The Deepening Greek Crisis

[GostHacked]

Because we are in a period of global easing, and our ENTIRE PLAN for creating economic growth, and mitigating recessions is to finance consumption with debt. This effects not just government but consumers as well which is why we have the lowest savings rate in modern history.

BOOM - BUST - BOOM - BUST - BOOM - BUST. Thats just how the system works.

Then the system is broken.

[Wild Bill]

I am struck by how a very pertinent fact has been completely buried and forgotten in this debate!

Am I the only one who remembers how a year or two ago, when the problem of Greece and a few other EU countries first became prominent in the SM, how we were told that in Greece one of the major problems of the Greek government is that almost no one pays their taxes?

Apparently, tax evasion is standard operating procedure for almost the entire population! It is part of their way of life! I recall articles that told us the Greek government collects only about 25% of the actual taxes owing annually.

Seems to me that not only could Greece fix most if not all of its financial problems overnight, what a great life the Greeks have been living!

Now the chickens have come home to roost. No wonder Greeks get resentment from citizens in countries like Germany. Yet we have many enthusiastically blaming the bankers for loaning them the money for their party, excusing Greece from throwing the party in the first place!

When you look at it from an outside perspective, it all seems rather loopy...

[Canuckistani]

I am struck by how a very pertinent fact has been completely buried and forgotten in this debate!

Am I the only one who remembers how a year or two ago, when the problem of Greece and a few other EU countries first became prominent in the SM, how we were told that in Greece one of the major problems of the Greek government is that almost no one pays their taxes?

Apparently, tax evasion is standard operating procedure for almost the entire population! It is part of their way of life! I recall articles that told us the Greek government collects only about 25% of the actual taxes owing annually.

Seems to me that not only could Greece fix most if not all of its financial problems overnight, what a great life the Greeks have been living!

Now the chickens have come home to roost. No wonder Greeks get resentment from citizens in countries like Germany. Yet we have many enthusiastically blaming the bankers for loaning them the money for their party, excusing Greece from throwing the party in the first place!

When you look at it from an outside perspective, it all seems rather loopy...

I alluded to a it above. Also a problem is a pension system that allows hair dressers and radio announcers to retire at 50 because they have "dangerous" occupations. During election years it was not even attempted to collect taxes. If remember the figure right, only 25% of Greeks pay their taxes.

Greece has very little of economic value except tourism - no manufacturing, no large scale agriculture, no resources. They just don't have the means to finance a very good lifestyle. They should never have been allowed to join the EU.

I don't blame the Greeks for being mad now that the dream has burst. And I'm sure, as usual, the people on the bottom have to bear the most pain, which isn't right. They were lied to by their politicians, but they were also complicit in creating their problems.

[dre]

I alluded to a it above. Also a problem is a pension system that allows hair dressers and radio announcers to retire at 50 because they have "dangerous" occupations. During election years it was not even attempted to collect taxes. If remember the figure right, only 25% of Greeks pay their taxes.

Greece has very little of economic value except tourism - no manufacturing, no large scale agriculture, no resources. They just don't have the means to finance a very good lifestyle. They should never have been allowed to join the EU.

I don't blame the Greeks for being mad now that the dream has burst. And I'm sure, as usual, the people on the bottom have to bear the most pain, which isn't right. They were lied to by their politicians, but they were also complicit in creating their problems.

I alluded to a it above. Also a problem is a pension system that allows hair dressers and radio announcers to retire at 50 because they have "dangerous" occupations. During election years it was not even attempted to collect taxes. If remember the figure right, only 25% of Greeks pay their taxes.

Sure but thats the kind of thing that happens when credit is too easy, and it happens to all governments to varying degrees. When monetary policy doesnt suit your economy this is the inevitable result.

Greece has very little of economic value except tourism - no manufacturing, no large scale agriculture, no resources. They just don't have the means to finance a very good lifestyle. They should never have been allowed to join the EU.

And they should never have wanted to join, and they would be much much better off if they didnt join. They have a large shipping industry too btw.

This is a classic bursting bubble scenario exasterbated by the global economic crisis. Greeces economy was booming and out performed the euro-benchmark economy for more than 20 years. Switching to the euro made credit too easy and all that easy credit further inflated the bubble. Then it burst, and Greece was hit especially hard when the financial meltdown happened because of its reliance in shipping and tourism.

They were lied to by their politicians, but they were also complicit in creating their problems.

Its not so much that... The biggest problem is that they were fed false signals by the credit markets. The greek economy was growing fast, interest rates were very low, and bond yields were very low. When a government sees these things they read them as a signal that debt levels are sustainable. And governments with easy credit, dont worry as much about revenue and they tend to collect less taxes.

This whole "lazy greeks" meme is utterly bogus, and the "corrupt politicians caused all these problems" is at best a half truth. The greeks are the hardest working people in Europe.

Edited August 31, 2012 by dre