The Austerity Disaster

pop_gun

HAMISH_MCTAVISH wrote: »

They were mostly put in place last year. Some of the plans call for further reductions over time.

When you cut someones wages in nominal terms by 30%, then dramatically increase their taxes and costs of living, then add a decade to their pension age, then decrease their pension by 20%, and then start cutting all the services, facilities and infrastructure..... It's no surprise that the economy and thus tax revenue has fallen faster than the savings from the cuts. Their debt position is worsening, not getting better.

The cuts are counterproductive.

The cuts aren't counterproductive if you they're meant to address the supply side of economic theory. To be precise dwindling resources and energy constraints.

gagahouse

Zorz wrote: »

Being Greek, I am more familiar with the situation and I 'll give you a couple of analogies to understand what is going on.


-The greek government is like a father, alcoholic and addicted to gambling. He just recently lost his crappy job and the family is barely surviving with some temporary benefits. Now, he must make some serious decisions, get his act together. Cut the booze, get a decent job, etc. So, after contemplating the gravity of the situation, he gathers the family around. He says:
Well, kids... ...breakfast is overrated, isn't it?


-The greek government is like a very obese person. His health is in risk and must change his eating habits. Somehow though, he is forced to run in London Marathon, this April. So, a cardiologist advises him that he must lose weight, eat more healthy foods, gradually start excersising, etc. A couple of weeks later, he returns to the doctor for a follow-up, except this time is in a wheelchair. He says to the doctor:
You told me to lose weight, so I did. I had my legs amputated.


I hope you get the point. Some facts now. The greek economy is very inefficient and skewed (Italy has many similarities actually, only it's a lot bigger and more industrialised). There has been a lot greek-bashing in western european media, and although there are indeed actual problems too, a lot of it is just stereotypes or outright BS.

For instance, the myth of southern laziness. Actually, the Greeks are the second most hardworking nation (in hours worked per week) after the South Koreans.
http://stats.oecd.org/Index.aspx?DataSetCode=ANHRS
http://en.wikipedia.org/wiki/Working_time

Or the salary freqency (and the nonsense of 13 and 14-month years). What is the most meaningful metric, the total annual income or in how many installements it is paid? What whould you say to someone who gets paid weekly? "OMG, you are being paid almost 50 paychecks a year???" :rotfl:

Also the average actual retirement age age is not younger than most other european countries. Yes, there are some privileged categories, like the armed forces who retire around 50 or even earlier. But the vast majority work until 65. Oh, and by the way, according to the Constitution, MP's are not allowed to work outside of their parliamentary duties during the time they serve in the office. So it makes sense that the Parliament should pay whatever pension credits they were paying in their previous jobs, in their private lives, right? Well, not exactly. If you serve for at least 48 months (1 full term), you are entitled to an extra pension, starting at 1400€/mth!!!!

The problem now is, that the greek government in order to avoid having to confront the unions and all it's political buddies, didn't tackle almost none of the actual problems but instead hit hard the easiest targets. It royally screwed the PAYE employees and pensioners (who are really the phytoplangton of the tax system), the healthcare system, education and public works.

It has delayed tax returns for months in order to hold on to the cash, it has effectively stopped almost all public works funding, it doesn't pay VAT returns for exporting businesses, it has practically defaulted on suppliers etc. It did cut labour costs, but instead of getting rid of "consultants" with fat paychecks, it is more keen on slashing the wages of nurses and front line doctors, school teachers, policemen etc. :mad:

Here is a very recent example:
http://news247.gr/oikonomia/oi_xryses_amoives_toy_oaka.1596964.html (you can translate it with Google Translate http://translate.google.com/#gr|en)
The public organisation that manages a large stadium pays 3900€ per month to secretaries and 3400€ to night security guards.

Now, there is a misunderstanding that these are typical salaries in Greece. Far from it. These aren't even typical public sector salaries, but just one of those "golden clubs" for friends and relatives of those in the government. :cool:

Meanwhile, the tax-free income allowance, last year has been reduced, twice, both times retrospectively from the start of the year! Instead of tackling down VAT evasion, what did they do? They raised VAT rates (and moved a lot of products, including many foods, to higher VAT rates) up to 23%. This way they reward the cheaters who now have even more incentive to keep cheating and penalise those who pay their taxes...

It's no surprise then that unemployement has skyrocketed to 1960's levels, income from indirect taxation (VAT, excise in fuel, alcohol, tobacco, stamp duty, import duties for cars, etc) is slumping, the economy is spiralling down very fast, the GDP has collapsed, the government is still running a deficit (since now it has to pay unemployement benefits to laid off people, instead of receiving income tax if they were still working) and all that restructing negotiations will reduce the public debt at best to roughly 120% of GDP (around the same ratio or slightly more since this whole mess began, what at the time was considered unsustainable)...

orea post, kalos irthate - pateramu ine miso ellinas miso italos

great post, this poster has given you an insight you're unlikely to get in the MSM - a lot of what they have said I can confirm is true from personal experience. It saddens me to know Greece will go back 30-40 years as a result but also can't help feeling it was inevitable given the cultural mindset - this will force them to change and adapt for the better with the current population having to bear the brunt of the transition.