Can Greece stand on its own feet? Interview with ADN Kronos

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As elections begin to loom in Greece, an extraordinary propaganda drive has commenced. Its purpose? To impress upon the world (with a view to swaying Greek pubic opinion) that Greece is out of the woods; that Greek public debt is (miraculously) sustainable, that the banks are back on track, that investment is beginning to flow again, that unemployment is in the mend. OfScreen Shot 2014-10-10 at 12.50.34 PMcourse, none of this is true. Greece is being made over as a Potemkin village prior to the forthcoming General Election. In future posts I shall show that the reality on the ground continues to be one of a depressed economy, with an unsustainable public debt, a banking system that only functions courtesy of the ECB’s willingness to turn a blind eye, a private sector in which everyone owes to everyone and no one can pay and investment that is utterly non-existent. For the time being, here is a short interview with an Italian journal – click here. For the original English text read on…

Troika experts left Athens without an agreement, but Greece seems confident that it can exit from the bailout program at the end of the year and Greek Finance minister Gikas Hardouvelis said yesterday that Greece is closer to stand up again on his feet. Do you think that end of the crise is really near? Do you think that greek people will began to feel the difference in their everyday life ? Are there other things that greek government could do? 

Greece cannot stand up on its feet as long as its debt remains un-payable, its banks insolvent and its private sector incapable of repaying its taxes, debts and wages. The ‘exit’ from the bailout program is another propaganda tactic, this time as a smokescreen that the government will use in order to convince voters to return it to power in the election that will be triggered off by this Parliament’s failure to elect a President. The government, instead of negotiating a new package that will dissolve this triple crisis of debt, banks and private sector asphyxiation, is begging the troika to allow it to declare an exit from the current ‘package’. In conclusion, the crisis is deepening and the Greek people cannot see any light at the end of this long tunnel. This is why the opposition is leading in the opinion polls.

Unemployment, specially for young people, is still a big problem. This is the argument of today EU meeting in Milan and Mr Samaras will be there. In which way can the EU and Italy’s Presidency help to solve the problem?

To tackle the unemployment issue, Europe-wide, our leaders must at last admit that this is a systemic crisis which requires a systematically redesigned Eurozone. That the deficits and the debts are not the cause of the problem but only the symptom of the deeper malaise. And the problem is twofold: First, the continuing death embrace between ‘national’ banks, whose asset books are full of black holes, and governments whose debt is unsustainable without growth, which is made impossible when they are forced into austerity. Secondly, there is no mechanism for recycling the idle savings of the surplus countries into investments that will increase productivity and demand in the deficit countries. As long as our leaders avoid talking about these issues, and focus instead on the Maastricht-SGP limits (and whether Italy or France should or should not be allowed to exceed the 3% of deficit to GDP limits) employment will continue to languish at pathetically low levels, and unemployment will only shrink as workers are discouraged and drop out of the statistics, out of sight and out of mind.

38 thoughts on “Can Greece stand on its own feet? Interview with ADN Kronos

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  2. Yes, Greece will stand onits own feet eventually. Because, what it all boils down to, they can’t keep buying Greek bonds with German taxpayer money until the end of time.

    And the markets know this. And when they feel like it, for example because other profits (free QE funds) have dried up, the markets will call that bluff at craftfully chosen intervals. It’s the easiest thing in the world: they only need to bet against something they know is hollow gaping hot air to begin with. There’s no there there. Draghi cannot save Greece. Period. And if he can’t save Greece, he can’t save the euro. Period.

    In Brussels, like in Washington, Tokyo, Beijing, only one thing really counts: they have to achieve economic growth, because if they do, all problems will vanish into thin air. Which is not only an idiotic notion, it’s been 7 years now and they still haven’t achieved even just that one thing they focus on. It’s exactly like converting to some religion because it promise that the deity of their choice will relieve you of all your troubles, only in modern economics the deity is growth. And its apostles are debt, debt and credit.

    If it were you or me, we’d say: let’s try something else, go for some other approach, but not Brussels or Washington, they live in one dimension only, they lack every form of depth perspective, and they will keep pushing for growth until they die trying. And in the case of the ECB, drag Europe down with them, first of all the young people of Greece, Italy, Spain and Portugal.

    The idea is that all problems will be solved by the return of growth, but how is Greece ever going to grow again when over 50% of its young people haven’t, for 6-7 years running now, ever worked a decent job in their lives, and those who are now 25-28 years old, and never had a shot at real work, despite college degrees, university degrees, face the competition of all graduating classes of those 6-7 years for the same jobs, which still don’t exist?!

    It’s an impossibly dumb concept that can exist only in the minds of well-paid bureaucrats in both Athens and Brussels – and Rome and Madrid-. And it can lead to only one outcome: Greece will leave the EU. Because no matter what you think about the Greeks’ abilities to govern themselves, they couldn’t possibly do worse for themselves, for their young people, and thereby their entire economy, than the present system has done. What could possibly have been worse than this?

    http://www.zerohedge.com/news/2014-10-19/europe%E2%80%99s-fatal-flaw-laid-bare-all-see-again

  3. I couldn’t help noticing that phrase you used: “it is up to the Greek electorate to put an end to this drama”. I’m afraid you have to specify what you mean by the words “end” and “drama”. Don’t get me wrong, I’m pretty sure that the Greek debt is, as you say, un-payable . Moreover, your proposal may be a fine piece of work but, the feeling I get is that nobody wants to save the euro. So if we want to be “realistic” (there it is I said it), sometime in the future Greece will default and Germany will ditch the euro and not necessarily in that order. Is that what you mean when you say we must “end our drama”? Cause if you ask me, I see no end. Just drama…

  4. Hello Yanis,

    “Which means that it is up to the Greek electorate to put an end to this drama.”

    Nice to see that, finally, also you understand this truth. BTW, this is *exactly* what I write here since, well, since I write here. Another BTW: of course it was always up to the Greek electorate to pull the plug from their ‘elites’ and thus put an end to this drama already years earlier. Which would have saved the Greeks and Europe a lot of grief, hatred, and wasted time and money.

  5. Thanks to both Vasilis & Dean,

    I sure reading these documents & reports will keep me entertained for hours!

  6. The question is not ‘can Greece stand on it’s own feet?’, because Greece simply has no choice to become able to stand on her own feet again. As she was before the Greek ‘elites’ took the terrible decision to join a monetary union which was wrongly constructed plus Greece would never fit in. Since then Greece is in a prolonged state of zombiehood, subsidised by the EU taxpayers. This must and will end, it’s just a question of time

    • Of course Greece can stand on ist own feet! Life jsut will not be so sweet as it was when it consumed the fruits of other peoples labor.

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  8. Hello Yanis. From the intro of the Euro until the start of the crisis, the Greek government was the beneficiary of a massive recycling mechanism ie the ECB pumping billions into the private banking sector so it could primarily purchase Greek government bonds and also lend into the Greek private sector for investment and look at the result.

    Clearly money injected from outside in the form of loans has damaged the Greek economy not helped it. What we need is lower taxes, at the very least for exporters (tourism/manufacturing). The money has to come into the country because people want to give it to us for what we offer and not because of government coercion. That is what will build a solid foundation for the future.

  9. You have not devoted an interview specifically to Greece for some time, so I had no opportunity to comment on your views. This interview of yours is a good chance for me to take up Greece again, trying to fathom if you actually have some analysis (besides the Modest Proposal).

    As you mention, non-performing loans are currently at 74bn and taxes in arrears at 70bn, summing up to almost one GDP, and equal to total deposits in Greek banks.

    So, let us assume for the sake of argument that, (a) the banks are recapitalized externally, knocking 50bn off the public debt, and (b) the remaining public debt is “frozen”-no payments-until otherwise specified. A completely unrealistically generous settlement, I know, but let’s assume.

    Still the Greek private sector will be deeply insolvent and will find itself in a sort of liquidity trap, similar to the Japanese malaise (what Richard Koo calls “balance-sheet recession”).

    With the Greek government being revenue-constrained, under the Euro, how do you envision that the aggregate demand needed to reduce unemployment, will be created? Will the rest of the EZ be willing to sustain the kind of public investment needed to overcome the deleveraging of the Greek private sector? Bringing up the Greek public debt by another 50%-100% of GDP over the course of the deleveraging period (which, judging by the Japanese experience, could be decades long)?

    And if you don’t have an answer for that, why are you so completely certain that Greece must keep the Euro?

    • Hi Vasilis,

      Can you pls advise where you are getting these numbers from?

    • @ Alex68_of_Melbourne
      Sure! But you are not specifying which numbers, so I guess you mean all. There are various sources for each number. Anyway, here is a list:

      — ” non-performing loans are currently at 74bn” source:
      http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_25/08/2014_542389

      — “…and taxes in arrears at 70bn”, –sorry, it’s in Greek–
      source: http://www.tanea.gr/news/economy/article/5161020/aykshthhkan-kata-1-47-dis-eyrw-ta-lhksiprothesma-xreh-pros-to-dhmosio-ton-aygoysto/

      — “..summing up to almost one GDP,”
      the sum of tax arrears, non-performing loans and arrears to social funds is 164bn (source: http://www.bloomberg.com/news/2014-09-28/quiet-build-up-of-greek-private-bad-debt-casts-shadow-on-rebound.html)
      which is close to the projection of 182 bn nominal GDP in 2013 (2014 will be lower, because of deflation !)
      http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/National_accounts_and_GDP

      * “…and eual to total deposits in Greek banks…” around 163.2 bn, source:
      http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_28/08/2014_542460

      ** “… knocking 50bn off the public debt…” look at the Hellenic Financial Stability Fund capital, (on p.37), which is 49.7 bn
      http://www.hfsf.gr/files/hfsf_annual_report_2013_en.pdf

      ** “Bringing up the Greek public debt by another 50%-100% of GDP over the course of the deleveraging period (which, judging by the Japanese experience, could be decades long)”
      This is of course a “guesstimate”, based on the experience of Japan, whose public debt went from 65% of GDP in 1992 to 180% of GDP in 2005 (and is now at 225%!!), as the Japanese government strove to avoid high unemployment by providing (via deficit spending) the aggregate demand needed.

      I don’t think it will be this much for Greece, because current greek GDP is well below the country’s productive capacity (what is called “full-employment GDP”)

      source: http://www.tradingeconomics.com/japan/government-debt-to-gdp

    • Vasili:

      Yes the total damage is higher that the Greek GDP. So what? says Berlin. The objective was to save the euro not Greece.

      The only people suggesting that they saved (or tried to save) Greece is the present government aided by the Berlin propaganda machine. But as we said already the Greek politicos are of low quality and out of depth in the EMU game.

      By you bringing up these arguments at such late stage it means that you still believe that someone has somehow tried to save Greece and failed. No one did though. It was never about Greece nor could you make it about Greece at this stage by electing something new. It’s too late for such because Greece as a country is no more. The attempt of the opposition to close the barn door after all the cows have left is sort of hilarious in its naivete, simple mindedness and lack of skill. Greece has no time to run further failed experiments.

      Meanwhile you may want to consider something more effective than pathetic Greek politics of the “us morons against them idiots” sort of thing (The Vlako-ilithioi) which only lead to further polarization and gridlock:

      http://www.telegraph.co.uk/finance/economics/11159649/The-great-Lira-revolt-has-begun-in-Italy.html

    • @Dean

      Don’t be such a pessimist Dean.

      Btw, [… means that you still believe that someone has somehow tried to save Greece and failed.] I certainly don’t, thank God! Some do, though…

      Now, on to more fun things! I am certain that, _if_ the move by 5* receives traction on the public debate, it will have a huge influence on the developments to come in our unhappy EMU. I am a VERY FIRM supporter of a return to democratically administered, national currency for Greece, Italy, etc. Others, like Yanni, express an attachment to the idea of “pan-European currency” that cannot be supported convincingly purely by economic arguments, and is probably rooted in socio-political ideology.

      Many of these idealists’ efforts are self-contradictory. For example, I was very disappointed hearing Yanni on Greek TV the other day, proclaiming that “… a move by France leaving the Euro would throw it back to the stone age”. This is the kind of misleading, scaremongering hyperbole that does a huge disservice to his own cause of breaking the current zeitgeist he opposes, as I have many times tried to explain to him. Obviously, I haven’t convinced him🙂

      My greatest regret these days is not that the Euro will survive; that is still to be seen. My greatest regret is that, if time comes to break the Euro–more plausible by the day, Greeks, misled by their local kleptocracy and/or their cosmopolitan left, may shy from returning to a currency that they control, choosing to join some succeeding abomination that will be on offer as the next “currency of happiness, prosperity and stability”.

      Such abominations are already on the table (“south euro”, “soft euro”, etc). They are thinly veiled frauds, whose purpose is to put the issue of currency—and thus, power to control most important aspects of people’s lives—outside the realm of democratic rule (such as it is) and into the service of those prosperous few who are repulsed to be ruled by the will of the restless many.

    • Vasili:

      Believe me I am not a pessimist.🙂 However, this EMU game is s heavily stacked against Greece so that one has no choice but to be a pragmatist.

      As I said before: if 1 euro = $2.00+ then a lot of the wrongs done to Greece might be curable. At least the Greeks would see their real estate and other assets go up in value not to mention their purchasing power.

      If you can’t do such then a coordinated EMU exit is in order. The last thing you want to do is leave Berlin with a “euro-survivor” currency to continue its destructive game(as an exporter of deflation to all others). Under all circumstances you have to cause Berlin to implode; call it divine justice if you wish. This is the aim and we need to stay focused on curing the German problem in Europe once and for all. No mercy.

    • Vasili:

      I think I found a self-answer to my question of why Greece can’t insist on a new budget a la Italian defiance. This graph says it all. Greece has almost 13% of its GDP as budget deficit whereas Italy is proposing 3% and Germany has 0%.

      This also shows why Germany and Greece would never reconcile their different points of view. Meaning that Greece will be in the slammer for a long, long time:

      http://www.tradingeconomics.com/greece/government-budget

    • “1euro = $2.00+ …. the Greeks would see their real estate and other assets go up in value”

      You mean the real estate would be worht 40% more in EUR then. What is the Point of that? In USD the real estate would still be worth less than today.

    • @Dean
      “And also Vasili: Why can’t Greece do something like this?”

      By “this”. I assume you mean “stimulate the economy via deficit spending, and ignore the balanced budget mandate”.

      You probably know the answer: it can, if it increases its debt. But its rating in the money markets, implies that its central bank, the ECB, must buy new Greek debt to finance said deficit.

      And this is exactly what I asked Yanni in the original post:
      “Will the rest of the EZ be willing to sustain the kind of public investment needed to overcome the deleveraging of the Greek private sector? Bringing up the Greek public debt by another 50%-100% of GDP over the course of the deleveraging period (which, judging by the Japanese experience, could be decades long)?”

      Renzi either believes that for Italy the answer is “yes”, or he doesn’t worry about possible EZ reactions (which, as Mr. Berlusconi found out, could be “severe”). But I would like to know Yanni’s opinion about Greece.

    • Vasili:

      Greece has already received a 65% reduction in her debt based on real terms.

      What confuses most people is the difference between “nominal vs. real” debt. In nominal terms the debt is still 350 Bil. euros. In real terms the Greek debt is below 150 Bil. euros and has a possibility to go down to almost zero.

      Greece does not have a debt issue anymore. But it has a GDP/economy serious problem.

      What Syriza and Yanis don’t understand is that if the Greek debt was cut down to 100 Bil. and then Greece was asked to finance at market (say @ 8% or close to the 10-yr bond rate) then Greece annual debt service would be 8 Bil. euros. Today Greece pays 7 Bil. euros on 350 Bil. total debt. Greece could have 1 Trillion debt but at 0% with the practical effect of no annual debt service. The amount of debt is irrelevant because a combo of inflation over 50-70 years will render it worthless.

      Syriza has locked in on the wrong issue. Greece’s debt will not be reduced below the nominal 350 Bil. euro, ever. But the net present value of such debt will be a very low number almost close to zero. The Greek debt has already been written off but for political reasons in European parliaments no one could openly admit to such because there will be a revolt in the countries involved.

      This is just another case of how unsophisticated the internal Greek debate is about the debt issue. Forget about the sovereign debt because it has already been forgiven. The nominal debt existing is a scarecrow issue and nothing more than this. It’s part of a deliberate campaign of terrorizing citizens to submission. It’s a “baboula” issue for those who don’t understand how finance works which is 99.999999999999999% of the Greeks.

      What basically Syriza wants is a haircut on NPLs of private citizens similar to the one the state has already received. And because they can’t explain (in convincing terms)that the state has already received a substantial haircut ( a deal structure which the private sector could never possibly get) they insist on the haircut issue as something that needs to be done when in fact it already has. They want a public announcement of the sovereign debt haircut so that they could demand the same for the NPLs. Syriza wants a freebie for voters but they will never get it because they simply don’t understand how irrelevant they are under the Berlin regime.

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  12. Watching last night the parliamentary debate regarding Mr. Samaras’s administration voting confidence I heard him assuring the public that this time there will be an overall balanced budget (not only primary surplus), which happened only once again within the last forty years. He furthermore insisted that shortly Greece will be able to repay off and the principle of its national debt and this in conjunction with the ensuing economic growth will place it on a declining trend in relation to GDP. Thus, the debt is manageable and sustainable! Trust my administration and not experimenting with the terra incognita of SYRIZA,whose views on the debt issue change more often than the wind.
    Could you please Yanis comment on the plausibility of Mr. Samaras’s arguments, and also what advise would you give to Mr. Tsipra in dealing with the debt crisis in Greece, if SYRIZA is elected and forms the next administration, without aggravating the other member states?

  13. I will try to be as plain speaking and as practical as possible:

    Greece is irrelevant at this point because it has zero leverage to effectuate things in either direction. It has a low grade political class and the vast majority of the Greek people are unable to frame the issues properly nor do they have a solid understanding of what so far has happened to them and why. They tend to judge outcome by their own particular circumstances which also happen to be irrelevant in the big continental picture. By character, Greeks obsess over the just or unjust nature of things and they seem to believe that if a situation is proven unjust then they ought to automatically possess the power to change it. (the naive belief that proof of injustice equals immediate cure)

    Not so in the eurozone prison and in the realm or realpolitik. Greece’s strategic blunder occurred when Greece joined the EMU roughly 10 years ago. Before that Greece has been a member of the EU for 33+ years or so, a fact which by itself is o.k. (the benefits outweighed the disadvantages).

    Greece today is no longer an independent country and she is clearly part of an undemocratic construct continuously morphing into new shapes by its Brussels bureaucracy. Greeks feel ashamed not to be called/considered Europeans even though we are the foundation of western ideals and the european civilization. Therefore for a Greek there is nothing worse than not to be thought as a European and this is where the unholy abuse regime begins. Greek politicos have swallowed the bait wholesale and every move to unhook themselves results in further deep injury in Greece’s flesh.

    Regarding the polls indicating the opposition gaining ground that’s the biggest mirage of all. These polls have typically a 20+% undecided factor or so and therefore they come down to measuring already pre-declared preferences in the hard core supporters resembling football fans. I am sure these polls are conducted by the government itself to show Berlin cause for lenience. They mostly backfire because in return make Berlin to harden even further in response. The opposition relies on the fact that in modern Greek history there has never been an opposition party which did not eventually become government. So the opposition falsely thinks that this is a waiting game. Not so because Greece is no longer a sovereign state. So both the government and opposition in Greece are promoting falsehoods and un-deliverables galore. Bottom line: great waste of time. Meanwhile Greece seems to be unable to connect with other political forces in Europe and remains a very isolated, ebola-type case which no one wishes to touch or be allied with (Berlin has made sure of framing it this way).

    Believe me when I tell you that Greek politics have no future because they are a profession of the ignorants, maladjusted and clueless. Greek politicos are unfit for the EMU game. They can’t cut the mustard; it’s that simple.

    • Dean,
      You might not live in Greece and therefore you cannot see people’s reaction to the real estate tax enacted by Samaras. It is based on real estate values that are twice the real ones and it is not deductible from income tax. This tax alone alone is enough to ensure that the leading party after the next election will be the opposition party.
      The government in Greece has failed its people by overtaxing them.

    • Dean…so are you saying that potential future Greek Politicians who are NOT ignorant, maladjusted and clueless do not reside in Greece itself, but could be recruited from the ranks of those who left Greece in the 70s, 80s and 90s. I mean those who have been educated and who have worked in other parts of the world and are interested in taking a “leap of faith” in returning to a small country like Greece & help to reverse social & economic dynamic?

    • Kostantinos: I am aware of the ENFIA tax and the difference between real market values and the much higher assessed value. This is not in Samaras hands to cure; it’s all up to Troika and Troika wants a further increase of the assessed value by 30% or so. This ENFIA tax is further proof that Greece does not have a government. Once you realize that Greece has lost its sovereignty then you could frame this issue properly.

      Alex68 of Melbourne: I am sure there are quite a few talented Greeks overseas some in Australia and some elsewhere. This does not mean that they make good politicians and that by merely showing up the position is theirs for the asking. There is a vast gap of perception about reality between autochthonous Greeks and those living overseas akin to Plato’s Allegory of the Cave. Trying to convince the locals that they got it wrong and you right it will probably have you killed in short order. If it were that easy then Yianis, our host, would be Greek Finance Minister by now. It’s far more difficult than you think and especially in a country which has lost its sovereignty. I wish there was a happy ending in all of this about Greece but maybe there isn’t. Greece claims that the reason for entering the eurozone was for national interest purposes ensuring that Cyprus also became a eurozone member and thus a thorny Cyprus issue was inherited by the EU (and assumed to have been solved somehow). If so then Greeks everywhere need to understand the significance of the EMU Greek move and decide whether it was worth the trouble. What is amazing to me is a. the undemocratic nature of such move and b. the absence of a Plan B and that despite all the unbelievable abuse Greeks have received so far, they still cling to the euro; which means that they don’t get it. There is a strong case of false association here which also highlights a lower level of understanding and sophistication. Being a leader of ignoramuses is not an easy job nor one which necessarily leads to better outcomes. You are asking for a leader that simultaneously will re-educate the Greeks on their fallacies and manage a strong European campaign to overturn the beast of Berlin(when the BOB has already framed you as a special case devoid of any commonality with other Europeans). Perhaps you are talking about mission impossible.

    • Dean,
      I believe that the ENFIA tax is not from Troika. It is because Samaras finds this tax to be convenient. Please note that he reduced the dividend tax to 10%. He is reducing taxes for the rich and is taxing the middle class. He has no chance of getting re-elected. This government is finished. Today they area announcing a min. income 4-6,000 euros a year. Can you imagine? Total collapse of any common sense.

    • Kostantine:

      About half a million people with high net worth estates have paid property taxes for decades. In August 2011 the socialist government instituted the first ownership tax on the country’s remaining five million real estate holders – about half the population.

      Initially it was to be a two-year emergency levy, but the conservative-led coalition government renamed the levy Enfia – it has been rebaptised five times – and made it permanent.

      “Until 2010, the contribution of property tax to state coffers was much lower than in the majority of European countries,” Finance Minister Yannis Stournaras told parliament. “Our tax system almost ignored this source of revenue.”

      In fact, Greece has some 40 property-related taxes and fees on construction, rent, sale, inheritance, transfer, and legalisation of illegal structures, but none of them tax the average household for mere possession. Enfia raised government revenues on property from 500m euros ($674m) to about 3.5bn euros ($4.7bn).

    • Dean,

      ENFIA is not a fair tax because:

      1. It is based on unrealistic preset values mainly in the cities.
      2. It is not deductible from income. You pay your income tax, your real estate tax, your sales taxes and there is nothing left.
      3. Greece now taxes income from rental properties at flat fixed rates of 33% + without any deduction of expenses.
      4. Greeks traditionally relied on real estate, this tax is taking this safety net and turning it into a big problem.

      You have to see the absurdity in the overall tax system.

      You have a 23% sales tax on all consumption even when buying a house.

      Taxation starts with the first euro earned (new with Samaras).
      (I am not sure of another country that does that. In the US a family does not have to even file taxes for the first 20,000 and sales tax is 5-10% not 23%. Food tax is 0% in the US. Greece has a 13% sales tax on food)

      Yet Samaras reduced the dividend tax to 10%.

      Samaras is taxing the middle class and is looking the other way when it comes to taxing the upper class.

      The only thing that works in Greece is shipping as it is a tax free business.

    • Kostantine:

      I don’t think ENFIA or other taxes are fair. They are a product of Greece not really having a Greek government. This is what happens when you lose your sovereignty.

      If ENFIA is not applied then the “government” needs to find same tax revenue elsewhere to satisfy the Troika. If Troika is not satisfied then they pull the carpet underneath your feet and your 10-year bond rates go above 9% (like today) and you are finished,

      Look at what has happened during this past week. In a matter of days/hours the 10-year Greek bond rate went from below 5% (meaning some reasonable access to markets) to above 9% (which means zero access to markets). Which also means that Troika could manipulate you at will the minute they sense your intent of freeing yourself from bondage.

      Now imagine Syriza winning a future election (with or without a clear majority). As Syriza ponders the next step, yields will go probably to 20% or higher upon announcement of the election results. You can not pretend to have a government in Greece when your finances are determined in Berlin or Brussels. That’s the bottom line: Greece has ceased to have a Greek government since 2012 when Papandreou fell. His government fell because the “so called” European partners decided that Greece no longer needed a government. Since then the redundant political system in Greece has concentrated on dispensing insults to one another confusing the citizens that somehow they mattered and that the local politicos were still in charge. Not only Greece does not have a government at this stage but even if it did it would be way below the minimum qualifications required to play in the brutal EMU game. Politics don’t matter in Greece any longer because the politicians have surrendered Greece under faulty assumptions to a system which fully controls them and renders them ineffective. When a Greek politico tells you “give me a chance to govern you”, he/she means give me a chance to become a Troika/Berlin employee.

      As a result, when you say “ENFIA is unfair” I hope you are addressing such observation to the European Talibans and the Merkel Ebola who insisted on it. Because if you think this is up to Samaras or any other below circumstances Greek politician to cure it would be totally wrong.

    • Dean,

      You are absolutely right. I read your last paragraph and it is as if I am thinking the exact thoughts.

      I will vary in one important point. Samaras had choices. The ENFIA tax was a choice.
      You don’t pollute the system to gather 3.5B Euros. It is not worth the pollution.

      They had a tax before ENFIA which was starting to be accepted. To raise an extra 2B they totally ruined it.

      The irony with Samaras is that he lowered the dividend tax to 10% while enacting ENFIA one year later. They had choices and they made the wrong decisions.

      The decision to go to the markets was also a huge mistake. This week Samaras was out rolling out a minimum income initiative. Can you believe that. Overall gross incompetence at many levels.

  14. The crucial question remains however: How long can the Greek government continue to deceive the Greek people and the rest of the world about the true state of the Greek economy? Surely, there must be a lot of people out there who are well aware of what is really going on, including Greece’s international lenders. Let’s say that the government through skilful propaganda will manage to get re-elected, how long could they possibly keep up the hollow facade? How long can the Emperor continue to walk around in the nude?

    • If they get re-elected, the answer to your question is: “As long as Berlin continues to be ambivalent on what to do with the Eurozone.” Which means that it is up to the Greek electorate to put an end to this drama.

    • The Greek governing elites be they PASOK or New Democracy or Golden Dawn…who do they talk to a daily / weekly basis, who gives them financial support & direction on how to govern, who’s political agenda are they advancing. Based on what I have learned in the past few years & what Yanis has been explaining, it appears that the “Representatives of the Demos” are advancing the agenda detrimental to the current & future generations of Greek & European citizens. The leadership team of Syriza are certainly active in promoting a different type of problem solving approach which has been outlined in some detail here, they are facing resistance on many fronts. Those yet to be born will look back on this period with disappointment & sadness I suspect!

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