Friday, February 10, 2012

On Greece And The Euro

Image credit: Agni Travel

Yesterday, I wrote that I wouldn't want to be David Axelrod the day after Greece left the European Union. That statement might seem a bit cryptic to some readers, but Marshall Auerback has thankfully provided an update about how things are going there. His punchline is:
It is also worth pointing out that Greece’s pension payments on a per capita basis are amongst the lowest in Europe. Still, apparently, this plunder hasn’t gone far enough The Greek people must feel like Sabine Women right now.
Game, set and match to the Troika.

While we’re at it, let’s address this “Greeks as tax cheats” canard once and for all. Greece’s tax revenue from VAT collapsed by 18.7pc in January from a year earlier. As Ambrose Evans Pritchard noted:

Nobody can seriously blame tax evasion for this. It has happened because 60,000 small firms and family businesses have gone bankrupt since the summer.

The VAT rate for food and drink rose from 13pc to 23pc in September to comply with EU-IMF Troika demands. The revenue effect has been overwhelmed by the contraction of the economy.

Overall tax receipts fell 7pc year-on-year.
We’re one step closer to ensuring that the birthplace of democracy becomes a form of national indentured servitude. That is of course, unless Greece regains some modicum of self-respect and tells the Troika to take a hike and leaves the euro zone.

Greece and the Rape by the Rentiers
While there may be conditions under which a decline in gross domestic product (GDP) is an acceptable thing, this isn't one of them. Greece's population isn't shrinking, at least not yet, and it's certainly not a country that's living in the lap of luxury. Paying off a big foreign debt like the one they owe is somewhere between difficult and impossible under these conditions.

I keep expecting the Greeks to tell the EU to pound sand, but so far they haven't. If I had to make a bet, I think they'll do it before November. Last summer was pretty ugly, and I think this time around it's going to be even worse.


lawguy said...

I haven't figured it out, but no politician will stand up to the banks from any party in any country. With the possible exception of Iceland and that was only after the people forced the government to switch positions.

I suspect the goal is to put Greece in the same position as most of the third world. In permanent debt to the banks.

Cujo359 said...

I haven't figured it out, either. Greece and Spain were run by the Socialists when this thing hit the fan. Yet they did just what the EU and the banks told them, like good little capitalists.

Whatever the reason, the rot seems to have spread throughout the West.

Ira Morse said...

I think is a goodbye for Greece. Economic problems will eat them slowly.

By: exchange rates comparison

Cujo359 said...

I think it's truer to say that if Greece is out of the Eurozone, it will have its own exchange rate. I'm inclined to let this bit of spam go, since it actually addresses the subject, sort of. Don't do it again, though.