By Wolf Richter, San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.
In Greece, three-quarters of the independent doctors, lawyers, and engineers declare taxable income below the existential minimum. Tax fraud amounts to €20 billion per year (8.5% of GDP). And tax dodgers owe €63 billion in unpaid taxes (27% of GDP). The country is bankrupt and has been kept afloat by the Troika (EU, ECB, and IMF), of which Germany is by far the largest contributor. And the numbers are staggering: the first bailout package of €110 billion, the current bailout package of €130 billion, and the debt swap of €107 billion, in total €347 billion, amount to a mindboggling 150% of Greece’s GDP!
And even that won’t be enough, apparently, according to a crescendo of German politicians, among them Finance Minister Wolfgang Schäuble who inserted these devastating words into his letter to the members of the Bundestag: “I cannot give any guarantees that the path taken will lead to success.” And: It’s possibly “not the last time that the German Bundestag will have to deal with financial aid for Greece.” Thus, he put a third bailout package on the table.
On Monday, the Bundestag will vote on the second bailout package of €130 billion plus €24.4 billion from the first package that hasn’t been paid yet, a total of €154.4 billion. There is resistance within the governing coalition. And the opposition SPD and Greens accused the government of deception. The documents they received were incomplete, they said. Though there were several hundred pieces of paper, they didn’t include the most important: an analysis of Greece’s ability to service its debt in the long term. Most likely, they said, Greece would need to be bailed out again after 2014 because it won’t get its finances in order by then, and won’t be able to fund itself in the capital markets. €50 billion would be needed, they estimated. And yet, the SPD and the Greens will largely vote for the bailout, which is expected to pass.
But it’s a theoretical approval. Theoretical, because in reality, payment of the tranches will be conditioned on the implementation of all promised measures down to the last iota, however Teutonic they may be—and it’s almost certain that Greece won’t be able or willing to comply with all of them. The latest iota is a leaked document that specified that 160 employees of the German Ministry of Finance were ready to head to Greece to help install a functional financial administration.
“The European Union is suffering under Germany,” said Georgios Karatzaferis, president of the right-wing LAOS party. He accused Chancellor Angela Merkel of trying to “impose her will on Southern Europeans.” And he wasn’t the only one lashing out. For the bitter turmoil inside Greece, read…. Greece at the Point of no Return.
In Germany, the chorus for strict implementation has been loud. While Greece cannot be forced to implement and stick to the austerity and reform package, Bundesbank President Jens Weidman said Friday evening, “it must be clear that more financial means cannot be made available if Greece does not adhere to the agreements.”
And Merkel’s coalition partner, the CSU, has been relentless. Among them, Hans Michelbach, who said that pressure for reform must be increased. Greece “overburdened to excess” the patience of the Troika, and that could not continue. “There can only be new money if all demands for the previous tranche have been met.” That would include privatizing its state-owned enterprises. And about the third bailout package that Schäuble couldn’t exclude? “We’re giving Athens an additional chance with the second package, but the country has to use that chance. One thing is clear: since Greece already didn’t use the first chance, there won’t be a third chance.”
So the plan becomes clear. And it is now politically correct to pronounce it in public: Greece should decide on its own to leave the Eurozone. This way, no politician outside Greece can be blamed.
“The chances for Greece to regenerate itself and become competitive are certainly greater outside the Monetary Union,” said Minister of the Interior Hans-Peter Friedrich (CSU). “I’m not talking about kicking Greece out, but creating incentives for an exit that it can’t refuse.”
Luxembourg Finance Minister Luc Frieden said it too: “If the Greek people or the Greek political elite do not apply all of these conditions, they exclude themselves from the Eurozone.” All of these conditions. Then the crucial words: “The impact on other countries will now be less important than a year ago.” And that’s has been the strategy all along. Read…. Firewalls Are in Place, Markets Are Ready: Now Greece Can Go to Heck.
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Wow…
“I’m not talking about kicking Greece out, but creating incentives for an exit that it can’t refuse.”
I won’t say “no”, but I am disinclined to acquiesce to your request… riiiiight.
“In Greece, three-quarters of the independent doctors, lawyers, and engineers declare taxable income below the existential minimum.”
So in Greece the professional classes are doing what the hyper-rich do everywhere?
Mind you, professionals,artisans, farmers throughout Europe are fiddling their taxes. The Greek case may be especially bad – but then again, it may not be – but it’s rife throughout the Eurozone, including in Germany : http://www.spiegel.de/international/business/0,1518,646558,00.html
That’s a sad reality, there will always be loop holes and ways to evade taxes, often favouring the rich.
Yet, if it becomes endemic and the tax revenue is only 60% of what it should be, then we have a problem and I fail to see how playing it down by proclaiming that “in Greece the professional classes are doing what the hyper-rich do everywhere” is helpful.
The right solution woul dbe to plug tax loop holes for corporations and the like, and not turn a blind eye on widespread tax evasion by doctors and lawyers.
Most Companies Pay No Federal Income Tax
Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.
The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.
Collectively, the companies reported trillions of dollars in sales, according to GAO’s estimate.
“It’s shameful that so many corporations make big profits and pay nothing to support our country,” said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.
An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called “S” corporations pay taxes under individual tax codes.
“Half of all business income in the United States now ends up going through the individual tax code,” Edwards said.
http://www.cbsnews.com/stories/2008/08/12/national/main4342535.shtml
http://www.gao.gov/new.items/d08957.pdf
“Can’t refuse,” “can’t refuse”…. Now what does that remind me of? I know I’ve heard that phrase somewhere…
“The European Union is suffering under Germany,” said Georgios Karatzaferis, president of the right-wing LAOS party. He accused Chancellor Angela Merkel of trying to “impose her will on Southern Europeans.””
——-
I’m sure Mr. Karatzaferis would prefer a return to the old modus of European policy where the Germans paid the bills and kept their mouths shut. Won’t happen, though.
While I sympathize with the Greeks and their current predicament, they really have to make up their minds. They can either have a strong welfare state and a big public sector or they can have low taxes. Right now, they seem to demand a strong welfare state and a big public sector while trying to avoid paying for it by engaging in tax fraud on a mind-boggling scale – and this has been going on for a long time.
A First World social safety net, infrastructure and public services can’t be paid for with Third World tax revenue. One reason why e.g. Germany is fiscally somewhat sound, while still being able to run a decent welfare state, is the crushing tax burden placed, in particular, on middle class incomes, as well a a slew of regressive consumption taxes.
I am very much in favour of a strong welfare state but at the same time, I understand that it comes at a price.
In Italy and Germany – two examples of successful political and monetary union with automatic transfer payments for the weaker regions of the union – the Mezzogiorno and the states of the former DDR are still economic basket cases, after 140 and 20 years of massive transfers, respectively.
Greece, by joining an exclusively monetary union with no transfer payments condemned itself to backwater status for the long run. Compared to it, the Mezzogiorno will soon look like a success story – unless there is a change in the course of events.
Perhaps the time has come for the Greek people to hold the elite accountable for that disastrous strategic choice of joining the euro, taken more than a decade ago.
Meanwhile, Greece should seriously consider accepting the proposal of the German Interior Minister that it leave the EZ with Germany’s tacit approval. Because nothing – I mean nothing – could be worse than staying in the euro under the present desperate conditions.
Well said, Jose.
It’s something that many German-bashers don’t get.
Why blame Germany? Germany didn’t force Greece to join an ill-fated monetary union (ill-fated b/c of no transfer/fiscal union). The Greek pols did this.
So I blame the Greek pols who agreed to this monstrosity, and who today refuse to leave it.
Why?
I would argue because these Greek politicians care more about their benefits/privileges in Brussels than about the average Greek citizen. Were they to initiate Greece’s departure from the Eurozone, they would become personas non-gratas in Belgium, and they can’t face that.
So, instead, it’s austerity as far as they can see for the Greek citizen, while it’s Four Seasons in Brussels for them.
And Greece didn’t force Germany to engage in what amounts to a spectacularly irresponsible form of vendor financing. Ultimately Greece’s problem is not some mythical welfare state but an unsustainable balance of payments. And that is the fault of the elites in ALL the Eurozone countries.
Greece doesn’t have a strong welfare state. It’s actually almost dead last among European countries in social spending, with the burden of healthcare, education, unemployment and housing costs falling almost entirely on the individual, not the state. The tax evasion story is low hanging fruit for the media, but it’s an unlikely culprit in Greece’s struggle. Consider the fact that ‘fiscal role model’ Germany has faced massive tax evasion scandals of its own in recent years, and, per its agreement with Switzerland, seems to now be promoting tax evasion by its wealthy citizens.
But let’s play along with your line of reasoning. Then what explains Ireland, in much the same predicament as Greece, but with neither an expensive welfare state nor a tax collections problem to speak of?
I don’t think Ireland and Greece are quite comparable.
Yes, Ireland and Spain were brought low by massive housing bubbles that burst. Unrelated to problems in Greece and other “periphery” countries.
Here’s an article from kathimerini that corroborates the leak reference from Handelsblatt:
Berlin to send tax officers to help Athens
German press reports on Saturday suggested that Berlin intends to send to Greece at least 160 tax officers who would volunteer to assist with the operation of the Greek tax collection mechanism.
“As the opposition of lending countries grows regarding the new bailout for Greece, so does the belief that Athens cannot proceed to any further cuts, otherwise the economy will be strangled,” writes Der Spiegel magazine. As the collection of taxes is almost impossible, the state’s revenues are crumbling, argues the German magazine, adding that the tax authorities must do something with the money that citizens owe.
Financial magazine Wirtschaftswoche adds that “the construction of a modern public sector is required. This is where the [German] federal government wants to lend a helping hand. More than 160 volunteers of the German financial authorities are ready, according to the general secretary of the Finance Ministry, Hans Bernhard Beus.”
“Volunteers must have good knowledge of English, while there are several who speak Greek, too,” the German magazine notes.
Greece though had a high military budget for the size of its economy.
I agree that there is a problem with the “low taxes, high debt, and large welfare state” narrative. This seems to be more of a case of low taxes, high debt, and lots of non-welfare spending, such as on the military, but this narrative may hit too close to home.
But I’d be willing to bet that the working and middle-class in Greece pay more than their fair share while the really wealthy pay almost nothing. And the recent “reforms” will only serve to increase the tax burden on the middle-class, while ignoring the tax scofflaws.
Well, this is all wrong of course. The attempt to make the Greeks pay taxes is part of the bankster conspiracy to put the suffering Greek people under the jackboot of neo-liberal German colonialism. It is obvious that those poor professional people are really suffering quite unfairly under the neo-liberal cult of austerity. Which is all due to the Germans! If they would just stop exporting so much to Greece, and making Greece suffer under the neo-liberal bankster inspired Europlot, Greece would be just fine.
The real problem is nothing to do with this tax story which is just a neo-liberal attempt by people who probably are Global Warming Deniers funded by fossil fuel interests who don’t even believe in evolution, they are anti-science like they are anti sensible economics. The real problem is that these poor Greeks were goosemarched into that instrument of oppression, the Euro.
They need to repudiate it, repudiate their debts, throw off the German yoke, get back to their own currency and central bank, and none of these professionals would have any need to pay taxes. Obvious, when you think about it.
You realize that the tax issue is nothing but a cute distraction from the real problem. Ireland, Portugal, Spain, and Greece are all in the same position. A current account deficit is a demand leakage. The leakage is either replaced or the economy shrinks. Cracking down on tax cheats does not magically close a current account deficit.
You still need revenue in order to have transfer payments. A state that can’t even properly collect taxes stops being a state and becomes a mere geographic entity.
And Greece pre-crisis raised 30% of GDP in revenue, more than the US does. Raising the tax take to a more European normal 40% of GDP doesn’t in itself do anything to close the current account deficit. And under the institutional structure of the Euro, there are only two options, borrow the money back at interest, or undergo austerity without devaluation, a process which has essentially zero chance of successfully turning around the trade deficit.
Thanks for some relief to the “The Nazis are coming!” screams. Having said that, the Germans are currently enjoying very good times:
http://www.faz.net/aktuell/wirtschaft/unternehmen/automobilindustrie/rekordpraemien-in-automobilindustrie-jetzt-kassiert-die-arbeiterklasse-11662590.html
IMHO Schäuble has done the math and found that there’s a good chance the payoff will continue even after transfering to their naer-do-well south-of-the-border relatives more from the gusher.
The question is, is there an extractive quality to current German prosperity, and are the transfers back to Greece just compensation for what the country has lost as a result of Germany’s EMU prominence? In other words, are Greece’s problems attributable to EMU membership alone? Clearly the answer is no. They were a financial mess before the Euro. The Euro provided a means for corrupt politicians and financial industry talent to exponentially grow the consequences of the mess.
The auto workers aren’t “the Germans”, they are a very privileged segment of the German work force. Most German workers in manufacturing don’t earn as well and work longer hours. Ditto lower level white collar jobs.
Oh come on: unemployment at a 20-year low, 5% of the population on Hartz IV i.e. at the default, public health insurers admitting that they could lower rates. Germany is sometimes called a corporate society, not in the sense that Exxon owns everything but in the sense that society is highly organized and interconnected (except at new years). Admittedly the automobile industry is near the top of the pyramid. Who’s at the top of the pyramid in the USA – financial industry talent, management? Waiting for the trickle down from Dimon & Co. should be more frustrating, I suggest, than what travel agents in Ingolstadt may be going through now.
It’s certainly not the average German worker who is benefiting. Between 2000 and 2007, Germany had the second highest rate of increase in manufacturing productivity in the Eurozone and the second lowest rate of increase in labour costs.
http://www.reuters.com/article/2012/02/08/us-germany-jobs-idUSTRE8170P120120208
Riiight… if by “good times” you mean:
1. Wage Inequality:
“”I’ve had some people earning as little as 55 cents per hour,” said Peter Huefken, the head of Stralsund’s job agency, the first of its kind to sue employers for paying too little. He is encouraging other agencies to follow suit.”
2. Private Sector Fraud:
“”A lot of my friends work as carpenters, but companies describe them as janitors in their contracts to avoid paying the salary negotiated in the collective wage agreement,” said one 33-year-old unemployed man in Stralsund who declined to give his name.”
and 3. Low aggregate demand:
“Depressed wages and job insecurity have also kept a lid on domestic demand, the Achilles heel of the export-dependent German economy, much to the exasperation of its neighbors.”
Then allow me to quote the obvious:
“ILO’s Ernst says Germany can only hope that other European countries do not emulate its own wage deflationary policies too closely, as demand will dry up: “If everyone is doing same thing, there won’t be anyone left to export to.”
Coming soon to a hapless austerity zone near you…
1. The one-euro job, which can “pay” 55 cents ultimately, and can also pay more than one euro, tends to outrage people who don’t know the system, like Americans who want to pretend that no other country can really do it better.
You can only get a one-euro job if you are already collecting. Typically your 55 cents comes in addition to the non-wage benefits that you receive as part of your “job-seeker” (not unemployed please) package, benefits that include social security contributions, health insurance (including dental, optometry, and prescription drug coverage) and re-training. Furthermore, citing Wikipedia:
“Sie wird zusätzlich zu den Leistungen zum Lebensunterhalt ohne Anrechnung auf diese gezahlt.”
Meaning that your 55 cents comes in addition to the wage benefits that you receive as part of your “job-seeker” status, i.e. cash amounting to 80% of your last monthly earnings.
2. Can happen and is a negative externality of a rigid, qualifications-based labor market in which those with qualifications and corresponding employment enjoy relative security while guaranteeing formal quality standards. What you describe can be unpleasant for workers and I know several East Germans who have moved west to find better opportunities. The quasi-carpenters could sue and German labor courts are notoriously worker-friendly.
3. “Depressed wages and job insecurity” are terms that I do not associate with the German labor market. Even after Schroeder/Merkel wages are high and a stunning number of jobs are “secure” which in Germany means that the burden of proof for employers is often prohibitive.
That’s called working under the table and the illegal worker can call in the authoritiesboth the private sector employer and the illegal worker benefit
This is wet tripe from an American Bank apologist. As soon as someone says “start up”, the thought should be of a decadent Roman orgy, with paternalistic faux intellectuals validating the debauchery, taking measurements and so forth as they jam money into their gullets. Default!
Default and put a proveriable knife to the American predators. The Dimons, Blankfiends other Wall Street Mafia find themsleves in a Hellenic bind. uncomfortably rattled. Every American should join in and do the same thing simply stop f$%king paying. Direct non-violent comedy filled action to destroy Military/Financial oppression.
Ha! Whatever those “morning herbs” are, we need to get them to the masses! :)
Capitalism is the study and practice of unearned income.
We use these terms Greece and Germany, but we really need to distinguish between the German and Greek 1% of the kleptocrats who have made out like bandits in all this and the German and Greek 99% who are being expected to pick up the bill for all this.
The same Greek politicians who have had no compunction acquiescing to every turn of the screw squeezing ordinary Greeks have done nothing to go after Greece’s hyperwealthy tax cheats, and let’s face it that’s where the money is.
As always, this is about kleptocracy, who is doing the stealing, and class war, how the kleptocrats have got the Greek and German 99%s pointing fingers at each other.
Thank you, Hugh, I agree. How they frame the public conversation is always interesting and telling.
Why is the focus of the corporate owned media and officials in governments, central banks, and supranational organizations always on the debtor nations, and even subgroups within the society of the debtor nations, rather than on the large transnational financial institutions who are again being bailed out?
The template of blaming the innocent victims of unserviceable levels of debt, and the various schemes to strip a society of its publicly owned assets, increase taxation of the people, and eliminate social services that are innocuously termed “privatization” and “austerity”, is no longer credible at any level. Likewise, the “Divide and Conquer” tactics that revolve around playing members of the 99 percent off against one another over social values issues have become self evident.
Why has there been no public discussion of the role of the original underwriters of these debts and the issuers of the trillions of dollars in derivatives contracts? They certainly have responsibility in this matter.
The metrics to assess whether a sovereign state is creditworthy have been known for decades, just as the metrics are known regarding corporate and individual borrowers but were intentionally ignored as a policy choice during the 2004-2008 time frame.
Again, why did the underwriters fail to exercise a reasonable level of prudence before advancing the funds to Greece or writing credit default insurance, etc. against Greece’s obligations and those of other troubled sovereign borrowers?
There is more to this story… much more. This story goes right to the heart of the global kleptocracy.
why so much sympathy for the greeks: lazy, dishonest, whiners who wanted
something for nothing.
let’s not bother with substance, shall we? Tell us what you really “think”.
any time, foppe. what’s more, if the greeks devalue and the place becomes
cheap as hell, i’ll never go there.
[…]what’s more, if the greeks devalue and the place becomes cheap as hell, i’ll never go there.
Never? OMG, the Greeks must be thrashing themselves at the news…
Troll
I’ve been wondering why Greece doesn’t just leave the euro if not the EU, and why the country hasn’t just been expelled, especially since they seem to have used fraud to meet the requirements of entry!
Apparently one of the flaws with the euro concept was that no mechanism was set up to expel countries. So the European elites might well be trying to set things up so the Greek elites leave on their own. This article is the first I’ve seen that suggests that this is the plan. If it isn’t, then most of the moves of the key actors in this crisis are baffling.
Remember Ed, democracy has essentially been usurped in Greece. The country is basically being led by unelected technocrats (some with ECB resumes). Even though elections loom in April, the Troika has made sure to obligate Greece to terms regardless of who’s in office thereafter. The only real solutions are exit and/or revolution.
The reason is it would make no difference. The story being told here is that the problem is the banks, and particularly the German and US banks, who are thought to be in some way oppressing the Greeks in general. Or sometimes it is thought that there is a Greek kleptocracy consisting of a tiny minority which is in collusion with the US and German banks to oppress their fellow Greeks.
Not what is happening at all. When a government fails to collect taxes, it does not fail uniformly. The people who are not paying taxes and who are profiting at the expense of ordinary working people are the state employees who are charging fees for services, and the professional classes who, as the story says, are simply not paying.
The people who are losing are the ordinary working guys.
The problem has become worse because of the collusion of the government with the state employees and influential sections of the middle and professional classes, to overlook the evasion of taxes and to fund the resulting deficits by borrowing.
You have to realise this is not foreigners oppressing Greeks, this is one section of Greece oppressing another section. Because they can.
Yes, it is Banksters, including American kleptocrats that are intimately involved in samshing the little guy in Greece. Dismissed!
Collecting more taxes would do nothing to help the “ordinary working guys” in Greece. It would simply pull more money out of the private sector in Greece at a time when the public sector has been drastically cut. Much of the money collected via taxation will end up in the pockets of foreign bankers. You cannot solve a crisis and depression which were fundamentally caused by a sharp reduction in money supply by further reducing the money supply. Duh.
150% of Greek GDP! It’s absurd! And the Greeks will default on half of that, meaning the EU gifted them over 170 billion Euros. And was there any benefit from this huge gift? None!
Greece is in an austerity-induced depression, the Euro-zone suffers from a crisis of confidence and on top of that the tax-payers are 170 billion poorer. For absolutely no gains whatsoever! It’s absurd!
So here’s my somewhat radical solution. Just give them the money. No sham loans with counter-productive austerity measures baked in. Just give them the f***ing money to stimulate their economy with. Certainly a much better solution than the current absurdity/obscenity.
Just in, Police search for missing autistic boy! Seriously, gifted them?
If the Greeks were smart they’d withdraw from the EU and go back to the Drachma, of course this means their purchasing power will drop like a rock and there won’t be anyone to loan them money until they get their economic house in order.
Yes but …
Then the Greeks will still have the problems of not generating enough tax revenue to be a modern country.
Almost all of the infrastructure built in Greece in the last 15 years came from funds from the European Union – the new 900 million Acropolis museum, the new airport, the new subway, the new road around athens, and the bridge at Patras.
But the Greek government itself was unable to modernize the road between Athens and Patras. It look the same way it did 40 years ago.
So who knows – do not underestimate the contribution of the Greek Church to the fiasco.
Anyway, if Greece goes to the Drachma how will they pay for all of the BMW’s and Mercedes that crowd the streets of Athens?
Either way, they must fix the tax situation.
This is absolutely right. It does not matter what your currency is if you have a government that cannot collect taxes. It will not help for them to leave the Euro, it will make absolutely no difference. They will still have a huge deficit, they will still not be collecting taxes, they will still be borrowing, their public sector unions will still be totally out of control…..
The currency is not the problem. The behavior is the problem. And the behavior of the middle classes is the greatest problem. They have their rich kleptocracy too, and that has to be fixed. But even if you fix that, you will still not have solved the problem unless you also fix the middle class and public sector union issue.
Yes, maybe they should leave the euro. It will in one sense help, they will be a third world country fully confronted with reality, whereas in the euro there is the illusion of alternatives, and this illusion is part of the problem. In another it will not help. They will be just as poor, just as unable to fund their desired lifestyle without the economic basis for it.
More apologetics for a failed system.
Countries that genuinely don’t raise enough tax revenue (i.e less than 10% of GDP) to fund the apparatus of state – Yemen, Sudan, Haiti, Congo, Chad, Burma, Angola.
And straight from the Eurostat website, Greek tax revenue as a percentage of GDP (2000-2008 av.) – 34.5%. (Higher than Ireland, a touch below Spain and Portugal)
Ah, you say but they were spending 45% of GDP. Well, that’s what happens when you have a current account deficit that averages over 9% during the same period. Either private credit expansion (the Spanish/Irish housing boom solution) fills the gap or government spending (the Greek solution) does. Unfortunately for the Greeks, the fact that they went the public spending route rather than the housing bubble route means they’re first behind the eight-ball now.
It is interesting to see how effective the propaganda of class war has been with regard to Europe. Some blame the Germans. Even more blame the Greeks. This is all great if you are a rich kleptocrat. The primary weapon of class war, as I have said a million times, is distraction. And this pointless blame game is about as distractive as it gets.
Greece violated the euro covenant. Hate to tell you this but so have France and Germany on numerous occasions. And again not Greece, not Germany, but who precisely violated these agreements, and for whose benefit?
Bad loans were made! Well, yes, they were. What’s your point? Why do you blame the Greek people for them when most of the money did not go to them or simply made up for what Greece’s rich were not paying in taxes. So why aren’t you up in arms about all those greedy, stupid German bankers who made loans they knew could not be repaid? Why aren’t you aiming your anger at Greece’s rich and the politicians they own?
Why do you blame ordinary Greeks? Many of them have been out in the streets. Where have you been? America’s kleptocrats have stolen orders of magnitude more money from our 99%. They have bought US politicians just as effectively as the Greek kleptocrats bought theirs, and the Germans theirs.
This would be silly if it were not so sad. Even in a forum where most are well informed, the kleptocrats still have us buying their lines and dancing to their tune. All of us desperately need to unlearn the poisoned lessons we were taught about “how things really work” by kleptocratic elites that reading a thread like this can do nothing but laugh and feel very satisfied with themselves.
Exactly Hugh, I agree with you 100%. Its always easy to put the blame on people less fortunate. While the real cocksuckers who are to blame are busy stealing millions every year and refusing to pay any into the system. They get full blessing from the politicians they own in their tax avoidance/forgiveness. Till people can see those bastards for what they do, not what they say, their situations are going to go farther into the dumpster.
I think those who are being stolen from are just as much to blame for the ‘imbalance’ as those who export too much, no?
There should be no blame for anyone bar the financial elite who insist on maintaining an unworkable currency union. Average Germans don’t choose to have their wage gains fall behind their productivity gains. Average Greeks don’t choose to consume more imports than the country can earn through its exports. They just go down to the shop and find shelves full of imported products and few Greek substitutes.
Average Greeks did choose to do just that. Average professionals chose not to pay taxes, the civil service unions voted for politicians who would give them ridiculous levels of pay and benefits. The only way to fund this stuff was to borrow, which they politicians they elected did.
As to the idea that lending them more money will help, of course it won’t. Would giving it to them help? Sure, all we have to do is all club together and pay the Greeks’ taxes. That way they can have all these great medical and pension benefits and not have to pay themselves.
Now, where are we going to get the money from? Oh…. Well, perhaps we could borrow too?
Good lord! Germany is in the position of a man who has nailed his hands to the table complaining that he cannot reach the hammer to pull out the nails!
The only way the Greeks can “regenerate itself and become competitive” is to borrow. There is no other way, no country can pay off finance debts they can only repudiate them or roll them over as they mature. The premise is based on the knowledge that sovereign nations outlive their creditors. Now the Germans demand that Greece repays NOW and whines that they cannot and are bankrupting Germany.
The Greeks never could, no sovereign is expected to pay, countries are not individuals or firms. Germany and Greece along with the rest of Europe are caught in the unfinished euro business, where there is no real lender of last resort and all countries are dependent upon external sources of credit (and predatory capital flows). From a capital standpoint the euro is a lending instrument no different from a sub-prime mortgage. The outcome of its exercise is identical!
Greece cannot repay its debts: HELLO! Germany cannot repay Greece’s debts! It will find this out the hard way, Germany is no different than Greece, its enterprises are non-productive and credit dependent, not the other way around. Meanwhile, Germany is the magnet for all of Europe’s liabilities. Why? Because Germany is the beggar with the ‘spare change’.
… Because Germany has ruled that all the EU states must now repay their debts on demand, one rule for all. If Germany changes the rule it is default for Germany. If it defends the (worthless) euro it will be ruined. If Germany abandons the euro she will still not save herself.
All of this so that the blessed (utterly worthless) German auto manufacturers — all six or seven rich dudes — can have their moment in the sun. Some moment.
Some Sun. They all should be lined up and shot.
“Some Sun”
Seems you had to much sun, judging from your comment.
“Because Germany has ruled that all the EU states must now repay their debts on demand, one rule for all.”
—
Quite an active fantasy you have there. No one has ever demanded that all states repay their debts on demand. The goal was to reign in the deficits to a point where it becomes sustainable so that the countries can get money again from the capital markets at acceptable interest rates.
“All of this so that the blessed (utterly worthless) German auto manufacturers — all six or seven rich dudes — can have their moment in the sun. Some moment.”
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Gee, you seem really educated about the German economy.
Another one of Wolf Richters incredibly stupid hate-rants against Germany. Again, of course, completely wrong, with a lot of soundbites taken out of context. Same methods he used recently as he fantasized about a ‘housing bubble’ in Germany.
What exactly are this guys credentials? “executive, entrepreneur, start up specialist, and author, with extensive international work experience”, is he? Are there any checkable facts which bolster these swankish claims?