Finally, someone at the European Central Bank has hinted that a baseball bat may be what's needed to fix the never ending Greek debt mess.
The hint was couched in polite Euro-speak, mentioning a "second stage of bailouts," where the Eurozone would take some control over a country's [read Greek's] economic policies if it could not do so itself. Hours later, the Bank's economist was more blunt and stated that if Athens doesn't take the necessary measures then other parties would "interfere."
Translated into plain and simple English, it looks like the Euros are finally realizing what has to happen. Greece needs to undergo a severe "workout," which is banking jargon for lenders commandeering a profligate's management. Put another way, on the streets of Calabria or New York City, it is time to bring in the "muscle" because the loan "sharks" want their "juice."
More genteel lingo and methods have been applied to no avail. This is because Greece is not a country, it's a party.
Taxes have gone uncollected forever or have been short stopped by corrupt tax collectors. For decades, Greek governments have paid civil servants bonuses for showing up to work on time and 14 months' pay for Christmas. Retirement has averaged at 53 years of age. The other members of the "Club Med," or Club Nearly Dead, include Portugal, Spain and Italy which have soaring costs and gigantic underground, tax free economies.
There's also Ireland with governments that behaved as if their entry subsidies to the EU would never end.
The Greeks are the worst of the lot, and the Euro lenders should get in there and undertake a couple of obvious reforms in the absence of any Greek political leadership. Tax collection there should be outsourced to independent collection agencies, which know how to deploy tried-and-true measures to get taxpayers to pony up.
One condition of this latest, the fourth, bailout should stipulate the transfer of title of all Greece's publicly-owned assets so they can be foreclosed and sold to cover deficits and pay down debts. Greece, as one German legislator suggested two years ago, has hundreds of beautiful publicly owned islands and other assets that should be privatized to fix the fiscal mess.
By the way, these poorly managed nations are not going to sink the global economy but they should be of concern to everyone. Greece is economically the size of Denmark or Maryland; Ireland the size of Israel or Alabama and Portugal the size of Hong Kong or Louisiana. But if the Europeans keep tiptoeing around this situation, the unraveling of the European Project will unfold, with grave and negative ramifications geo-politically.
The root of the problem is that the euro experiment was badly designed: One cannot have monetary union without political integration, at least when it comes to fiscal and economic policies. So the fixes are obvious and anything less will fall short:
-- All euro countries must scrap their national central banks and bank regulatory systems in favor of one central bank and financial system.
-- The subsidized members must submit to stringent workouts by this new entity and avoid the embarrassment, and risk, of public bond markets. This means the crisis can remain "in house," which is where it belongs for the sake of properly managed members.
-- A portion of the workouts should include loan restructuring and a significant haircut to bond holders or banks who have known for a couple of years the risks involved. They've been betting the Euros will never stop putting bad money in after good.
It all sounds very severe, and there are Greeks protesting on the streets every day. But they were protesting when the retirement age was kept at 53 years of age and when civil servants, who were already underworked and overpaid, wanted more year after.
At least, tough remedies will give them something legitimate to protest in the streets about. That's because the Greeks, and all Euros, must realize that when a client owes a bank one million dollars and cannot pay, the client is in trouble. When a country owes its partners hundreds of billions and cannot repay, the partnership is in trouble.
From Diane Francis and appeared in The Financial Post
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This shows Greece is collecting plenty of tax, and when you consider that its biggest industry is untaxed (Shipping) though its revenues are counted as GDP, then the % of tax to GDP is among the highest in Europe. Shipping pays a small tonnage tax based on the weight of ships. Why? Because ships can call any other port a home for tax purposes.
The tax evasion thing is real but not a primary cause of Greece's troubles. Eurostat lists tax evasion in Greece at 25% (though I've seen estimates of 30%). This is not so far an outlier from the 19% Eurozone average or the 18% American average. You can't simply lop on 25% more tax to Greece to figure your calculatio
Greece is defaulting because over 10% of GDP is being spent on servicing loans at very high tax rates, and they are purchasing military weapons at 5% of GDP (as part of the bailout agreement, a quid pro quo). Otherwise, in terms of gov't affairs, they have a primary balance.
The writer should consult Eurostat where she'd find these facts:
1. Average salary of government worker in Greece: below 7,000.
2. Average actual retirement age in Greece: 61.9 (Germany 61.2)
3. Average pension in Greece: below 6,000
4. Average hours worked yearly (OECD): Greece is at 2120, Germany at 1430 (see http://eco
Does this sound like a party to you? This article is nothing more than hateful ethnic baiting.
More facts:
1. Greek tax collection
2. Breakdown of Greek tax collection by GDP %: 8% income, 13% social (i.e. payroll/me
CONTINUED
-- The subsidized members must submit to stringent workouts by this new entity and avoid the embarrassm
-- A portion of the workouts should include loan restructur
Before the coming of the Euro, the EU had the European Monetary Union, made up of its various currencies that were allowed to "swivel" within a certain bandwidth, to allow national government
I would imagine the average American citizen reading this would find such developmen
Or, maybe you think that the IMF should interfere with the UK, too, because the government is not going after 500,000 UK companies that have evaded taxes.
http://www
HMRC has been unsuccessf
In other words, your arguments in favor of interferin
John Perkins' books shed a great deal of light on what happens behind the scenes in the economic crises we are experienci
http://www
Where, in her lovely, tough, 'make them pay up' scheme is there help for a people raped by their past and possibly current corrupt government and church? The real ones, who already live on the street or in cardboard boxes or in cars?
Or do they just get to starve to death so the banks get their money?
To say that they must bite the bullet and suffer is simply wrong.
I don't know the answer to these problems, but I do know that destroying people is not an effective one.
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That would give a tremendous boost to productivi
I used to live in Europe and totally agree.
How about Cyprus & Malta?
Not to mention that Greek GDP is #39 in the world, higher than a dozen other EU members [CIA Factbook]
wikipedia : "A developed country with an advanced high-incom
It is also a founding member of the United Nations, the OECD, and the Black Sea Economic Cooperatio
It would be easy to say that Greece was already a full member when die Ossies were still tinkering around with their planned economies. However, that is exactly what the powerful and the filthy rich would like us to do: "divide et imperat".
We need a Europe with more social provisions
The Eurocrats in power only think about economic expansion, and that the original "European" idea has been abandoned. Instead of a European Community, the EU has become nothing more than a huge free trade zone, just like NAFTA.
Read what wiki has says about NAFTA, and you know where the financial institutio
2) "they were protesting when the retirement age was kept at 53 years of age and when civil servants, who were already underworke
3) The Greeks take the least back from Europe, compared to richer industrial
4) Amongst the bigger beneficiar
Most outside of Greece don't realize that fully 3 quarters of the population pay their taxes, which are deducted at source. It's mostly the rich and powerful that abdicate their responsibi
I think Diane went to the Taste of the Danforth and hung around some of the 3 am bouzouki crowd for her insight on the working habits of main land Greeks.