Greece and her economy

[Zoraptor]

If they have no profit they aren't a viable business, long term, or even really medium term. I rather suspect what was meant was that most businesses would be effected negatively in that suddenly a lot of people would have higher taxes and less take home pay- or become unemployed- leaving them with less income to spend and less discretionary spending and thus less to spend with those businesses; and as a consequence otherwise viable businesses will start failing.

[Enoch]

I was speaking in the aggregate, and Zoraptor's comment is on-point. Honest tax enforcement means that, when all the transactions that make up an economy are aggregated up, the government would be taking a much larger percentage of the money changing hands. That reflects a reduction in the amount of money that citizens in general have to spend, shrinking the size of the private economy.

 

As an aside, I really thought that WoD would be one of the last people around here to argue that spending by governments is more efficient at generating an economic return than spending by private parties. More on-point, whatever the private beneficiaries of government waste are spending money on, the government spending being discussed here ain't building road-- it's making debt-service payments to foreign bankers. That forestalls the negative consequences that would come with default, but it produces no positive return-on-investment for the Greek economy at large.

Edited June 22, 2011 by Enoch

[Walsingham]

On the other hand I don't think Britain is terribly good at paying attention to what our government does. Not in any meaningful way.

 

Unfortunately no one really is. Of course the politicians have spent most of their lives getting to know the trade - while your average Joe is busy trying to figure out his work/speciality.. Asking someone to use their >8 hour spare time keeping tabs on the government is asking a lot and unfortunately (again) the press doesn't seem to do a good job either.

 

My answer must remain "Boo f***ing Hoo". You want democracy - and believe me you do - then you have to up your game and work at it.

[Freedom Fighter]

A Call For Resistance And Solidarity From Athens' Syntagma Square

 

Dear friends, brothers and sisters,

 

We are the ones who have kept up the struggle for a month at Syntagma Square in Athens. We organize ourselves by direct democracy, excluding all political parties. Our voice is our daily People's Assembly.

 

We are indignant because others decide for us without us and mortgage our future; they impose loans that do not benefit the people but, instead, the interests of banks and governments. We are indignant because they terrorize us with the threat of bankruptcy. Not only do they try to instill fear in us but they also try to set the people of different countries against each other.

 

WE DO NOT WANT ANY MORE SUPPORTING LOANS

 

WE DO NOT WANT PUBLIC ASSETS TO BE SOLD OFF

 

WE DO NOT WANT THE MEDIUM-TERM PROGRAM TO PASS

 

We do not want the socialization of losses and the privatization of profits.

 

UNITE YOUR VOICE WITH OURS

 

They are using our sacrifices and yours in order that a few may acquire wealth.

 

We find ourselves here today. You will be here tomorrow.

 

We take to the streets every day.

 

Every Sunday hundreds of thousands of citizens are at the town squares throughout Greece, Syntagma being the core.

 

The medium-term program will not pass.

 

Journalists keep silent, we do not.

 

We urge all the people of Europe and all trade unions to organize solidarity and mutual support actions on the day of the medium-term program vote [in parliament].

 

 

 

 

ALL TOGETHER LET'S TAKE OUR LIVES INTO OUR OWN HANDS

[Morgoth]

How about those protesters stop protesting and get back to work, because otherwise I don't see the country getting out of it's misery anytime soon.

[HoonDing]

How about those protesters stop protesting and get back to work, because otherwise I don't see the country getting out of it's misery anytime soon.

That's not how they do things in the south.

[Wrath of Dagon]

I was speaking in the aggregate, and Zoraptor's comment is on-point. Honest tax enforcement means that, when all the transactions that make up an economy are aggregated up, the government would be taking a much larger percentage of the money changing hands. That reflects a reduction in the amount of money that citizens in general have to spend, shrinking the size of the private economy.

When some people shirk taxes, honest people wind up paying more. This discourages honest and beneficial economic activity and encourages dishonest and harmful one. It's not like no one at all is paying taxes there.

As an aside, I really thought that WoD would be one of the last people around here to argue that spending by governments is more efficient at generating an economic return than spending by private parties. More on-point, whatever the private beneficiaries of government waste are spending money on, the government spending being discussed here ain't building road-- it's making debt-service payments to foreign bankers. That forestalls the negative consequences that would come with default, but it produces no positive return-on-investment for the Greek economy at large.

That's not what I said at all. I was talking about crooked politicians stealing and spending public money instead of using it for public benefit it's meant for. Short term yes, private spending helps Greece more than paying interest to foreign bankers. But long term the economy will work well only if the person who actually earns the money is also the one who spends most of it, because that encourages him to produce and earn more. The basis of capitalism.

[Enoch]

Well, the issue in Greece isn't so much that some people shirk taxes-- it's that it's widely accepted as a social norm that nobody pays taxes apart from the ones that are withheld from payrolls automatically.

 

The other stuff you're talking about fits into what I was saying about "good governance." In the long term, yes, the reduction of waste, fraud, corruption, cronyism, and dishonesty is quite important in the function of the civil society and of the economy. The question I was addressing was more short-term: How is the Greek government, as presently supported by the Greek economy, going to make the debt-service payments that it owes over the next few years?

Edited June 23, 2011 by Enoch

[Calax]

Ironically, they have a little less debt than america.

[Freedom Fighter]

Greece is now the test case. Iceland stiffed the European bankers by defaulting on its external debt. This has led to a revived economy, something that the media do not discuss in detail. Iceland has done better than Ireland, which capitulated to the EU and the European Central Bank.

 

Iceland had this enormous advantage: it never joined the European Monetary Union. It now enjoys low rates on its bonds. This indicates that Greece can escape from the trap by pulling out of the EMU and defaulting on its external debt. This would send a message to Portugal and Spain: deliverance is available. Stiff the foreign creditors and abandon the euro.

 

Iceland

[Calax]

When everyone defaults, nobody trades, and economies die off.

[Morgoth]

Has any country ever defaulted? What happens if it does?

 

Either way, those austerity measures wouldn't be necessary if Greeks would actually pay their taxes.

 

And now Croatia, another corrupt ****hole is joining in 2013.

 

Luckily enough, the world will end in 2012.

[pmp10]

Has any country ever defaulted? What happens if it does?

Yes, Russia did in 1998 and Argentina in 2001.

As to what happens as I understand it - nothing good to those involved.

[Humodour]

Either way, those austerity measures wouldn't be necessary if Greeks would actually pay their taxes.

 

What, so that their corrupt politicians could funnel large sums into secret offshore bank accounts and waste whatever is left?

 

Catch-22 for Greece.

 

But yes, based on what I've been reading Greece should never have been allowed into the Eurozone in the first place.

[Nepenthe]

Either way, those austerity measures wouldn't be necessary if Greeks would actually pay their taxes.

 

What, so that their corrupt politicians could funnel large sums into secret offshore bank accounts and waste whatever is left?

I don't think Greece ranks too high on the kleptocracy index. They're spending the money on bribing the electorate, instead.

[Enoch]

Has any country ever defaulted? What happens if it does?

Yes, Russia did in 1998 and Argentina in 2001.

As to what happens as I understand it - nothing good to those involved.

It's not rocket science-- the people who have bought your government bonds get less than 100% of the payout they were guaranteed. As a consequence, the entire international and financial community knows that you have already screwed one batch of investors over, and are going to need a lot of convincing (read: very high interest rates and evidence to suggest that the political climate is fixed enough that you won't do it again) before they lend you any more money.

 

That said, markets are already pricing an immense risk premium on Greek debt. A default would not be pleasant, but if it's set at the right levels (i.e., not a complete "we owe nothing," but an "outstanding obligations paid at XX% of face value") it may be the least-bad outcome for the Greek people and political institutions.