after this weekend’s election has 30 days to decide whether to make today’s interest payment on 20 billion yen ($250 million) of 4.5 percent notes maturing in 2016, or default. Then, by May 15, officials must decide if they’re going to repay the 436 million euros ($555 million) due on a floating-rate note issued a decade ago.

These are among about 7 billion euros of bonds whose holders took advantage of being governed by foreign rather than Greek law to sidestep losses suffered under the private-sector involvement rescheduling, or PSI. Paying the holdouts in full would arouse the ire of Greek taxpayers, as well as investors who cooperated with PSI. A failure to pay would signal Europe’s debt crisis is worsening.

A lot of moving pieces here, but any way you organize the pieces, the odds of a Greek exit from the Eurozone are heading up with each passing day, and market participants are increasingly leaning in that direction. From Bloomberg:

“This summer I think is very likely,” Taylor, founder and chief executive officer of FX Concepts in New York, said today in an interview on Bloomberg Television’s “Inside Track” with Erik Schatzker and Sara Eisen. “The Europeans aren’t going to give them the money, the International Monetary Fund’s not going to give them an OK. They will be out of money in June.”

June is coming up fast. And, for the moment, the rest of Europe is drawing a line in the sand. As expected, the Germans are at the forefront. From Reuters:

The European Central Bank will not renegotiate Greece’s bailout package and there are no alternatives to sticking with it if Greece wants to stay in the euro zone, ECB Executive Board member Joerg Asmussen was quoted as saying on Tuesday.

“Greece needs to be aware that there are no alternatives to the agreed bailout program, if it wants to stay in the euro zone,” Asmussen told German financial daily Handelsblatt.

See also Athens News. Of course, the sustainability of the last bailout might have been a moot point anyway, given that the Greek economy will likely deteriorate more than expected anyway. From Athens news:

The economy will contract by a steeper-than-expected 5 percent this year, the central bank chief said in a speech to the bank’s shareholders on Tuesday.

Last month, the bank in March had forecast a 4.5 percent contraction in the economy this year.

I don’t know if this includes expectations of a decline of the Greek tourism industry. From ekathimerini:

Online tourism bookings from abroad are pointing to a 12.5 percent decline for this year, according to the Airfasttickets travel agency.

Nikos Koklonis, head of the company that owns the agency, says that the biggest drop in bookings for Greek destinations this year is from the German market, which last year accounted for 15 percent of all bookings. Its share has now shrunk to just 3 percent.

In my opinion, what makes a Greek exit more likely is the apparently growing belief that the external costs will be minimal. Back to Bloomberg:

“I think that people are feeling the implications of a Greek exit aren’t so bad,” Taylor said. If Greece leaves the euro, Europeans will “turn around and huddle together and say, ‘how do I help Portugal and Spain?’”

And Athens News:

Voters’ rejection of pro-bailout political parties in Sunday’s election has raised the chances of Greece leaving the euro, but this unprecedented step is seen as manageable rather than catastrophic for the currency bloc.

Some banks have raised estimates of the likelihood of Greece quitting the euro. But after a year of investors shedding bonds issued by highly indebted euro zone countries and big injections of central bank cash, they said the damage could be contained.

And from CNNMoney:

The results of the latest elections in Greece may make it more likely that the country will eventually leave the eurozone. But such an exit would probably be more orderly than Greece’s default, experts said….

…”[Greece] is not going to get pushed, but they might walk out,” Citi chief economist Willem Buiter said at last week’s Milken Institute Global Conference…

…Economist Nouriel Roubini thinks Portugal and Ireland may also find themselves restructuring their debt and could even wind up following Greece out the door, but none of that should prove disruptive to world markets.

“If a small country — like Greece or Portugal — exit, you can have an orderly divorce, but if that restructuring and/or exit hits Italy or Spain, effectively you could get a breakup of the eurozone,” Roubini said. But he added that’s an unlikely scenario….

The proximate cause for such optimism, I believe, is that the much feared Greek debt default failed to trigger a financial collapse. Apparently, European policymakers kicked that can far enough down the road that financial market participants had time to adjust to that ultimate outcome. That, in addition to the two LTRO’s and more firepower in other emergency funding facilities have perhaps created a sense of complacency about a Greek exist from the Eurozone. And that complacency suggests that there will be no third bailout for Greece, especially if that means reserving resources for other ailing Euro members. No bailout renegotiations will likely tip the balance such that staying in the Eurozone will be more costly than exit.

Whether or not Europe should become so sanguine about a Greek exit is another question entirely. But perhaps at this point such concerns are irrelevant anyway. Unless economic conditions dramatically shift in a positive fashion in Greece, it is increasingly difficult to see how this ends with anything but a Greek exit from the Eurozone.


Greece's best luxury hotels and villas

Food and drink have gone upmarket, too. In the best hotel restaurants,
traditional cooking is given a lighter modern touch, and a brigade of
internationally acclaimed chefs has found new ways to work with locally
sourced ingredients. Visit Nobu, at the Hotel Belvedere on Mykonos, to see
what happens when Japanese skills are applied to the fruits of the Aegean.
Greek wines, too, are beginning to be taken seriously by connoisseurs.

Best of all, there is still an egalitarian friendliness that is hard to find
elsewhere in Europe – though be prepared for your driver or waiter to
unburden his (or her) resentment at the way Greece has been treated by its
wealthier EU neighbours. This year, for reasons not unrelated, Greece is
favourably priced. At Katikies, a whitewashed enclave on Santorini, a week
in a junior suite costs £3,200, compared with £5,700 for a similar stay at
the Capri Palace on the Italian isle of Capri.

Here is our hedonist’s guide to the Greek islands, with hand-picked properties
and advice on how to travel in style. Prices are for travel in June.

Kastellorizo

Way down south, the tiny island of Kastellorizo is as far off the beaten track
as it is possible to get in Greece. In high summer (July and August) its fjord-like
blue harbour, lined with old Ottoman-style houses in liquorice-allsorts
colours, hosts a flotilla of rich folks’ yachts. Silvio Berlusconi, Tom
Hanks and Eric Clapton are (reportedly) on the summer guest list; ex-Pink
Floyd axeman David Gilmour liked it so much that he recorded an album (On
an Island, 2006) inspired by its charms.

The place to stay is the Mediterraneo (00 30 22 4604 9007, mediterraneo-megisti.com;
ground-floor suite from around £140 per night), one of the most colourfully
charming small hotels in Greece. The owner Marie Rivalant, a Parisienne, has
converted an old waterfront mansion into a colourful haven, with bedrooms
looking out over the harbour (though the ground-floor suite is the best) and
a sunbathing terrace on the quayside. It doesn’t have a pool, but a bathing
ladder drops you into the aquarium-clear sea, where tiny, rainbow-coloured
fish swim around your toes. There is no à la carte restaurant or bar,
either, but breakfast is a lavish Levantine affair of yoghurt, island honey,
nuts, home-made preserves, cheese and fresh-baked bread – and with a chain
of tavernas and café-bars all around the waterfront, there is no need to eat
at the same place twice.

The island’s big “must-see” sight is its blue grotto, the equal of
the much more famous one on Capri but blessedly free of singing gondoliers.
If you feel like changing continents, you can charter a boat to putter
across the bay to Kas, just a few miles away on the Turkish mainland. In
short, Kastellorizo offers luxury of a different kind: it really is one of
the world’s great escapes.

Lesbos

Despite tales that Greece might sell off some of its thousands of uninhabited
islands to plutocrats, to help meet its debts, renting one of them remains
an impossible dream. A handful of islands, ripe for development as exclusive
mini-resorts, languish on the books of the Canada-based company Private
Islands Online, with asking prices starting
at about €5 million (£4 million), but Greece is not about to become the
Maldives any time soon.

The next best thing is Villa Faros (001 647 477 5581, privateislandsonline.com;
from around £23,300 per week, sleeps 16), on a private peninsula near Sigri,
on the big, calm island of Lesbos. This is more than just a villa. It offers
the kind of yoga and spa treatments found in five-star hotels. There are
three private beaches, a seawater infinity pool, a heated indoor wave pool
and gardens that provide organic fruit and vegetables for guests at the
villa. At the jetty, a 30ft speedboat awaits – and for those in a real hurry
to get down to the serious business of relaxing, the property has a helipad.

Chios

Those who make it to Chios are pleasantly surprised to find themselves
outnumbered by locals. There is a reason for this, say Chiots: this big
island in the north-east Aegean is the ancestral home of several Greek
multi-millionaire shipping dynasties, who still keep villas here. They
prefer their holidays to be undisturbed by the antics of foreign hoi polloi,
and have used their local clout to discourage large-scale development. So
there are no big resort hotels – but there is at least one real boutique gem.

With its uncrowded beaches and quaint villages dotted around a rolling
hinterland of fields and orchards, Chios feels thoroughly Greek. To Greeks,
it is synonymous with the country’s finest ouzo, a sweet and subtle tipple
that is as different from the cheap liquorice firewater found in most
tourist bars as a 20-year-old malt whisky is from a supermarket blend.

Like many Greek islands, Chios has produced more history than it has been able
to consume. It is famous for its old-fashioned mastichochoria (mastic
villages), which grew wealthy from the precious gum of the mastic bush, much
prized as a breath-freshener by Ottoman sultans and their harems. Behind
high walls, labyrinthine alleys lead to village squares where stonework is
decorated in intricate harlequin patterns of black and white, embellished in
summer with scarlet strings of drying peppers and tomatoes.

In medieval times, Chios fell into the hands of Genoese merchant-aristocrats
who later became Ottoman vassals and whose grand mansions are still dotted
around the Kampos district, inland from the island capital. Indeed, it is to
a Genoese noble family that the island owes one of the most outstanding
hotels in Greece.

The palatial estate that houses the Argentikon Luxury Suites (00 30
22710 33111, argentikon.gr;
from around £400 per night for a double) was the home of the Genoese
Argenti family from the 16th century until 1822, when the Argenti joined the
Greek uprising against the Ottomans. Four of them were executed when the
rebellion failed (marble busts in the hotel’s lush grounds commemorate them)
and the rest fled to Italy, France and England. The palazzo fell into
disrepair and was finally destroyed by an earthquake in 1881. What you see
now is a lavish reconstruction, begun by a descendant of the Argenti dynasty
in 1900.

Philip Argenti spent millions on the project, and it shows. With its marble
columns and mellow-hued stone walls, it is a slice of medieval Italy
transplanted to a Greek island and surrounded by formal gardens scented and
made colourful by thousands of citrus trees and rose bushes. But there is
nothing antiquated about the facilities, which include a classy outdoor
pool, an excellent restaurant, where the wine list includes bottles from the
hotel’s own vineyard, and a well-equipped fitness centre with sauna and
whirlpool.

This is not a place for those who love minimalism. Its eight suites, housed in
five separate villas, are unabashedly opulent, with period furniture,
crystal chandeliers and frescoed ceilings. Each has a separate living room,
a veranda, air conditioning for sultry summer nights and a fireplace for
spring and autumn evenings. Service is ubiquitous without being intrusive,
and includes twice-daily housekeeping. The only snag is that you may not
want to step beyond the walls of this calm oasis, but if you do feel like
exploring, the island’s capital – with its museum, ruined castle and plenty
of good restaurants – is just a few minutes away. Arrivals and departures
are smoothed by private car transfers, and the airport is only
two-and-a-half miles from the property.

For full-on luxury, Argentikon is hard to match, but if it is full – and
booking well ahead is strongly recommended – try the smaller, even more
intimate Perleas Mansion (00 30 22710 32217, perleas.gr;
from around £100 per night for a double), set in four acres of grounds. With
just three bedrooms, this 17th-century farmhouse (run by a husband-and-wife
team) feels more like your own private holiday home. It has no pool, though
there is a sunbathing terrace beside a pretty lily pond.

Corfu

Private villas with pools are the way to go on Corfu (especially for
families). There are plenty to choose from, and at the high end they come
complete with household staff, plus a boat with a skipper. The best
properties are in the better-off areas of the north-east, set on
semi-private bays and coves overlooked by the forested slopes of Mount
Pantokrator, a million miles away in spirit from the fleshpot resorts of the
south.

This is glorious isolation, which is why Corfu has been favoured by sundry
oligarchs and millionaire political fixers. But when you feel the need to
explore, the island has plenty to offer: the World Heritage old town, with
its Venetian fortresses, Italianate churches and town houses, and
faux-Parisian arcades, is about 30 minutes’ drive away.

Heading in the other direction, there is a cluster of bars and restaurants
around the harbour at Kassiopi. If you need activity, there is riding in the
nearby valley of Avlaki, the highly commended Corfu Golf Club in the Ropa
valley, a plethora of watersports from windsurfing to scuba diving, and
phenomenal views of mainland Greece and Albania from the summit of
Pantokrator, reached by four-wheel drive (with the final stretch on foot).

A boat is more than just a luxury in this part of Corfu – it’s an essential if
you are going to make the most of exploring secluded bays and beaches. You
don’t need a licence to pilot a boat with a motor up to 30 horsepower but
for bigger-engined vessels you need a certificate of competence. The answer?
Hire a boat complete with skipper.

The Bay Estate, near Agios Stefanos, has villas sleeping up to 10, and
mooring space for vessels of up to 70ft – big enough for all but the
showiest of oligarchs – and you can hire a skippered motor cruiser for eight
to 10 people for €1,500-€2,000 (£1,250-£1,670) a day. Staying there is
expensive, it’s true – a villa costs almost £32,000 per week in July, but
the price includes a housekeeper (five hours a day) and a chef and host
serving breakfast, lunch and dinner six days a week. In June the same villa
– with a 40ft infinity pool and access to a secluded beach in the villa
grounds – costs £17,615, with a housekeeper but no meals. It’s the perfect
mix of high-end hotel service with villa privacy. Book through CV Travel’s
Private Collection (020 7401 1031, cvprivatecollection.com).

The next best thing is the Barbati Beach House, which sleeps six
to 10, right on Barbati beach. It has a large pool and lush gardens, and a
cook and boat hire are available. Prices start at £2,620 per week, again
with CV Travel.

Santorini

Long before the Venetians seized and renamed Santa Irene (now Santorini) in
the 13th century, it was and often still is called Thira. Long before that,
the ancients knew it as Kallisti – “the most beautiful”.
Today, the island lives up to its old name, but its natural beauty is harsh,
even apocalyptic. Arriving by sea, you enter a vast blue caldera, created
when a volcanic explosion blew the island apart around 3,600 years ago and
wrecked or blighted the Bronze Age civilisations of the eastern
Mediterranean. Red and black cliffs loom above the sea, and whitewashed
houses and blue-domed churches perch along the rim of the sea-flooded
crater, hundreds of feet above the Aegean.

The same volcanism that destroyed the ancient civilisation has endowed
Santorini with a surprisingly fertile soil. It is hard to believe that this
Martian landscape, with its red and grey tufa hills and terraces of greyish
clinker and ash-like soil, is one of the most productive in Greece. Every
square foot has been painstakingly terraced, and shrubby vines – few of them
more than 3ft high – crouch in their own little foxholes. The combination of
hot sun, volcanic soil and the island’s own Assyrtiko grapes produce wines
unique to Santorini which increasingly win plaudits from connoisseurs.

In 1953, an earthquake rocked the island, all but destroying the village of
Oia, on its northern tip. The village remained almost deserted for decades,
only to rise from the ashes in the 1980s to become one of the most gorgeous
holiday hot spots in Greece, with a plethora of superb boutique hotels.

Competition is fierce, but Katikies (00 30 22860 71401, katikies.com;
from £380 per night for a double) stands out, having one of the world’s
great infinity pools and a collection of vivid white cottages carved out of
the volcanic rock, 300ft above the sea. The hotel’s open-air gourmet
restaurant is one of the best on the island, and there are sunset wine
tastings to introduce visitors to Greece’s best vintages. The staff –
immaculate in white uniforms – are multinational, multilingual, friendly and
efficient.

You may not want to venture out, but do, if only to take a private boat trip
out into the deep blue caldera to swim in the warm springs around Nea
Kameni, or to eat the freshest fish at a rickety quayside table.

With a global reputation and only 29 rooms, Katikies fills up fast; an
excellent alternative, by the sea in Vlihada at the other end of the island,
is the Notos Therme Spa Hotel (00 30 22860 81115, notosthermespa.com;
from around £150 per night for a double), with a semi-private beach, and spa
treatments based around Santorini’s natural thermal springs and volcanic
mud.

Mykonos

Mykonos is where jet-set travel began in Greece, and although it is no longer
quite as exclusive as it was in the 1960s, its airport still sees a steady
flow of private jets and helicopters as well as scheduled flights. In recent
years, its cruise and ferry terminal has been relocated away from the
excruciatingly pretty main village, leaving its harbour once again to
fishing boats, private yachts and small excursion boats which ferry visitors
to the serene temple ruins on Delos, the sacred island of the ancients.

Conspicuous consumption has always been one of the hallmarks of Mykonos, and
there is no shortage of fine jewellers, designer boutiques and cigar bars in
the narrow village streets. Equally, there is no shortage of great hotels,
in the village itself and on the island’s sandy beaches. They do get
jam-packed in summer, so a hotel with
a gorgeous pool is a better bet.

One such is the Hotel Belvedere (00 30 22890 25122, belvederehotel.com;
from £313 per night for a double), set a little above the whitewashed
labyrinth of the inner village: and a dream. Palm trees around the free-form
pool? Check. Evening cocktails in the well-named Sunset Bar? Check.
Matsuhisa Mykonos, the only Nobu restaurant in Greece? Check. Cellar with a
list of 5,000 wines (particularly strong on Greek and New World varietals)?
Check. All of this is built in and around an 18th-century mansion with
west-facing verandas, perfect for watching the sun set over the bay.

If your taste inclines towards 1960s glamour with a 21st-century twist, the Mykonos
Theoxenia Hotel
(00 30 22890 22230, mykonostheoxenia.com;
from £210 per night for a double) is a great alternative. Like the
Belvedere, it is far enough from the village centre to avoid the throngs of
cruise passengers, but close enough for effortless window-shopping and
bar-hopping. The architecture echoes ancient temple precincts, while inside
it is all pop-art colours. You half expect Jackie O to walk in at any
moment.

Rhodes

Rhodes has one of the world’s great medieval walled cities, a dazzlingly
attractive white village that is the envy of many other isles, and – so its
proponents claim – more sunshine than anywhere else in Greece. The hot tip
here is the Amathus Elite Suites (00 30 22410 89900, amathus-hotels.com;
pool suites from £400 per night), a hotel-within-a-hotel overlooking
the beach at Ixia, 10 minutes from the medieval ramparts of the Old Town.
The suites have sea views, some come with private pools and the attentive
and friendly staff deliver trays of island goodies – sweets, cakes, liqueurs
and other treats – every afternoon.

Breakfast is particularly lavish (take full advantage of the complimentary
sparkling wine from the local winery). I’m not normally a fan of half-board
deals, but à la carte dinner lives up to the rest of the services. There’s a
spa and health club, a tranquil, black-marble pool where scarlet and
electric-blue dragonflies zoom overhead as you swim. A vast, lagoon-style
pool is shared with the main wing of the hotel, and an underpass leads
direct to the Amathus’s own stretch of beach.

Tearing yourself away from all this takes an effort, but the hotel can lay on
a private car to take you to the Old Town, with its
13th-century ramparts, the opulent Palace of the Grand Masters, and a handful
of really outstanding restaurants. One of the best is Alexis (00 30 22410
29347) at Sokratous 18, which specialises in old favourites, from grilled
lobster and red mullet to octopus carpaccio and clams in ouzo. Expect to pay
€40-€50 (£33-£40) each, including wine.

Lindos – one of those iconic white villages, beloved of the glitterati
since the 1960s – is the island’s other nexus of boutique hotels. The gem
here is Melenos Lindos (00 30 22440 32222, melenoslindos.com;
from £220 per night), where the 12 suites are inspired by the unique
vernacular architecture of the village, with monochrome pebble mosaics and
canopied beds. Each has its own terrace, and black-and-white tiled patios
overlook the beach. We may think of Greece as cheap, cheerful and, in recent
months, broke, but it’s easy to forget that, until mass tourism really took
off in the early 1990s, it was as much a rich man’s paradise as a hippie
haven. In the 1960s, opulent enclaves such as Rhodes and Mykonos attracted
visiting royalty, wealthy socialites and glitterati from the worlds of film,
music, art and fashion, from Pablo Picasso, John Lennon and Henry Miller to
Jackie Onassis and Brigitte Bardot.

There is still plenty of money around. The canny owners of the world’s biggest
merchant fleet aren’t on the breadline yet – in fact, some have been quietly
buying up tracts of Mayfair and Knightsbridge, and can still afford to send
their offspring to English public schools. Some spend their summers in
discreet comfort on Chios; at the other end of the scale, tiny Kastellorizo
is a well-kept secret among wealthy Greeks, to whom luxury means simplicity.

Meanwhile, the new breed of post-Soviet plutocrat is drawn to the more
upmarket Greek islands, with their staffed villas, crewed yachts and
high-end hotels with pool suites, sybaritic spas, cigar bars and
well-stocked wine cellars. Another option is the “hotel within a hotel”,
as exemplified by the Amathus Elite Suites on Rhodes, where guests can enjoy
privacy combined with five-star-hotel services. Irrespective of recent Greek

troubles, boutique hotels continue to expand. Old mansions and village houses
have been converted, creating a new generation of smaller, more colourful
design hotels where luxury is still of the essence.

Food and drink have gone upmarket, too. In the best hotel restaurants,
traditional cooking is given a lighter modern touch, and a brigade of
internationally acclaimed chefs has found new ways to work with locally
sourced ingredients. Visit Nobu, at the Hotel Belvedere on Mykonos, to see
what happens when Japanese skills are applied to the fruits of the Aegean.
Greek wines, too, are beginning to be taken seriously by connoisseurs.

Best of all, there is still an egalitarian friendliness that is hard to find
elsewhere in Europe – though be prepared for your driver or waiter to
unburden his (or her) resentment at the way Greece has been treated by its
wealthier EU neighbours. This year, for reasons not unrelated, Greece is
favourably priced. At Katikies, a whitewashed enclave on Santorini, a week
in a junior suite costs £3,200, compared with £5,700 for a similar stay at
the Capri Palace on the Italian isle of Capri.

Here is our hedonist’s guide to the Greek islands, with hand-picked properties
and advice on how to travel in style. Prices are for travel in June.

The five-star island hop

Getting there

British Airways, Aegean Airlines, EasyJet and Olympic Air offer scheduled
flights from London airports to Athens. Aegean and Olympic offer connecting
flights from Athens to six of the islands featured here. For Kastellorizo,
fly to Rhodes, then take a short hop with Olympic. EasyJet offers scheduled
services to Athens, Corfu, Mykonos, Rhodes and Santorini.

In transit

Depending on your flight connections, you may opt to spend a night in Athens.
At the Sofitel Athens Airport (sofitel.com), a couple of minutes from the
terminal; prestige suites cost from £210. From there, take a 15-minute cab
ride to Rafina, where a dozen open-air restaurants surround the fishing
harbour. Though simple in appearance, these places aren’t cheap, and are
frequented by wealthy Athenians who drive there with their families to
sample red mullet, lobster, octopus, sea urchins and other Mediterranean
staples, displayed on trays of ice.

Transfers

Consider travelling from Athens to the islands by private plane or helicopter.
For aircraft options and prices, see ellada.net/helicopter_services
and privatejetscharter.net.

The Greek islands are, of course, prime yacht charter territory, too. The list
of vessels available is comprehensive, ranging from steer-it-yourself luxury
sailing boats to fully crewed motor yachts and cruisers complete with a chef
and steward. For choices, see yachting-greece.com;
the company can also arrange helicopter transfers and private plane charters.

Packages

Numerous tour operators offer tailor-made holidays to Greece, staying in
boutique hotels and villas and benefiting from such services as chauffeured
transfers and private tours. They include Sovereign Luxury (sovereign.com),
CV Travel (cvtravel.co.uk),
The Villa Collection (gicthevillacollection.com),
Abercrombie Kent (abercrombiekent.co.uk)
and Cachet Travel (cachet-travel.com).
Small Luxury Hotels of the World (slh.com)
features more than 30 boutique properties in Greece.

More on Greece

Athens
city break guide

Corfu
travel guide

Crete
travel guide