The Greeks legitimately lay claim to one of the world's oldest surviving civilizations. It's a fascinating and tumultuous history full of wars, empires, conquests and much more. During the 20th century the Greeks endured civil war, monarchy and eventually settling on a democracy of sorts, a situation fairly similar to all European nations. At the end of the day the Greek are no different than anybody else - they are just people trying to survive in a world gone mad. What makes the Greeks unique is that while their situation is not necessarily historically unique, Greece is the first western nation to literally implode financially and politically, a fate that many predict will ultimately fall on most western nations as a result statism and fiat central banksters.
Greece is at the end of its rope. It indebted itself on a massive scale to sustain its socialist paradise and there is no way the debt can ever be repaid without making Greek citizens debt slaves for a very long time. Michael Lewis summarized the Greek situation best in his book Boomerang.
As it turns out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it. In just the past twelve years the wage bill of the Greek public sector has doubled, in real terms – and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a years. Twenty years ago a successful businessman turned minister of finance….pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension…..and there isn’t a single private company in Greece with that kind of average pay.”If you think the words of Michael Lewis are harsh, the Brits have their own peculiar views of Greeks and basically accuses the Greeks of being lazy and/or overpaid folks who robbed European taxpayers while refusing to pay their own taxes.
The Big Fat Greek Gravy Train: A special investigation into the EU-funded culture of greed, tax evasion and scandalous waste
Andrew Malone of Mail Online writes:
Even on a stiflingly hot summer's day, the Athens underground is a pleasure. It is air-conditioned, with plasma screens to entertain passengers relaxing in cool, cavernous departure halls - and the trains even run on time. There is another bonus for users of this state-of-the-art rapid transport system: it is, in effect, free for the five million people of the Greek capital....
Indeed, as well as not paying for their metro tickets, the people of Greece barely paid a penny of the underground’s £1.5 billion cost — a ‘sweetener’ from Brussels (and, therefore, the UK taxpayer) to help the country put on an impressive 2004 Olympics free of the city’s notorious traffic jams. The transport perks are not confined to the customers. Incredibly, the average salary on Greece’s railways is £60,000, which includes cleaners and track workers - treble the earnings of the average private sector employee here....
Significantly, since entering Europe as part of an ill-fated dream by politicians of creating a European super-state, the wage bill of the Greek public sector has doubled in a decade. At the same time, perks and fiddles reminiscent of Britain in the union-controlled 1970s have flourished.Whatever the situation in Greece and for whatever reason(s), life as the Greeks know it is rapidly coming to an end.
The bailouts arranged by the Troika (the European Commission - EC, the European Central Bank - ECB and the IMF) are a big fail and only added more debt to the gargantuan mountain of Greek debt. Postponing reality was the primary motivation of the Troika because European banks can’t handle the write-off of Greek debt without severe pain, pain sufficiently painful to crash the Euro and many European banks, notably French and German banks. Essentially, the Greek bailout was really nothing more than a temporary bailout of primarily French and German banks.
Michael ‘Mish’ Shedlock accurately summarized the situation in his blog, Global Economic Trend Analysis, here.
Pressure from the Troika and fear-mongering by all the politicians in the bailout-bed will be immense. There will be another decade of pain and suffering for Greeks if they stick to the Troika plan.
However, there will be short but intense pain for Greeks if they tell the Troika to shove it. Which is worse? It seems Greeks have come to the correct conclusion.The Greeks really need to just bite the bullet now which is different than putting the gun in their mouths, pulling the trigger and eating the bullet, something the Troika expects the Greeks to do. When a nation is so debt ridden and so bankrupt that most of its revenues go to debt service, there is only one option: default. Many financial pundits are predicting that Greece will simply be forced to exit the Euro-zone but not the EU. But the systemic risk is far wider than Greece as Spain and other nations find themselves in dire financial condition. Some pundits have even suggested that the Greeks might attempt to blackmail the Troika just to keep the Euro-zone from financially detonating itself.
Greece Black Mailing Eurozone? As mentioned above most of the Euro 400 billion of Greek debt is now owed to other euro-zone member state institutions and the IMF, therefore a Greek default will have a double whammy on the Euro-zone as institutions such as the ECB will be sitting on huge losses that would require a bailout from member states even before it attempted to rescue the euro-zone wide banking system from collapse. Clearly the Greek politicians are using the losses the euro-zone would directly suffer were Greece to default as a blackmail tool to try and evade any responsibility. However the problem with the Greek strategy is that if Greece is allowed to successfully black mail the Euro-zone then so will other larger countries such as Spain and Italy eventually engage in similar tactics to evade economic austerity pain as their populations also demand a similar solution to economic austerity as Greece were being allowed to get away with.
Read the rest here
The Market Oracle
But how are the Greek surviving economic calamity? Folks are fleeing Athens for the rural life and learning agricultural skills.
Crisis-hit Greeks leave the cities for a new rural life
”Before, the olive groves had all been abandoned,” said Flores, noting that the island now has an industrial press and for the first time, is producing its own olive oil.But the Greeks are doing far more than sharpening their survival skills, they are learning to barter with each other as communities work cooperatively.
Battered by Economic Crisis, Greeks Turn to Barter Networks
VOLOS, Greece — The first time he bought eggs, milk and jam at an outdoor market using not euros but an informal barter currency, Theodoros Mavridis, an unemployed electrician, was thrilled. “I felt liberated, I felt free for the first time,” Mr. Mavridis said in a recent interview at a cafe in this port city in central Greece. “I instinctively reached into my pocket, but there was no need to.” Mr. Mavridis is a co-founder of a growing network here in Volos that uses a so-called Local Alternative Unit, or TEM in Greek, to exchange goods and services...Part alternative currency, part barter system, part open-air market, the Volos network has grown exponentially in the past year, from 50 to 400 members. It is one of several such groups cropping up around the country, as Greeks squeezed by large wage cuts, tax increases and growing fears about whether they will continue to use the euro have looked for creative ways to cope with a radically changing economic landscape.The Greeks have also become adept at operating an underground economy and producing goods and services that escapes the grubby hands of the dreaded and insidious tax collector.
In Greece, Underground Economy Fuels Financial Crisis
If you think there's been a tax revolt in the U.S. -- or even California -- consider Greece. The estimates we've heard, from the sources that seem the most reliable: 40-50 percent of the Greek economy is underground. i.e., untaxed. When we were in Spain, people there were embarrassed that the estimate was as high as 25 percent. In the U.S., the usual estimates are less than 10 percent.Paul Solman, who wrote the above referenced 7/2010 PBS article attributed Greek financial problems to its inability to collect taxes. Solman writes:
The key to fixing the Greek economy is getting Greeks to finally stop paying cash and start paying their taxes. It would be a revolution. It would be a transformation. The push is on. In April, the top income tax rate was raised to 45 percent for those making more than 100,00 Euros and the country raised taxes on dividends, large real estate holdings and offshore companies. "The new tax bill is a revolution for Greece," said Prime Minister George Papandreou at the time. "No government in the past has dared such reforms."Like every other big government statist, Solman actually believes that an ailing economy can be magically resurrected from the dead and instantly made prosperous and flourishing simply by raising taxes.
How well did that work out for the Greeks?
When public corruption is rampant and taxation continues to rise to feed government waste and fraud, there is a point when folks just refuse to feed the system and they go underground. It's called 'screw the government that's done nothing but screw me'.