What are the Greek Austerity measures?

tomterm8

Really2 wrote: »

UK does not need to be brought in to this, but you still do not indicate is the current austerity measure likely to be there or worse should they leave the euro.
Tax returns will not change over night, so I understand if you can't answer it. But what would greece be looking at in terms of the short to medium term future.
My guess is the austerity measure would be probably worse for a good few years (5+) and standards of living and prevoius benefits and taxation levels were unlikely ever to come back.

If my plan were to happen, then you would be looking at an Iceland scenario.

There would be a very deep but short term recession, a lot of legal wrangling, but it would be over in 4 years. Greece would be closed to the debt markets for around that length of time, meaning it could only spend what it earned. But it would not be repaying its debts, it would only have to close the structural deficit which is essentially the austerity plan they are already going with.

If we continue with Greece in the eurozone, they will have to regain the same competitiveness. To do this, they will end up in a very deep long term recession, the greece government will fall, and it will be replaced by a military junta. In five years time, the Greek government will owe as much as it does today. It will not have regained competitiveness, and will do a disorderly default.

Just my opinion, though.

Really2

tomterm8 wrote: »

If my plan were to happen, then you would be looking at an Iceland scenario.

There would be a very deep but short term recession, a lot of legal wrangling, but it would be over in 4 years. Greece would be closed to the debt markets for around that length of time, meaning it could only spend what it earned. But it would not be repaying its debts, it would only have to close the structural deficit.

If we continue with Greece in the eurozone, they will have to regain the same competitiveness. To do this, they will end up in a very deep long term recession, the greece government will fall, and it will be replaced by a military junta. In five years time, the Greek government will owe as much as it does today. It will not have regained competitiveness, and will do a disorderly default.

Just my opinion, though.

But from my point of view Iceland was caused by nationalising the banks, not the massive structural problems greece has.

Greece seems to been caused by government spending, so this is my kind of point.

How far will greece have to redress (EG austerity measures or worse), They are not going to see massive inflows of cash, so I am trying to get a long term handle how greece is likely to change for ever.
I think the likely hood is, their whole government spend is going to have to change drastically for ever.
So they are unlikely to get back to the good times.
So I think very different to iceland, as in reality it was about inflating the country back to where it was. They can still go back to a similar structure, standard of living, public sector etc. as before.
I can't see that being the case for Greece.

I suppose what I think is when people say the austerity is unsustainable, my feeling unfortunatly, it is and will be any direction they take. Their way of life and what they had will change forever.

The idea of when people say "austerity is unsustainable" gives the indication there is another way, in reality people should be saying austerity is unavoidable.

ILW

Would I be right in assuming that the austerity levels will take greek living standards back to where they were before joining the Euro?

tomterm8

Really2 wrote: »

But from my point of view Iceland was caused by nationalising the banks, not the massive structural problems greece has.

Greece seems to been caused by government spending, so this is my kind of point.

How far will greece have to redress (EG austerity measures or worse), They are not going to see massive inflows of cash, so I am trying to get a long term handle how greece is likely to change for ever.
I think the likely hood is, their whole government spend is going to have to change drastically for ever.
So they are unlikely to get back to the good times.
So I think very different to iceland, as in reality it was about inflating the country back to where it was. They can still go back to a similar structure, standard of living, public sector etc. as before.
I can't see that being the case for Greece.

I suppose what I think is when people say the austerity is unsustainable, my felling unfortunatly it is and will be any direction they take. Their way of life and what they had ill change forever.

The idea of when people say "austerity is unsustainable" gives the indication there is another way, in reality people should be saying austerity is unavoidable.

From my point of view, the problem behind Greece is actually not the Greek deficit. That is a symptom not the cause. The fundamental cause is that Greece is uncompetitive.

If you want to buy an car made by Greek workers, it will cost you $1,200, compared to a car made by German workers at $1000.

Now, what right minded guy would by a car from Greece? Well, no one. Which is why Greek employment is over 20%. Those unemployed people don't pay tax. They claim money from the state. As a result, the Greek government is in major schtum. (actual figures may vary, this is just "argument mathematics" )

The solution is, Greece needs to cut prices by 20%. You can achieve that by a devaluation (like we did in 2008). Or you can achieve that by actually cutting wages.

It is much easier to accomplish a devaluation than cutting wages. In fact, legally it is virtually impossible to achieve such a internal devaluation, and socially it is very difficult too.

That is why the Euro is the problem: it removes the only way Greece can tackle the fundamental cause of the government deficit.

Which is, Greeks are uncompetitive, and need to reduce their prices.

Really2

So basically do what they did before the euro.

Become a cheap holiday resort.

Can't see how their living standards could get back to pre bust levels though TBH. They are in reality going to have to work harder for less which ever way we look at it.

2sides2everystory

Really2 wrote: »

But If I were Greek I would really like some idea other than bad.

Not a pop at you, but in reality. Someone has to highlight what their future will be like.

I am not pro bailout, but I really think the idea has to go past "nasty austreity" to this is what you will expect if this happens......

Well if it wasn't for the fact that Greece has always been perched precariously in a geographical location that could get mixed up in war then for an example of a 10 year prognosis perhaps look at Argentina 2001-2011 minus the recent good bits unless Ryanair plays a blinder, reduces hand luggage to 5kg swimming costumes only so they can stretch the aircraft range and do a deal with Athens Chamber of Commerce and Industry to increase tourism to Greece 10 fold - that means Michael and Michalos need to get talking right now :rotfl:

Really2

Another question,

Is greece bad at collecting taxes (EG people avoid collection) or are their general taxation levels lower? (or were)

Looking at some graphs they spend about average compared to their GDP but they collect a hell of a lot less.
So it could be argued they don't overspend if measured against GDP, but then again if you measure it against tax income they do.

So is it low taxation or is it bad collecting, if bad collecting what are the estimates of missed collections.

Thrugelmir

Really2 wrote: »

But from my point of view Iceland was caused by nationalising the banks, not the massive structural problems greece has.

Greece seems to been caused by government spending, so this is my kind of point.

How far will greece have to redress (EG austerity measures or worse), They are not going to see massive inflows of cash, so I am trying to get a long term handle how greece is likely to change for ever.
I think the likely hood is, their whole government spend is going to have to change drastically for ever.
So they are unlikely to get back to the good times.
So I think very different to iceland, as in reality it was about inflating the country back to where it was. They can still go back to a similar structure, standard of living, public sector etc. as before.
I can't see that being the case for Greece.

I suppose what I think is when people say the austerity is unsustainable, my feeling unfortunatly, it is and will be any direction they take. Their way of life and what they had will change forever.

The idea of when people say "austerity is unsustainable" gives the indication there is another way, in reality people should be saying austerity is unavoidable.

Even with the austerity measures. Debt is forecast to be 120% of GDP at the end of 2020.

So seems only fair that the Greek people should be allowed to make their own choice on the matter.

The_White_Horse

this is what needs to happen to the public sector of all european countries. especially here.

Kennyboy66

Really2 wrote: »

But from my point of view Iceland was caused by nationalising the banks, not the massive structural problems greece has.

Iceland didn't nationalise the banks.

Glitnir went into receivership
Landesbanki went into recievership
Kaupthing went into recievership