Greek myths

[Jovial Monk]

The protests failed to prevent parliament from enacting a severe austerity package, the impact of which is very real. When we have dinner that night in a Cretan restaurant, the owner tells Stathis that he has many friends in Melbourne who have for many years been encouraging him to move there; now he is thinking of taking their advice. When the bill comes, I understand why: the value added tax on restaurants has risen from 13 to 23 per cent. Eating and drinking out in Athens is twice as expensive as it is in Berlin.

At the same time, public sector salaries have been cut significantly. School teachers, for example, have had their pay reduced by 30 per cent. A teacher new to the job now takes home a monthly €670, after tax. For those with over five years of experience, the amount is €850. With an exchange rate of €0.75 to the Australian dollar, an experienced Greek school teacher earns only about $20 per week more than an Australian on the basic unemployment benefit. The costs of living in the two countries are certainly very different, and school teachers in Athens can cover their basic expenses more readily than an unemployed person can in Sydney, but the comparison sticks in my mind because the prices of many things – food, drinks and transport – are comparable to what I would expect to pay in Australia.

. . . .

Workers on an average salary also face frighteningly high tax rates. An average income is taxed at a rate of around 15 per cent, on top of which a 13 per cent social security contribution must be paid. That doesn’t sound too bad, until the value added tax is brought into the equation. In total, people on average incomes lose 28 per cent of what they earn and 23 per cent of what they spend. On top of that, employers in Greece are required to pay a 22 per cent social security contribution for each worker directly to the government. Faced with such high tax rates, small business operators may simply choose to conduct a lot of their business off the books.

. . . .

Policy-makers probably had little choice when formulating the details of the austerity package. Raising taxes, cutting public sector salaries and laying off public servants are no doubt the obvious ways to address the debt crisis in the short term. The severity of the measures, however, risks throwing the Greek economy into a protracted recession. The uncertainty is considerable. Stathis, speaking about his work in risk management, sums it up succinctly. “Public sector salaries fell by 30 per cent this year,” he says, “so what would you assume would happen next year? A return to trend wages growth? How can a business make even the most basic plans for the year ahead in these conditions?”
Another risk is that the austerity plan could further erode what economists call “social capital,” the glue that holds an economy together. To give a simple example, people are more likely to pay tax if they trust the system to provide for their needs. But funding those services will require collecting more tax revenue, and designing a set of incentives to bring people into the tax system is a very complex technical and social problem. For now, it’s difficult to imagine that raising tax rates will do anything other than make the grey economy a more attractive option for those who can, or already do, avoid tax.

. . . .

Perhaps the most contentious measures in the austerity package involve the privatisation of public enterprises. Given all that has been said and written about corruption in Greece, this suggestion should set alarm bells ringing. Experience in other countries indicates that mass privatisation, particularly when carried out hastily, can go disastrously wrong. Joseph Stiglitz devoted a chapter of his book Globalization and Its Discontents to an analysis of Russia’s transition from a communist to a market economy, and much of his criticism was directed at how privatisation was carried out. Stiglitz argues that privatisation can only lead to positive outcomes if certain necessary conditions are met. These conditions are broad, ranging from good corporate governance laws to a free, effective media. In Russia, none of these were in place, and so insiders benefited stupendously. Rather than boost economic performance, privatisation increased income and wealth inequality markedly. Stiglitz warns that failed mass privatisation can “undermine confidence in the government, in democracy, and in reform.” Greece is not Russia, but neither is it a country with all of the safeguards of a developed economy.

http://inside.org.au/greek-myths/

Some of the problems of the Eurozone and how “austerity” is making things worse and could in fact prevent real solutions being implied.

[IQS.RLOW]

Greece= Classic demonstration of the failure of the Social democratic ideology

[Jovial Monk]

{sigh}

Whatever problems there are in Greece they came from the previous Conservative govt. I gave a link and extracts of a long, detailed article and get back, what did Mattus call it, an agrarian rant.

Given that failure in Greece could bring on a new Long (“Great”) Depression I would think a more nuanced, considered reply was warranted. I guess IQ is just the village idiot of this board.

[Neferti]

{sigh}

Whatever problems there are in Greece they came from the previous Conservative govt. I gave a link and extracts of a long, detailed article and get back, what did Mattus call it, an agrarian rant.

Given that failure in Greece could bring on a new Long (“Great”) Depression I would think a more nuanced, considered reply was warranted. I guess IQ is just the village idiot of this board.

Was your Dad a Greek, Monk?

Really, Monk, nobody in Australia cares very much about what happens in Europe (USA or The UK) . It has no bearing on our interest rates or living expenses or how educated our kids are or whether the water restrictions with be returned next Summer or whether our jobs will be outsourced to India. You of all people should realise this as you are one person I know of who voted for the GALP who is the lot who are really stuffing up Australia .... and you want to talk about Greece? Why?

[Mattus]

Germany, Australia, Sweden, = Classic demonstration of the success of the Social democratic ideology

I think the only country in the world without a social democrat party is America. So how's their economy doing?

[Jovial Monk]

{sigh}

Whatever problems there are in Greece they came from the previous Conservative govt. I gave a link and extracts of a long, detailed article and get back, what did Mattus call it, an agrarian rant.

Given that failure in Greece could bring on a new Long (“Great”) Depression I would think a more nuanced, considered reply was warranted. I guess IQ is just the village idiot of this board.

Was your Dad a Greek, Monk?

Really, Monk, nobody in Australia cares very much about what happens in Europe (USA or The UK) . It has no bearing on our interest rates or living expenses or how educated our kids are or whether the water restrictions with be returned next Summer or whether our jobs will be outsourced to India. You of all people should realise this as you are one person I know of who voted for the GALP who is the lot who are really stuffing up Australia .... and you want to talk about Greece? Why?

Because what happens in Greece may just determine whether the world goes into a Long Depression or not. USA is s l o w l y recovering but recession in Europe will reverse that quickly.

[Jovial Monk]

Greek unemployment rises to record 20.9 pct in Nov

ATHENS | Thu Feb 9, 2012 5:11am EST
Feb 9 (Reuters) - Greece's jobless rate rose to a fresh record of 20.9 percent in November from 18.2 percent in October, statistics service ELSTAT said on Thursday, as the debt crisis and austerity measures took their toll on the labour market.

Greek unemployment figures are not adjusted for seasonal factors.

The average jobless rate in the 17 countries sharing the euro rose slightly to a seasonally adjusted 10.4 percent in November from 10.3 in October.

http://www.reuters.com/article/2012/02/ ... 1020120209

In Ireland unemployment is above 25%—and their Budget is still in deficit!

Now they are starting on grinding Romania into the dust:

Romania's Prime Minister Emil Boc has stepped down to "defuse political and social tension" after a series of protests against austerity measures.

Speaking after a cabinet meeting, he said he had given up the government's mandate as "it is the moment for important political decisions".

Although Romania's economy grew last year, the government has been hit by three weeks of demonstrations.

Mr Boc has imposed a 25% cut in public sector wages and a freeze on pensions.

Sales tax was also increased to 24%, in a country seen as Europe's second poorest.

Romania said it needed to implement the measures to qualify for the next instalment of a 20bn-euro ($25bn; £17bn) bailout loan from the International Monetary Fund (IMF).

http://www.bbc.co.uk/news/world-europe-16905151

This is the sort of policy that brought us the 1930s.

[Jovial Monk]

Meanwhile, in the US, a deal that might help the housing market there pick up some steam:

States Negotiate $26 Billion Agreement for Homeowners

After months of painstaking talks, government authorities and five of the nation’s biggest banks have agreed to a $26 billion settlement that could provide relief to nearly two million current and former American homeowners harmed by the bursting of the housing bubble, state and federal officials said. It is part of a broad national settlement aimed at halting the housing market’s downward slide and holding the banks accountable for foreclosure abuses.

http://www.nytimes.com/2012/02/09/busin ... ml?_r=2&hp

[Outlaw Yogi]

Really this entire financial crisis since 08 is due to bankers & Co's dodgey practices and govts failing to use their checks and balances. First the bankers crashed the system, so put their hands out for bail-out welfare, but didn't rectify any of their gambling habits, and continued giving the biggest culprits the biggest bonuses. They probably imagine they'll benefit further again by crashing the system again, through mass foreclosure and forcing bankrupt nations' hand toward wars for resources. They might achieve it, as they did prior to WW2, but they also run the risk of public backlash inciting such nations' banks and all their assets to be nationalised.

Either way, I'm not too concerned, because I laugh at market crashes, knowing that those trying to make a buck without getting their hands dirty will anxt over where their next free lunch will come from. And I tend to make more money easier when times are considered hard/tough.
I have no problem predating on those living beyond their means to keep up with the Jones'.

[boxy]

Apparently, the idea is to just spend your way out of trouble. It fixes all your woes... apparently.

Irony, it knows no bounds.