Greek Austerity is doomed to failure....

ManAtHome

So how much growth have we had from ZIRP/devaluation/£200bn of printing?
a) much more than the printed amount
b) slightly more than the printed amount
c) slightly less than the printed amount
d) much less than the printed amount

Note that as we've devalued, you should be measuring apparent growth in something other than quids - your choice (petrol, gold, Swiss Francs, corned beef...).

nearlynew

HAMISH_MCTAVISH wrote: »

Growth is the only sustainable way out.....

"Growth" and "sustainability" are two incompitable concepts.


You silly boy.

vivatifosi

HAMISH_MCTAVISH wrote: »

Yes, of course Greece needs to reduce spending and collect more taxes. But austerity to the point of economic destruction (as we're seeing in Greece) widens the gap between revenue and spending instead of narrowing it.

One thing we've spoken of in the past but haven't so much today is Greece's sheer inability to raise income, whether from taxes or the provision of "paid" government services.

A colleague of mine showed me an article that appeared in the Daily Mail a couple of days back. Not a paper I normally quote from, but there must be at least a grain of truth in it. If even half of the article is true, then we should be very concerned at the Greek state's ability to take money from the Greek people, whichever the scenario. I haven't seen it quoted before but there are a few Greece threads at the moment so apologies if its been doing the rounds:

http://www.dailymail.co.uk/news/article-2007949/The-Big-Fat-Greek-Gravy-Train-A-special-investigation-EU-funded-culture-greed-tax-evasion-scandalous-waste.html?ito=feeds-newsxml

To summarise, it says:

* The Athens Underground, built for the Olympics, has no barriers to entry or exit and works on a ticket validation system which few bother with.

* The average salary on Greek Railways is £60k.

* 600 professions including pastry chefs are allowed to retire at 50, on 95% of their previous salaries, due to the arduous nature of their work.

* Only 5,000 people in the country admit to receiving a salary of over £90k pa due to self-declaration of taxes.

* This is in spite of "studies" (unnamed) showing more than 60,000 greek homes have investments of over £1m.

* People are therefore saying they earn below the tax threshhold of £10k, even though they own second homes and boats.

* Allegedly there is a semi-official rate for bribing the tax collector if they find out.

* Greek shipping magnates are automatically exempt from tax.

* The government has resorted to using helicopters and Google earth to show where people add swimming pools and expensive extras to their property. People are using covers and camouflage to hide them.

* There is a big capital flight to tax havens (well that one must be true!)

* Greeks have been buying properties in London to hide their wealth.

* Greek schools have four times as many teachers as Finnish schools - the system rated best in Europe.

Clearly the article does what the Daily Mail is very good at - raising indignation in the heart of Middle England. It made me angry and I normally laugh at their articles, but it does raise a lot of questions as to how on earth the Greeks will claw back money from its citizens.

DervProf

HAMISH_MCTAVISH wrote: »

Austerity was never going to work. Not in Greece, not in Ireland, and not in any other country.

Growth is the only sustainable way out.....

So (to use the credit card analogy), you are on £20K a year, but have a £70K credit card balance. You've been adding £1K per month to your balance for quite some time. All of a sudden, the debt looks huge, and the credit card company want their money back.

What's the first thing that you should do, eh ?

Tell the credit card company that you are going to "grow" your income ? :rotfl:

I reckon the first thing to do is cut back on the spending.

Like the muppets who are going on strike today, they think that someone else should be paying for their lifestyle, instead of facing up to the reality that their current lifestyle is being funded by money that the country has not got.

System

If taxation is voluntary, is cutting someone's wages by 30% going to make him more, or less, likely to pay his taxes?

RenovationMan

DervProf wrote: »

So (to use the credit card analogy), you are on £20K a year, but have a £70K credit card balance. You've been adding £1K per month to your balance for quite some time. All of a sudden, the debt looks huge, and the credit card company want their money back.

What's the first thing that you should do, eh ?

Tell the credit card company that you are going to "grow" your income ? :rotfl:

I reckon the first thing to do is cut back on the spending.

If I were in that position, the first thing I would do is cut back on my spending. The second thing I would do is threaten the credit card company with my going bankrupt unless they freeze my interest payments, otherwise all the benefits of cutting back would simply be lost in servicing the exisiting loan instead of reducing the balance. The third thing I would do is try and grow my income (second job, etc.) to help d pay down the debt faster.

This isn't dissimilar to what Greece and the rest are trying to do.

DervProf

RenovationMan wrote: »

If I were in that position, the first thing I would do is cut back on my spending. The second thing I would do is threaten the credit card company with my going bankrupt unless they freeze my interest payments, otherwise all the benefits of cutting back would simply be lost in servicing the existing loan instead of reducing the balance. The third thing I would do is try and grow my income (second job, etc.) to help d pay down the debt faster.

This isn't dissimilar to what Greece and the rest are trying to do.

Of course, the best thing to have done is not to have racked up such large debts in the first place.

It seems that many governments are not capable of running their economies properly (ie spending ~ what they earn). What is it with humans that some love to spend what they have not yet earned ?

And not just a bit more than what they haven't yet earned, a lot more in many cases. Then if it all goes wrong, they blame someone else.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Austerity was never going to work. Not in Greece, not in Ireland, and not in any other country.

Hmmm.

Austerity can work, depending on the starting point. It's not going to work in Greece as no amount of austerity can solve their problems. But it can work in other countries.

You have to cut your cloth. We all have to do it, from households, to countries. You can't just continually grow and spend, and grow faster to cater for your spending, only to grow even faster.

The amount of growth needed for Greece as a solution to their problems would be absolutely massive and in no way sustainable.

DervProf

As Graham says, Greece's problems are massive, and austerity alone will not solve them. So, if someone (or some country) has huge debts, the least you can do is stop them from adding to those debts.

alisonmeyers

vivatifosi wrote: »

One thing we've spoken of in the past but haven't so much today is Greece's sheer inability to raise income, whether from taxes or the provision of "paid" government services.

A colleague of mine showed me an article that appeared in the Daily Mail a couple of days back. Not a paper I normally quote from, but there must be at least a grain of truth in it. If even half of the article is true, then we should be very concerned at the Greek state's ability to take money from the Greek people, whichever the scenario. I haven't seen it quoted before but there are a few Greece threads at the moment so apologies if its been doing the rounds:

http://www.dailymail.co.uk/news/article-2007949/The-Big-Fat-Greek-Gravy-Train-A-special-investigation-EU-funded-culture-greed-tax-evasion-scandalous-waste.html?ito=feeds-newsxml

To summarise, it says:

* The Athens Underground, built for the Olympics, has no barriers to entry or exit and works on a ticket validation system which few bother with.

* The average salary on Greek Railways is £60k.

* 600 professions including pastry chefs are allowed to retire at 50, on 95% of their previous salaries, due to the arduous nature of their work.

* Only 5,000 people in the country admit to receiving a salary of over £90k pa due to self-declaration of taxes.

* This is in spite of "studies" (unnamed) showing more than 60,000 greek homes have investments of over £1m.

* People are therefore saying they earn below the tax threshhold of £10k, even though they own second homes and boats.

* Allegedly there is a semi-official rate for bribing the tax collector if they find out.

* Greek shipping magnates are automatically exempt from tax.

* The government has resorted to using helicopters and Google earth to show where people add swimming pools and expensive extras to their property. People are using covers and camouflage to hide them.

* There is a big capital flight to tax havens (well that one must be true!)

* Greeks have been buying properties in London to hide their wealth.

* Greek schools have four times as many teachers as Finnish schools - the system rated best in Europe.

Clearly the article does what the Daily Mail is very good at - raising indignation in the heart of Middle England. It made me angry and I normally laugh at their articles, but it does raise a lot of questions as to how on earth the Greeks will claw back money from its citizens.

vivatifosi i read that article too and wondered how much truth (or stretching of it, since it's the DM) there was.

can anyone comment / expand upon it, based on their own experiences or the experiences of relatives / friends?

just how much truth is there to some of the (quite unbelievable) claims made in that article, I wonder?