ATHENS, Greece (AP) — A radical left-wing party vowing to end Greece's painful austerity program won a historic victory in Sunday's parliamentary elections, setting up a showdown with the country's international creditors that could shake the eurozone.
Alexis Tsipras, leader of the communist-rooted Syriza party, immediately promised to end the "five years of humiliation and pain" that Greece has endured since an international bailout saved it from bankruptcy in 2010. |
The party moderated its rhetoric to some extent prior to the election so there is some hope that they'd be more centrist than their reputation, and at present they have a plurality (though the final vote count could give them an outright majority). But this is arguably the biggest threat to the Eurozone as presently constituted in the last couple years. Greece could leverage a better deal out of the "troika" that handles its international finances or one or both parties may provoke a crisis. Interesting times.
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My favorite statistic, which I cannot immediately access but believe is correct, pertains to the government-owned train system: apparently, the cost structure is so high that, if they shut it down and let every passenger take a privately owned cab to their destination, anywhere in the country, they would save money. They take in something like 1/9 of the actual cost in fares.
I guess it IS good news, in the sense that the place was going to blow up economically at some point, so the lenders, especially from Germany, may just as well have it happen now before they put any more money into the supermassive black hole.
The level of self-delusion in that country in terms of its capacity to pay for itself based upon current policies is bigger than the visible universe. So, why not let a leftist political party take over and get the supernova over with.
The rail system has a small share of passenger miles travelled and carries almost no freight, but has a massive bureaucracy....
A couple of examples:
1) Millionaire doctors pay no taxes. They all report 12,000 Euros, almost to the penny. Income below that isn't taxable. There is no enforceable penalty for lying.
2) Tax revenues fall sharply every election year, because in order to avoid pissing off the electorate, the party in power pulls all of the tax collectors off the streets.
3) In 2009, I believe it was, protesters seeking their unsustainable government subsidies back firebombed a bank, in full view of the police. Most escaped over the roof, but three died. The general consensus was that it served them right for actually working. There were hundreds of witnesses, including police. No one was arrested.
Remember the Parthenon!
My favorite statistic, which I cannot immediately access but believe is correct, pertains to the government-owned train system: apparently, the cost structure is so high that, if they shut it down and let every passenger take a privately owned cab to their destination, anywhere in the country, they would save money. They take in something like 1/9 of the actual cost in fares.
I guess it IS good news, in the sense that the place was going to blow up economically at some point, so the lenders, especially from Germany, may just as well have it happen now before they put any more money into the supermassive black hole.
The level of self-delusion in that country in terms of its capacity to pay for itself based upon current policies is bigger than the visible universe. So, why not let a leftist political party take over and get the supernova over with.
This is the essence of the Eurozone's problem. They can't have members that behave outside of there defintion of normal economic behavior (whatever they decided that was). Greece has made an attempt, and failed. This should have been anticipated.
The key is the terms of the first bailout settlement. If the parties did not agree to a well-defined exit plan, this will be ugly. But I suspect the latter. The agreement lasted for over four years, which is pretty remarkable and likely was thoroughly thought out. Its allowed banks to slowly reduce their exposure so that they should be prepared. And if Greece decides that they can't live within the norms of the Eurozone, their exit will make it stronger...a good thing
This reminds me exactly of the subprime disaster - banks are lending people who have no capacity or intent to ever pay back large sums of money, and ultimately disaster ensues. Well - no difference here between those Greeks and the no-doc subprime lenders who were buying million dollar homes despite a sub-100k a year income.
Mind you, not trying to be sympathetic to the Greeks here. It takes two to tango; taking out 5 year loans for vacations didn't help their cause. But the masses there had been living hand to mouth there for generations, and had settled in to their socialist tendencies. Bringing them into the EU in that manner just perverted the situation that much more. Tax collections are a joke, but capital markets there are extremely fucked up, there's very little real economic development, there's shit for employment opportunity, and any time someone ever did try to foster an environment that might try to change things a little, the Greeks' tendency to revert to lazy and slow killed it in it's place.
My favorite line from Tina Fey's SNL updates, talking about how something would disrupt Greece's #1 export, hard working Greeks. Anyone who wanted a better life for themselves there has long since left.
and not austerity policies of Berlin and Brussels that have been tried for Six YEARS!
so how do you explain 25% unemployment in Spain
or 17% In Croatia and Cyprus
15% in Portugal?
I think Albert Einstein said the definition of insanity is doing the same thing over and over again and expecting a different result.
the Greek people finally had enough with the EU's insanity and are charting a different course.
I took a trip there at the begining of the crisis. Most showed little or no concern for any of it. Some thought the protests were staged to make it seem like they cared.
manh george : 1/25/2015 11:47 pm : link : reply
as to how the Greek economy works--or rather doesn't work, check out the chapter on Greece in the brief book by Michael Lewis called Boomerang.
A couple of examples:
1) Millionaire doctors pay no taxes. They all report 12,000 Euros, almost to the penny. Income below that isn't taxable. There is no enforceable penalty for lying....''
IMO doctors here should not pay taxes either.
You might have more and more people going to med school,
more supply of doctors,
easier to get to bottom line profit for doctors that own their own practice,
all factors lowering the price of a doctor visit, and thus healthcare.
Maybe doctors should also get property tax relief as well. Why would anyone resent them for becoming 'millionaires' if they are helping people get healthcare?
One could apply this to K-12 teachers as well, asses them no income taxes and give them property tax relief.
Background was that some of the Nationalists had collaborated with the occupying Nazis, however, do not underestimate how deeply many Greeks at the time, and still, resented the Greek Marxists attempts to create a 'managed economy' and rhetorical plans to tell people how to run their lives.
I believe the British Army had to intervene to put down the Marxists.
“Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery..”
― Winston S. Churchill
(I believe the greek civil war started in 1945, Churchill being still in office in Britain, and needing to communicate with allies about Greek operations)
.
And if as someone else said the Germans and particularly the German banks have used the last few years as an opportunity to whittle away their exposure this may actually be a desirable outcome for the rest of Europe, particularly as a Greek basket case may serve as a powerful cautionary tale for the other peripheral states balking at economic realities. But nobody is blameless in this; the German manufacturers were the beneficiaries of the imbalances on the Greek books, the German banks made plenty of money based on the implicit guarantee that in important ways actually held true, at least for long enough. And frankly, how ----ing blind could the Europhiles have been in supposing that the Greek economy could be effectively harmonized with that of Germany, the Low Countries and other frugal, risk-averse states?
Unless they try and peg it, then Greece can become Venezuela, sans oil.
Unless they try and peg it, then Greece can become Venezuela, sans oil.
Rob, your first paragraph basically detailed Greece post-WWII until they joined the EU. And honestly, given the circumstances and their preferences, I think they're better off going back to that. They've lived the good life for almost two decades now, though, and it's going to be a rude awakening for them.
Personally - given a fairly educated populace, I think they might be able to cash in a bit thanks to globalization and outsourcing. Most of them speak English, with a bit of training and a cheap drachma they might open up some industry there, something that's sorely needed.
(Or am I 'talkin ou me aas')
Annual inflation at 1000%, with a complict population who will know how to cope.
Annual inflation at 1000%, with a complict population who will know how to cope.
As others have pointed out there are people in Greece who are virtually recession-proof, as their standard of living is not much impacted by the vicissitudes of the market. But around 40% of the population lives in just two cities and I doubt they're going to have as easy a go of it. You're likely to see a rise in out-migration and you'll probably see resulting political and potentially social instability. It is very difficult to go from a couple decades of relative prosperity to a period of managed decline to out and out chaos.
(Or am I 'talkin ou me aas')
They're already doing that...
giantfan2000 : 8:53 am : link : reply
still grasping at the strawman of greeks not paying taxes and having a bloat bureaucracy to explain the 26% unemployment in Greece
and not austerity policies of Berlin and Brussels that have been tried for Six YEARS!
so how do you explain 25% unemployment in Spain
or 17% In Croatia and Cyprus
15% in Portugal?
I think Albert Einstein said the definition of insanity is doing the same thing over and over again and expecting a different result.
the Greek people finally had enough with the EU's insanity and are charting a different course.
Yes, austerity was overdone as a solution in a number of countries. But to suggest that the Greek situation is about that rather than being about a system of rampant tax cheating; lazy, corrupt overpaid government workers; and corrupt leadership that has gone along with a massively unbalanced budget for decades is exactly about Einstein's definition of insanity.
As was noted above, it was a horrible mistake to let them into the EU in the first place. Greece tripped all over itself to get access to capital it didn't deserve.
Under the current system, Greece has no comparative advantage in any sector of the global economy except archaeological ruins and pretty islands. Neither of those export very well, and living off of tourism is a third world strategy.
as they incorporated [some aspects of] the marxists view [government programs broad and large] they allowed those opposed (and ultimately many others) to have an 'out'....[that they could avoid taxes].
looking back, as in other parts of Europe, while the occupying german fascists were certainly big government state-ists,
those supporting them locally may have been more of the anti-marxist variety, in other words, people wanting little to no government in their business, old fashioned independents.
if the current system was the result of those two groups seeking compromise, and taking a sort of strange view on each, that could explain the weird disconnect between what they spend and what they take in.
Reminds me in a way of when a company agrees to a merger that doesn't seem so favorable - and then you realize that the senior management cashed out big time, leaving the rest of the suckers to hold the bag. Greece is a democratic country so they don't have that excuse, they could always have voted it down, but there were promises made that were greatly exaggerated.
I still have family there, so it's mixed for me. I knew they were heading toward disaster, but so did half of them. The ones who didn't thought they could latch on to all the benefits of being a first world nation without the work ethic or proper functioning economic system.
As for the statement above that their culture advanced ahead of their economic system, that's untrue. Just remember that in between ancient times and today, there was Roman occupation, 400 years of Ottoman occupation, and then the clusterfuck that was WWII and the Marshall Plan. Parts of Greece haven't even reached a hundred years of independence since Ottoman rule. All of that mixed together means there's very little left from ancient times beyond the pride and the archaeological ruins.
Depending upon your perspective, we may have a problem with politicians promising programs to garner votes- Greek politicians promise and deliver government jobs to supporters, with salary and benefits and iron clad provisions against being fired. No matter who won in Greece, the bureaucracy - decade by decade - won.
As noted above, it IS sad for Greeks who will suffer from this, but it also reflects the adage of voters getting the government they deserve. The economic culture of laziness and cheating got out of whack decades ago, and I do not suggest I know enough of the history as to why.
The disaster they are going through is one of simple arithmetic--massively more spending than revenues, no identifiable economic strategy, entrenched laziness among too large a proportion of the population, and a sense of entitlement among those with the financial wherewithal to pay more in taxes if they had to. They simply cannot get their budget deficit under control, and the downward spiral was just made worse by the new election. So, let them spend more--they just can't expect German banks to cover the shortfall this time.
I've had some work in Russia on and off the past year, and although I knew about the kleptocracy there, I had never seen it first hand. After witnessing it for myself, I walked away unimpressed in comparison to the Greeks (although on a much larger scale).
and other cases (venezuala?) where they just ramped up the rhetoric and played fake econ / votes for jobs rackets for a while, before the bubble burst.
It's tough to recover from the mentality created by 90 years of autocracy combined with rampant cronyism.
As to taxes, I don't think there is a country in the world where people pay what they should when they think enforcement is selective and/or very lax.
As to taxes, I don't think there is a country in the world where people pay what they should when they think enforcement is selective and/or very lax.
There are plenty of hard working Greeks, both here and abroad. The ones you see here emigrated mainly due to the lack of opportunity there. The ones who are there, who all look lazy and just thrilled to be suckling at the govt's teat, are really only doing so for lack of any suitable alternatives.
As for tax enforcement - there really is no such thing in Greece. Not that tax evasion doesn't exist everywhere, it just doesn't exist on the scale it does in Greece. Granted, the tax code there is a little ridiculous (example: some possessions result in luxury tax, like a pool or an expensive car, despite the fact that you should have been taxed on your wages and paid a VAT when buying them).
I had someone who used to work for me who was a former Greek IRS-equivalent employee. His job was to study maps to find homes that had pools that were undeclared and tax them. They started to do patrols by helicopter, until ultimately giving up because even when they did find someone, their chances of collecting were close to nil.
Venezuaela could have fared a lot better, I think, had they not had in power a skilled demagogue such as Chavez to help keep alive the illusion that living off of oil revenues was OK.
does this show some sort of structural problem even with all the spending?
spending up, inflation down, but GDP was 'meh'
not sure, but it looks like, what was a boom globally in 1990s through the 2000s was sort of 'meh' in greece.
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Venezuaela could have fared a lot better, I think, had they not had in power a skilled demagogue such as Chavez to help keep alive the illusion that living off of oil revenues was OK.
As much as the illusion of living off of oil revenues, the further illusion that your national oil company can provide for the nation when it is being run by a bunch of political henchmen.
Quote:
Falling oil prices and incompetent governance mean Venezuela might default on its debts, leaving major trading partners like Brazil holding the bag.
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I thought Greece was Europe's Venezuela?
No Coke! Pepsi.
but noone mentions that their military spending has been out of control for years
although Greece military spending was cut after the 2009 meltdown it was cut much less than social services
As a percentage of GDP Greek military spending is still double that of any other country in the EU
Indeed, over the past several months, the Greek media have written that Turkey violated Greek airspace at least once...
There is another political reason for exempting the army from cuts. Closing some of the 500 military bases and 17 training centers would mean sending tens of thousands of young soldiers into the ranks of the unemployed, adding a dangerous component to social unrest, according to Sipri, a Swedish research institute. Perhaps, analysts said, the Greek armed forces will have to wait for any major restructuring until the country’s economy picks up.
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