Greece plans referendum on austerity measures

[epepke]

The problem is industry, or rather, the lack of it. Greece just isn't an industrial powerhouse.

True, but in terms of agriculture, it's pretty good. Plus, what they do agriculturally is good for transport.

If I could get good Greek extra-virgin olive oil for $20 per gallon retail the same as I can do for Spanish olive oil, I'd do it in a heartbeat.

There's also a long-standing tradition of pervasive tax evasion, which they really, really need to address if they ever plan on getting their public finances in order.

That is a genuine problem.

 

[The Don]

Too bad. Let the Greeks choose, but also take the consequences of their choice.

I think the best for all in the longer run would be for Greece to leave the Eurozone, and devalue their currency like crazy to pay off their debt. The devalued currency would boost export and tourism, which could make it quite alright.

If the debt is denominated in hard currency (Euro, Dollar, Yen) then devaluing the new-Drachma won't help and may make things worse.

You are right about the effect of the devalued currency on tourism and it'll help any industry with a significant labour content.

Any imported goods will of course get a lot more expensive for the Greeks.

 

[Muldur]

Too bad. Let the Greeks choose, but also take the consequences of their choice.

I think the best for all in the longer run would be for Greece to leave the Eurozone, and devalue their currency like crazy to pay off their debt. The devalued currency would boost export and tourism, which could make it quite alright.

Except for all those Greeks who could no longer afford to buy food, pay rent, etc because their salaries became so much toilet paper.

Hyperinflation is NEVER desirable.

 

[Humes fork]

Except for all those Greeks who could no longer afford to buy food, pay rent, etc because their salaries became so much toilet paper.

Hyperinflation is NEVER desirable.

It would not be hyperinflation. In fact, plenty of economies have got back on track be devaluation.

The prices for Greek products would (I think) follow the devalued currency, and be affordable, or as affordable as now. However, imported products would be much more expensive.

But as you can see, other nations have successfully devalued their currencies.

 

[SezMe]

And doing something about the corruption which is worse than some Eastern European states. It's bad for entrepreneurship and investment.

I was not aware that corruption was so bad in Greece. Do you have somewhere I would read up on it.

It's not about tax increases, it's about enforcing the current tax code. Tax evasion is a national sport in Greece.

Same with tax evasion.

 

[Virus]

I was not aware that corruption was so bad in Greece. Do you have somewhere I would read up on it.


Same with tax evasion.

Look up a group called Transparency International. They do international rankings.

 

[SezMe]

Look up a group called Transparency International. They do international rankings.

Thanks. Here's their 2010 ranking. Greece is low but in the same ballpark as all the adjacent countries. Even Italy is not much better.

 

[Humes fork]

Thanks. Here's their 2010 ranking. Greece is low but in the same ballpark as all the adjacent countries. Even Italy is not much better.

I think Italy is severely burdened in this regard by their mafias and the corruption they bring about due to contacts with politicians.

 

[KDLarsen]

Re: the tax evasion, this article from last year pretty much sums it up:

ATHENS — In the wealthy, northern suburbs of this city, where summer temperatures often hit the high 90s, just 324 residents checked the box on their tax returns admitting that they owned pools.

So tax investigators studied satellite photos of the area — a sprawling collection of expensive villas tucked behind tall gates — and came back with a decidedly different number: 16,974 pools.

Personally, I'm slightly baffled by the reaction to the austerity measures. Does the Greek protestors disagree that their country's finances are, to put it politely, ****? If not, what have they proposed to correct the situation?

 

[Humes fork]

Re: the tax evasion, this article from last year pretty much sums it up:



Personally, I'm slightly baffled by the reaction to the austerity measures. Does the Greek protestors disagree that their country's finances are, to put it politely, ****? If not, what have they proposed to correct the situation?

Well, that's the thing. Apparently they consider it perfectly fair to send the bills elsewhere. Greek newspapers compare the Germans to Nazis, and claim that Germany is now trying to do to Greece what it failed to do under World War 2. I don't have the slightest sympathy for the protesters. They are really protesting for their right to have others pay the parts of the taxes they refuse to pay.

 

[erwinl]

Well, that's the thing. Apparently they consider it perfectly fair to send the bills elsewhere. Greek newspapers compare the Germans to Nazis, and claim that Germany is now trying to do to Greece what it failed to do under World War 2. I don't have the slightest sympathy for the protesters. They are really protesting for their right to have others pay the parts of the taxes they refuse to pay.

This,

That is why I'm almost sorry the referendum was cancelled. One way or the other it would at least have gotten clarity.
Now they have (or will have) a new government and thus get more of the aid money the EU provides.
My fear is that, next year, the Greek will vote for parties that will oppose the austerity and thus turn back the clock to last week, but by that time they will have gotten more aid money.

 

[davefoc]

Re: the tax evasion, this article from last year pretty much sums it up:



Personally, I'm slightly baffled by the reaction to the austerity measures. Does the Greek protestors disagree that their country's finances are, to put it politely, ****? If not, what have they proposed to correct the situation?

I have a bit of an unsophisticated view of all this. Let the people that loaned Greece the money suffer.

Some political leaders thought it was a good idea to loan Greece more money than it could ever remotely pay back. The average Greek probably benefited hardly at all and now the con artists that loaned the money as part of their scam want to put Greece on a big austerity program to help cover their asses.

I think the world would be better off if the only loans to nations were collateralized by specific projects. Like if somebody wants to build a dam they can put up the dam as collateral. Everything else should just be written off immediately as a gift. Loaning and borrowing by nations has become a giant cynical game that destabilizes the world economy and that has nothing to do with providing benefits to the citizens of a country.

So now there's a bunch of Greek bashing. I think they deserve bashing sort of. The fact is that political leaders Greek or not will usually spend as much money as they can, even if that involves massive borrowing. That is just the way it is. Politicians are corrupt and if they can curry favor by destabilizing a country with foreign debt in the short term that's what they'll do. The US has been driving down that road for the last 12 years or so with only the slightest indication that there is any end in sight.

 

[Neally]

Some political leaders thought it was a good idea to loan Greece more money than it could ever remotely pay back. The average Greek probably benefited hardly at all and now the con artists that loaned the money as part of their scam want to put Greece on a big austerity program to help cover their asses.

You forget the part about the massive tax evasion and job benefits that much of the population benefits from. Sure there is corruption at the top, but plenty at the bottom too. Lots of blame to share.

I think the world would be better off if the only loans to nations were collateralized by specific projects. Like if somebody wants to build a dam they can put up the dam as collateral.

And if they default, then what, repossess the dam?

The fact is that political leaders Greek or not will usually spend as much money as they can, even if that involves massive borrowing. That is just the way it is. Politicians are corrupt and if they can curry favor by destabilizing a country with foreign debt in the short term that's what they'll do. The US has been driving down that road for the last 12 years or so with only the slightest indication that there is any end in sight.

Indeed it has, but it's not just about corrupt politicians. Unions and seniors keep demanding more benefits and it's political suicide to make any noise about reining in the entitlements.

 

[davefoc]

You forget the part about the massive tax evasion and job benefits that much of the population benefits from. Sure there is corruption at the top, but plenty at the bottom too. Lots of blame to share.

I didn't forget them and I agree that the general Greek population probably got something. But borrowing a bunch of money had the effect of deferring the time when the Greeks had to get realistic about that stuff. So the benefits to the degree that they existed were transitory for most Greeks and probably involved a lot of artificial inflation of assets that evaporated when reality was forced upon the economy. My guess still is that the average guy in net did pretty poorly in all this, he might have done a little better while it was going on but then he gets hit in the face with economic disaster. Unless he was one of the lucky one to profit significantly while the getting was good the net impact on his life was probably negative.

And if they default, then what, repossess the dam?

Assuming that the country that borrowed money doesn't descend into lawlessness the output of the dam could be used to pay off the loans against it.

Indeed it has, but it's not just about corrupt politicians. Unions and seniors keep demanding more benefits and it's political suicide to make any noise about reining in the entitlements.

Sounds like we're on the same page here. I'd be a lot more optimistic about stuff if I saw a way out of this until economic reality is forced on people and by that time the disaster has the potential to at least rival the depression. I just don't hear anybody speaking realistically about the problems yet. Somehow the message that things are bad and they're not going to start getting better until hard unpopular decisions are made just doesn't seem to be the winning one if you want to get elected.

 

[Neally]

But borrowing a bunch of money had the effect of deferring the time when the Greeks had to get realistic about that stuff. So the benefits to the degree that they existed were transitory for most Greeks and probably involved a lot of artificial inflation of assets that evaporated when reality was forced upon the economy.

Well yeah, it's always hard to face reality when the bill comes due. The continuing protests are about blaming everything on the banks or politicians without any acceptance or recognition of their own part in continuing to vote in those politicians that promised more of the same. Just like now, any discussion of managing the entitlements, you get characterized as wanting to take away grandmas medicine and throw her out of her house.

Assuming that the country that borrowed money doesn't descend into lawlessness the output of the dam could be used to pay off the loans against it.

Thus throwing everyone into the dark, or in the case of highways, jacking up the tolls so that no one can afford them. I still don't see using the funded projects for collateral as a workable solution.

Sounds like we're on the same page here. I'd be a lot more optimistic about stuff if I saw a way out of this until economic reality is forced on people and by that time the disaster has the potential to at least rival the depression. I just don't hear anybody speaking realistically about the problems yet. Somehow the message that things are bad and they're not going to start getting better until hard unpopular decisions are made just doesn't seem to be the winning one if you want to get elected.

Yep, kicking the can down the road is the only way to survive politically and that's not going to change until there are no more road to kick the can down.

 

[timhau]

Well yeah, it's always hard to face reality when the bill comes due. The continuing protests are about blaming everything on the banks or politicians without any acceptance or recognition of their own part in continuing to vote in those politicians that promised more of the same.

Yep. It's not unlike Iceland; there was a lot of protesting against top politicians in 2008 after the big Icelandic banks went down the drain and took the country's economy with them. However, anyone going into the 2007 parliamentary elections with a program to rein in the banks and stop cheap credit might just as well have campaigned against him/herself.