Funny that the strings that come with the IMF’s “aid” always seems to set up bargains for wealthy investors:
Buyers’ market as Greece starts assets fire sale
If the rioting Greeks can be made to swallow this “medicine”, anyway.
Still, are we really convinced that they should accept the “deal”? It’s a loan, not a gift. The “austerity measures” aren’t merely taxing more and spending less – they’re also “privatise everything” and “sod the poor”, and they appear likely to make it even harder for Greece to recover. Greece may presently have an comparatively low retirement age that makes for easy bashing – but the “austerity measures” go far, far further than that.
And, frankly, Europe can’t afford not to “bail them out” (with a huge loan on which they’ll incur enormous interest and which they must eventually repay). Maybe the protesters are right. Maybe they don’t need to swallow everything that’s being forced down their throats.
Maybe they’ve got little to lose from calling their bluff.
Moved On 
No, they shouldn’t accept it. They can’t avoid default, and maintaining the pretence that they can helps no one in the long term except perhaps their private creditors, who irresponsibly lent Greece far too much and naturally deserve to suffer some of the financial consequences. Greece does need further bailouts, but it they involve debt restructuring as well as austerity.
Its not just the retirement age. The public service is huge, and its wages are in many sectors massively overinflated. Pensions are very generous which of course has a geometric impact when combined with the retirement age issue.
Corruption and tax evasion are widespread.
My dad and stepmother just got back from a honeymoon in Europe including time in Greece. Dad got sick while on a tiny island with a population in the hundreds. There was a medical clinic to put any doctors surgery in Australia with 50 times the patient base to shame. Once he’d seen the GP, he asked about payment. “Payment? No, its free”. As a wealthy foreign tourist with perfectly adequate travel insurance, he wasn’t asked to cover a cent of his own medical costs. All courtesy of Greek taxpayers, or rather, German taxpayers.
A European welfare state is a wonderful thing if your society is structured to sustain one, but its no good to base it off borrowing money from overseas in perpetuity.
Its on far more generous terms than what they could get from investors. The difference between what they’re paying and the market rate of interest is effectively a gift.
Forced down their throats, by the duly elected democratic government of their nation, who have judged this to be the best course of action.
Now if I were the Greek PM I would indeed take the Argentine strategy, and call the “but you can’t default!” bluff.
But there’s no doubt some of the protesters are simply dead set against any economic reform, despite the clear necessity of it.
“Forced down their throats, by the duly elected democratic government of their nation, who have judged this to be the best course of action.”
Should read. By the very same government who got them in this jam in the first place. Hi hi hi ho, it’s off to work we go.
In between this and the comment on the IR thread, lynot, I increasingly wonder if you’re just a troll.
Its not, in fact, the same government that got them in to this mess. It was a long dominant right wing bloc that (with the aid of dodgy bankers) cooked the books for years to disguise the problems in the Greek economy, and its the recently elected centre-left party that discovered, and came clean to Greek voters and the international community, just how bad the economic situation was.
I was going to quote the Argentina example as well. Might see a lot more of the rest of the world starting to pay attention to the Latin American examples (leaving out the Chavez flamboyance, of course). Wouldn’t be a bad thing.
What a lovely story of the GP on the Greek island, Jordan. Shame we don’t have anything similar here. Imagine if that were to be one of the first things to go when “austerity” sets in over in the Hellenic Republic.
“In between this and the comment on the IR thread, lynot, I increasingly wonder if you’re just a troll.”
Oh don’t be like that. No your wrong, Greece has been going down the tubes with all of its governments of all persuasions..They don’t collect enough tax, end of analysis. The rest of your points about the fiasco is out of the conservative talking points memo list.
As for my comments ref I.R. I stand by them. You wouldn’t know anything about I.R. which is crystal clear from your naive comments.
On the contrary, in Australia, one of the ways we keep universal healthcare for our citizens affordable (without racking up unsustainable government debt) is by making the insurance companies of foreign tourists pay their medical bills, and we also don’t have one GP for every 200 people.
My dad, like most tourists, has plenty of money, and doesn’t pay any taxes in Greece, or anywhere else in Europe. Why on Earth should he get free health care paid for by Europeans, the majority of whom are less well off than him? Its actively regressive – a transfer of wealth from the poor to the rich.
They don’t collect enough tax, end of analysis.
Did you hear that Jordan? Lynot’s solved the Greek economic crisis and that’s the end of it.
All alternate theories as to how Greece got into this mess are irrelevant and wrong. Move along please.
And practically every trustworthy source reporting on the Greek economy.
Also, I don’t think the conservatives got the memo about blaming the right wing of Greek politics for creating the mix that the socialist party is having to fix, or suggesting the bankers deserve to lose money and that Greece should default on its debts.
My grandmother served on the executive of the ACTU. I know a bit about IR, although I don’t claim to be an expert.
On the other hand, so far you have demonstrated no understanding of the topic at all, just glib, ignorant mockery of the idea that a person who worked in a casual job might have any insight into issues related to casual labour.
“All alternate theories as to how Greece got into this mess are irrelevant and wrong. Move along please.”
Not all! Just Jordanrastric.
“My grandmother served on the executive of the ACTU. I know a bit about IR, although I don’t claim to be an expert.”
You don’t say? Mine was a Spitfire pilot during WW2.I make model aeroplanes as it happens..
I was involved in I.R in Baghdad whilst you were still in Dads bag. Your insights into I.R. are a little myopic.
Really good (and brief) analysis on this by Paul Krugman
http://krugman.blogs.nytimes.com/2011/06/19/kicking-the-eurocan/
Not all! Just Jordanrastric.
I see – you are trolling after all.
” I see – you are trolling after all.”
Only when I go fishing.
Thanks, Mondo. But I guess we all know the most ancient expression on the internet about trolls, right?
a transfer of wealth from the poor to the rich
Dude, that’s a little dramatic. He went to the doctor. No transfer of wealth involved, unless Doc slipped him a big bag of money. Are the French citizens who subsidise the upkeep of their wonderful Paris landmarks transferring wealth to me everytime I look at them on my Gallic jaunts? Healthcare is (or should be) a part of the commons, same as any infrastructure that is shared by all. I really doubt that foreign tourists who get the flu over in Greece are bleeding the country dry.
trolling ≠ trawling.
Cheers.
For some reason this got sent to the ‘eternally in moderation’ abyss. Nevertheless, a really good (and thankfully brief) analysis on this by Paul Krugman
http://krugman.blogs.nytimes.com/2011/06/19/kicking-the-eurocan/
Greece is what Australia will be if the progressives get their hands on the levers of power.
Greece is what Australia will be if the progressives get their hands on the levers of power.
But of course it will look so much better after the neo-cons, represented by the IMF, have their way with the country, right?
Rubbish, SB. Unlike Greece, the Australian progressives are prepared to fund their promises through proper taxation. They might agree to deficits for building necessary infrastructure, but not for ongoing expenses.
RM there will be a bit of pain, but it is really up to the Greeks to get their economy in order and stop bludging off other countries.
Jeremy: “Rubbish, SB. Unlike Greece, the Australian progressives are prepared to fund their promises through proper taxation.”
The failure of the Greek taxation system is a big part of the problem. If taxes are too high they will destroy productivity and lessen to overall tax take. Also people will go to great lengths to avoid paying them as happens in Greece.
Given that the Greens want to destroy the coal industry they don’t even pass the giggle test when it comes to economic policy. If they succeed in that there will be no profits and no taxes for them to collect.
They want to replace the coal industry, SB. A big difference.
And the fabled Greek tradition of not paying taxes has nothing to do with the level they’re set at, it’s a much more long-standing cultural attitude than that. Australia has a different tradition.
So how is “replacing” the coal different from destroying it? and replace it with what exactly – all those solar panels and windmills we will be able to make so much more cheaply than China?
“the fabled Greek tradition of not paying taxes has nothing to do with the level they’re set at”
Nothing? The evidence suggests that higher rates mean greater efforts to avoid taxes. The Greeks need to rid themselves of the idea that they can have it all and have everyone else pay for them. They need to man up, and not in the traditional Greek way.
Tax avoidance in Greece is not primarily linked to particularly burdensome taxes, or else Sweden for example would be in worse shape than them.
It probably has its origins in corruption and government failure – its natural that people aren’t as willing to pay their taxes when they know or suspect that the money is often enriching kleptocrats instead of funding public services. And once it evading tax gains some degree of social acceptability, its easy to see how it could become somewhat entrenched in a culture.
The evidence suggests that higher rates mean greater efforts to avoid taxes.
Where?
Surely this would necessitate a corresponding greater effort to monitor tax avoidance, and to promulgate the culture of the importance of paying your share of taxes. As well as being a government that shows it knows how to spend your taxes wisely.
a government that shows it knows how to spend your taxes wisely
LOL!
I’m not sure you’ll ever get a population consensus on that one, even in places where they are ok with the taxation rate. The interpetation of ‘wisely’ is the fundamental component of the great divide between left and right.
Part of the problem is the tax system is so complex, its inevitable loopholes arise that allow sufficiently clever tax agents to reduce the requirements of wealthy people and institutions quite considerably. Monitoring is no good if a party is paying little in the way of tax due to perfectly legal arrangements.
An unfortuante but good point Jordan. Although I’d say, not perfectly legal, but strictly legal nonetheless 🙂 Taxation law in Australia is a dogs breakfast for the same reason. To the extent that the ATO refuse to communicate whether a regime will fit within a future model because it is so out of control (say if you propose a governance structure and you seek their advice as to if it will meet certain critera).