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Sunday, February 1, 2015

12 Billion Euro In New Tax Revenues? Just Like That?

Many people North of the Alps were shocked by the fact that a government South of the Alps kicked off its reign by keeping election promises. The implementation of the accouncement to spend 11 BEUR on all sorts of things which sound wonderful is more or less equivalent to a unilateral cancellation of Troika-Agreements. It has the attributes of a small revolution.

When the Habsburg Emperior Ferdinand I. saw the revolutionaries of 1848 making lots of noises, he asked Count Metternich what was going on down there. Metternich replied that they were making a revolution. To which Ferdinand replied with the following question: "Are they allowed to do that?" They may not have been allowed to do that but that didn't save Ferdinand's job.

One small detail has not been discussed very much about the above extra spending, namely: Greece would not borrow money to finance it. No! Greece would raise new tax revenues from tax cheaters, smugglers and other parasites of Greece. Now if that is not sensational, I don't know what is!

The obvious question is: If that 's really so easy, why wasn't it done before?

In all likelihood, this will not work out as planned because the new expenses will come a lot sooner than the new revenues but still: if SYRIZA manages to collect new tax revenues from tax cheaters, smugglers and other parasites in the near term, then they would receive a lot of international respect.

Perhaps the new government should get a bit away from narcissistic ego displays which alienate a lot of people and focus instead on those things where they could really gather a lot of international respect. I would venture to say: if SYRIZA indeed manages to collect before the end of this year 12 BEUR in new tax revenues from tax cheaters, smugglers and other parasites of Greece, they would certainly have my respect!

31 comments:

  1. I agree. They would certainly deserve respect. But you ask why it wasn't done before. Part of he answer can be found here:

    http://www.telegraph.co.uk/news/worldnews/europe/greece/11381653/Death-threats-forced-me-to-quit-my-job-says-Greeces-top-tax-man.html

    The obstacles probably would be high also for the new government.

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    1. I had already read that. It raises the very serious question: perhaps the Samaras government went for all those silly reforms like cutting purchasing power because they did not have the guts to tackle real reforms which might have hurt their friends and cronies.

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  2. The answer to your question "why wasn't it done before?" is the same in Greece as it is in all of Europe, even if more markedly so. The rich and corrupt have the politicians in their pockets, and they see no political gain in opposing the systematic tax frauds (by which I mean avoidance, evasion, criminal fraud, dubious schemes involving offshore companies, etc etc). The difference with Syriza is that its political life may be dependent on collecting such moneys, in order to finance the state.

    Here is the paradox: that a rather left government in Greece which wants to increase the role of state expenditure is prepared to do more to control corruption and tax evasion of the rich and powerful than any German or British or Swiss government. Of course, this will not help much with FDI -- because foreign companies do not want to pay taxes properly. The only solution might be Special Economic Zones: i guess Varoufakis would not be opposed in principle, but much of Syriza likely would.

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  3. >" If that 's really so easy, why wasn't it done before?"

    There are several reasons:

    a) The non left governments had not motivation at all to take their friends and relatives to court. Ever thought about why the famous "Lagarde list" resulted in the journalist being accused?

    b) I have not the slightest doubt that a big number of members of the parliament also liked the game of tax avoidance

    H.Trickler

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    1. Mr. Trickler,

      Up until last year, this is how you were supposed to catch tax evasion. Please concentrate your attention on the foreground and try using your imagination and fill entire rooms. Would you like to try your luck ?
      http://www.avgi.gr/documents/10179/547688/%CE%95%CE%A6%CE%9F%CE%A1%CE%99%CE%911.JPG/6a2c6a17-d3b4-48ba-8f53-1ed2332b213f?t=1375180878493

      SYRIZA, since this paperwork has been substituted with computers and there is a program to run "periousiologio" from this year (an electronic registry of every tax payer's asset), has this optimism of money pouring in from left and right.

      Like most things in SYRIZA's program, i am afraid their declared goal is a utopia.

      For the last 30 years, the self-employed and farmers, paid little to no tax, by declaring below the tax free limit. Average income for self-employed was in the rage of 8.000 and for farmers around 6000. They finally started paying something in the last 2 years, because the declared income alone, had to be confronted with a calculated income according to some parameters and because Samaras abolished the tax free limit, which SYRIZA now says that will bring back.

      It is easy to think that the tax evasion in Greece will be solved by Lagarde's list. Coincidentially, the heroic journalist that brought the list to light, changed one name in the list, that or Mr. Kondominas, a well known media magnate and substituted it, with a company name that many common greeks wouldn't associate to the specific name. The original list from Lagarde, as was shown to the parliament, didn't contain the company name, but the man's name. The heroic journalist took the initiative to... adjust the list.
      http://www.protothema.gr/politics/article/270421/proanakritikh-alloiose-th-lista-o-vaksebanhs/

      This as a cautionary tale, on good cowboys and evil indians.

      ND, has actually eaten her own flesh, when its comes down to her traditional voting pool. Disappointed doctors, lawyers and pharmacists, fled to SYRIZA to get the tax free limit back. Armed forces personnel, also abbandoned in big part ND, due to the cuts, that were restored only by court decision.

      Let us see if SYRIZA will be able to eat its own flesh, when it will have to deal with the public sector.

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  4. Given the fact that tax evasion seems to be part of the Greek national DNA it is rather delusional to count in 12 billion Euros on the revenue side of the budget without having established new means to fight evasion.
    I remember a conversation with a Greek man on Crete. I told him how we Swedes thought about paying taxes as something that would give us access to public goods like education and medical service. He looked at me in astonishment, and said: "You must be stupid in your country! Why should I pay taxes, so that my neighbours wife, who is a hypochondriac, can go to hospital for free all the time!"

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    1. That's exactly the kind of thinking that makes tax evasion such a widespread problem. Many Greeks seem to be libertarians at heart. The ideas "solidarity" and "society" seem to be rather alien to them. So, indeed, it will take a long time to change the hearts and minds.

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    2. Well, I find the comment made to you by a Cretan to be atypical. I have researched on the Greek economy since 1988, and lived in Greece for 17 years. Most of the reasons for tax evasion are either logical or historical-logical. The main problem is that the State itself is not separate from government, and financing of the state is used to finance the political parties, their members, and their supporters. The result is that the State (unlike the state in Sweden) is seen mostly as an enemy, occasionally as a friend when getting a lifetime job, and never as something the Citizens own.

      The origin of this lies in the Ottoman taxation practice, which consisted of making the Greeks, Armenians, Jews etc pay very high taxes while the Turks did not work in private business but only for the State and paid no taxes. The Greek politicians after 1832 who tried to abandon this system were usually assassinated, and the old habits live on to this day.

      The key was, and remains, to understate your earnings because the tax rates were onerous. The Turks set the tax rates very high, with the assumption that nobody would honestly declare their real income. This practice pertains to this day, and worsened with the Troika. People recently received threats (including me) from the tax authority, demanding amounts of 10,000 or 20,000 euros -- for no reason. Claiming that we had underpaid 10 years before, and if we didnt pay up the State would take it to court. Everyone, including me, threw the letters in the bin. Some Greek friends phoned me to ask for advice, as a foreigner with expertise in law and economics. I told them it was a joke, some silly idea of extortion by Samaras.

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  5. They will not get those billions. Most of the evasion comes from the small companies, think of all those tavernas and your plumber, who are Tsipras' -how to say it- clients. And don't forget that chasing those guys will have serious recessionary effects since a lot of enterprises are viable because they cheat. Make them pay and they will shut down or lay people off.

    The best thing to do is chase the cheaters while reducing the tax burdens to companies and individuals, in essence a budget neutral rule.

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    1. This is not correct. The biggest source of tax evasion in Greece are medium and large companies, and rich professionals such as doctors and lawyers (and possibly plumbers, but not so clear). All connected directly to Pasok or ND; few associated with Syriza (apart from the Pasok refugees). And the problem of people like plumbers is not specific to Greece: it can be found all over Europe.

      The tax burden on small businesses is extremely high, which requires them to cheat and underpay in order to survive. You confuse legitimate survival strategies carried out by family shops etc, against a parasitic state, with the greedy tax evasion of the rich and super-rich. This is a common piece of propaganda, which has no basis in fact.

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    2. Not sure about these. These guys were cheating even when times were good. It's not a matter of survival. Of course, I noted that if they were to pay they would go out of business simply because they are inefficient. Greece needs scale.

      How many doctors are there and how many small businesses? You got your answer about who is the major source of tax evasion.

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    3. You have to define the meaning of tax evasion for anyone even to attempt an answer. You see, from my comment above, that if taxes are set too high with the expectation of underdeclared income, then that is not really tax evasion. Tax evasion is when the State expects everyone to pay exactly the tax demanded, and some do not.

      This is something the IMF and northern economists do not seem to comprehend. The socio-economic model that they are using is derived from the USA and norhtern Europe, and is wrong. The only way to understand taxation outcomes in Greece is to estimate income levels from various businesses and examine actual taxes paid. When you do this, you will see that big business and rich professionals are the ones underpaying, by a massive extent.

      Of course, if you take the IMF view that 1 million small businesses on the verge of bankruptcy and minimising their taxes by underdeclaration is the economic problem of Greece, then you take a different approach. You claim that they underpaid by (let's say) by 1,000 euros a year, which comes to a billion per year. The fact that those tax rates were set too high, deliberately to adjust for underpayment, eludes the brilliant minds of the IMF. And the fact that many businesses of that type have gone bankrupt even with the tax evasion also escapes their attention. (It's about 60% of small businesses in Athens since 2010)

      It is a basic tenet of good taxation policy that levels are set appropriately for income, family circumstances, financial obligations such as mortgages and expected compliance levels. In fact, taxes are now set at the levels demanded by the Troika in order to pay external debt. Nobody in their right mind will pay it.

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    4. The definition of tax evasion is very very simple: breaking tax laws, no ifs and buts.

      Peace.

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    5. Your comment is childish, after I explained important cultural and economic issues here.It sounds typically northern European, and intolerant of other cultures -- which across the world are the norm. Your values are not the values of the majority of the world, and are not shared across Europe.

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    6. @ Guest(xenos) at 11.03
      Allow me to observe: it seems to me that you are the one who is a bit intolerant of other cultures. I could never state that I know what the world's norm is. That's where you are clearly ahead of me. But as regards Germany, I do remember, not long ago, that there was a report how other people looked at the Germans. The majority of EU citizens looked favorably on the Germans and in the USA it was close to admiration.

      And another thing: I have learned in my life that, most often, those who call others egotists are egotists themselves; those who call others dumb are dumb themselves ("stupid is as stupid does" - Forrest Gump), etc. If that thesis were correct, it would mean that those who call others childish...

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    7. Klaus: I have to concede that I am highly intolerant of power and privilege. In the UK this was always a very serious problem -- the class dimension -- and it has become far worse, as across all of Europe and the world. The gap between South and North in Europe has now started to replicate a class dimension, with a rather privileged North. (We have discussed the reasons for this on other occasions.)

      You should understand that I have had a lot of dealings with Germans, and they have generally treated me well. On the other hand, I despair of the rigid and inflexible German mentality -- which has come to the fore with the euro-crisis. This tendency recently has been promoted by German politicians and the media. So I suppose I am making a clear distinction between the personal and the political, but this looks like a non-distinction to others.

      In terms of global differences in cultures, I have been really struck in recent years by how peculiar Europe is. Of course, it is the origin of industralisation; it is the origin of the welfare state and enlightened ideas about workers' rights and protection by the State. It is the region that dominated the globe with many empires, military power and trading networks. Now, Europe is in decline, and our cultural patterns no longer look so "normal" in a global context. It is important for Europeans to realise several things:
      (1) that our privileged way of life is not guaranteed, and most countries of the world do not have it, They consequently have different cultural values (and also for other reasons).
      (2) that our rights as citizens and workers and pensioners are seriously threatened by the political and economic changes made by our own politicians
      (3) that some parts of Europe (eg Greece) have never had these rights and privileges, and survived with different value structures
      (4) that the policy of globalisation pursued aggressively by the West in recent decades has resulted in direct competition with distant lands and peoples. It is no longer an option to deny an interest in those cultures, and simply insist that "our values are the right ones".

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    8. Just to clarify; I am Greek, not an intolerant Northern European. I happen to live and work in the States but visit Greece quite often. In fact I had some wonderful time there about a month ago.

      Peace.

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    9. @Anonymous. I have met many US Greeks, and know the issues well. The fact is, that even though you are ethnically Greek you have no grasp of the culture in terms of living and working there. Those who have emigrated to Greece, for reasons of finding their homeland, have terrible adjustment problems.

      In order to know any country properly, you need to live and work there. I have managed to do this for only a few countries, and my knowledge of Greece is the deepest of all: this is essential for economic or structural analysis and proposals for reform.

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    10. I have leaved there... For 26 years.

      Peace.

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  6. I see Alot of positive thoughts....

    Have you not heard the fish smells from its head? If the government has the will to chase evaders, collect money and put people behind bars.... forget greek DNA and the Streotypical complexities that you all mention greeks have, they will all pay their taxes.

    Why do greeks living abroad pay their taxes? Because they have respect (fear) for the respective German, British or American Tax collectors.

    Lead the people by example and they will follow. Especially in Greece. Most Greeks have also good characteristics and it is called filotimo. Its just a problem that many times they need to be reminded how and when to be filotimo.

    If the head cleans things up people will follow. This month i will pay my last installment ENFIA tax. Syriza will not stop the running tax issue at hand. Greeks are stupid if they think they will get away with the last 2 installments. And even if you do pay them and they are canceled, the money paid is credited to you for future tax requirements.

    Head leads, people will pay.

    V

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    1. I ahppen to agree, but in some occasions the government found the whole society, and the then opposition -now government- standing in front of them. Quite often there was a threat of violent escalation so the government backed down.

      Think about it, the government wanted to move forwrd with HITA but the community did not. Who won? In the end it's not just a matter of political will. Greeks have become a bit unruly.

      Peace.

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  7. I don't think Syriza has the stomach to admit that it was millions of Greeks who ate the money, and that a million plus still does. They prefer the theory of 10 bad men who stole all the money. And as one of the commentators mention,they will cannibalize their own voters. If that is the case they won't get any extra taxes. The ship owners they cannot get. Most of the big fish have transferred their assets out of the country. They will most likely find that all the big companies who sold to the government (bridges, roads, medicine etc.) don't have assets apart from a few phones and laptops. The football clubs are the only ones with assets (one goal keeper for sale?). I'm also not so sure that the big fish were practicing tax fraud, most likely they are practicing legal tax avoidance, legalized by their politico MP's over many years. It could take years to clean up all the laws and rules. Sigh-------can we hope that a Syriza government will ask the Task Force for Greece to help them with that?
    Lennard

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    1. You must be a devotee of Pangalos, and his view that "we all ate the money, together". I have to tell you that I do not accept that there is a shred of evidence to support this claim. On the other hand, I do agree that it is hardly confined to 10 men.

      Where does the blame lie? As in any country, the ultimate blames rests squarely on the political leadership, the second--rate economic advisors and especially the incompetent Governor of the Bank of Greece, and to a lesser extent the civil service.

      Since I met many of those people just before Greece decided to enter the eurozone, and I asked them why.... I can give a very negative empirical comment on the situation. They performed no scientific study on the impact; they did not worry at all about what policies would be needed to stabilise the Greek economy against the effects of cheap credit and an over-valued exxhange rate... Basically, they didn't give a fuck.

      IN my opinion, they should be put on trial for treason and/or professional incompetence. Instead, the advisors have been rewarded with university posts in economics (despite having fuck all publications) and you know how well the career and finances of Papademos developed...

      So, blaming this on the Greek people? No, this is just irresponsible. The fact that the cheap credit made its way to many through the banking system -- but only for those with property and only for consumer goods -- has nothing to do with it. The primary responsibility for the mess lies with the upper hierarchy of Pasok and ND.

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    2. @ Guest(xenos)
      You want evidence that all Greeks “ate it together”? Well, let me try.

      Greece’s foreign debt entered the country by and large in two ways: (a) with the state as borrower and (b) with the banks as borrowers. A very small portion went directly to large private and public corporations but that is really not very relevant. State and banks split the new debt roughly 50:50.

      When the state borrows, it does so because it plans to spend the money. When the state spends money, it is revenue for the private economic agents (employees of the public sector and pensioners; suppliers and contractors of the public sector; etc.). That is where foreign debt gets miraculously transformed into private incomes (when the privates spend the money) or private wealth (when they save/invest it).

      Here is a cute example. Suppose there is a monastery somewhere in the North of Greece. One day, the monks find in their library a document 1.000 years old from which one could derive that the monastery owns a useless lake in the North of Greece. Suppose the monks travel to Athens to speak to the Minister. They ask him to buy the lake from them for 300 MEUR. The Minister tells them they are nuts. The monks answer that 50 MEUR out of the 300 MEUR go to the Minster’s account in Switzerland. Now the Minister thinks he is nuts if he doesn’t do the deal. At the end of this exercise, Greece’s debt has been increased by 300 MEUR, and the monastery has 250 MEUR and the Minister 50 MEUR somewhere in a secret account. The 300 MEUR are debt of all Greeks, the 250 and 50 MEUR are wealth of only some. Sounds easy, doesn’t it?

      The point is a different one, though: foreign debt (or foreign capital in general) flowing into a country (in Greece almost 300 BEUR from 2001-10!) is like raising the water level in the country. With it, all ships rise as well. Now, the ship of the pensioner in the village may not rise as much as the yacht of the clever operator in Athens but all ships rise. My brother-in-law (a workaholic with no debt ever) had a booming business in earth moving and construction materials. Why? Because all the villages now had money and they spent their money. Their spending was income for the privates like my brother-in-law. When I tell him that part of Greece’s debt is parked in his garage and on his site, he explodes. But the truth is, it is!

      When the banks are borrowers, it is different because the banks use the debt only partially for spending. Where they do spend (like hiring more staff, increasing salaries and benefits, etc.), it is the same process as with the state. Where they use the debt to make loans, it is a bit different because loans of the bank are not income to the borrowers. Instead, they are obligations of the borrowers. But, again, the borrowers are doing something with their money. To the extent that they spend it in Greece, they contribute to the rise in the water level.

      Instead of proving further that “all Greeks ate it together”, I should actually turn around and ask you: give me one example of someone who did not profit from the rise in the water level. Ok, there are those widows in small villages who had a pension of 300 and later got perhaps 350, no more. But let’s not make the exception the rule.

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    3. Your rather rambling answer does not provide coherent evidence of your claim. You are making a structural argument that government debt and private bank borrowing benefited all in the Greek economy equally. That is patently so incorrect, that I presume I do not have to elaborate.

      When you talk about "rise in the water level" you are making the same error as all the neoliberal crap about the trickle-down of economic growth focused on the rich. There was never any empirical or theoretical evidence to sustain that argument, and after two decades there is 100% evidence against it.

      If you want an example of someone who did not benefit, I can offer myself and my research centre in a state university. Initially, in the early 2000s we received a small amount of funding, most of which was channelled to Pasok members -- specifically, my own publications were used to get government funding, and the Minister (allegedly) told the university to make sure that most of the research money went to Pasok members who would do no research. Later, we took some from ND who did not specify that, but instead of a large amount (150,000 euros) gave only 10,000 euros for a major research project. They actually employed ND people in permanent contracts for fake research, with money paid by a Ministry. Then, I fell out with ND and they blocked all funding. Then, I fell out with Pasok (for refusing to pay a bill) and they blocked all funding. The end of the research centre, unless something changed politically.

      The bottom line is that the only beneficiaries of the research moneys were Pasok and ND members. Personally, I got far far less than I would have in the UK or most other EU countries, and had to leave for work in Vienna in 2007.

      So, from a structural perspective, from the information available, and from my own personal experiences, I can assure you that the principal beneficiaries of the Greek debt were (1) party members of Pasok and ND; and to a much lesser extent, through the private banks, ordinary people with property who borrowed at very low interest rates. All of those who did not belong to the political parties or did not own property as collateral, got nothing. Of course, those who belonged to a party and also borrowed money to purchase property were the biggest winners (other than the open corruption of major politicians and their friends).

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    4. @ Guest(xenos) at 11.26
      This is for the benefit of other readers because you I cannot convince.

      Regardless of what is said above, my description is not patently so incorrect. Instead, it is 100% correct! Now, even if "all ate it" and had a great time, that doesn't mean that, during this great time, there are no losers. Obviously, if you are dependent on politicians and you insult them, then you become a loser. But not because of the Euro because the state was flush with money. Instead, because you provoked your loss. Even when "all eat it", there will be losers, namely those who scew up despite the Euro-party.

      Just a couple of items: compare 2010 (before sudden stop of foreign money flows) with 2000 (before the Euro). You will witness an enourmous increase in wages, salaries, pensions, social benefits, general public spending, real estate prices, etc. etc. etc. I don't see how any Greek who didn't willingly screw up would not have benefited at least a bit from that party. I have recently read that, even today and after 5 years of recession/depression, wages & salaries are still 26% higher than before the Euro. Of course, the unemployed will find this cynical, which it is, but it is also a fact.

      There is nothing neoliberal about my observations. You can take any economy in the world. Whenever there is a massive inflow of capital, prices go up; the water level rises. If you don't believe me, just listen to what Andres Velasco, a former Finance Minister of a center-left government in Chile and a highly regarded economist, has to say about that. It starts at 6:10. In fact, if you listen to the entire 21 minutes, you will learn more in 21 minutes than the Greek Finance Minister will ever tell you.

      https://www.youtube.com/watch?v=56BGJ5wtVhk

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    5. @Klaus: it's about income distribution and growth in national income. If the increased economic activity is distributed equitably, then of course everyone benefits. If the distortions of economic structure are great, then entire sectors of society will receive either nothing or very little. Indeed, since the macro impact is inflationary, those who do not receive any increase in household income will actually suffer from the higher GDP owing to their lower real income.

      I have not had time to listen to the video: I will do so later, and react if necessary :-)

      [As a point of personal information, I did not insult any politicians. I insisted on independent scientific research which could not be controlled by political parties. This goes against the fundamental beliefs of both Pasok and ND politicians. It also explains why Greece is a mess.]

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    6. I certainly never said that the water level rose equitably. If I implied that, sorry! Of course it was the most inequitable distribution of fun. I have always said that one part of Greeks (hopefelly the smaller one) took the other part of Greeks (hopefully the larger one) for a ride of unbelievable proportions. 3-digit billion bank deposits in Switzerland & Co. are testimony to that. But as I said, a pension increase from 300 to 350 isn't necessarily a party but it is an increase which might otherwise not have occurred.

      When I remember that, during Drachme time, there was something like a 100% tariff on cars, I wonder how many smartphones one would see today in Greece's cafés if there hadn't been a Euro.

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    7. Klaus: I am not particularly impressed by the video. It is clear that he knew nothing at all about the Greek economy, the way in which eurozone membership impacted, and the effect of the Troika impositions on the population. I found it most peculiar to hear that there is no "crisis" because the European situation does not fit a particular definition of crisis. Indeed, the word used should not be the issue: the fact is that Greece is in a very serious situation indeed, with the worst depression of any developed country within a century.

      Turning back to your comments. Who told you that salaries and pensions are now higher in real terms than in 2000? This is very unlikely to be true, even if we use the government fake inflation data. Greece until recently was using very dubious RPI data (with a basket of only 20 goods, I recall) designed to produce low inflation measurements which were not subsequently corrected with actual GDP data -- ie they did not calculate a GDP deflator from aggregate data. Although public sector wages rose, they did not exceed inflation by very much, as far as I know. I suppose that there could have been a l;ot of promotions in the public sector, giving effective salary increases (but only to Pasok and ND members). The private sector, as far as I know, did not have much raise in wages. What could have increased income is that employment increased, and family income would have increased with extra earners in the household.

      I also recall that most people with property were borrowing money from banks merely for consumption goods. Others were borrowing massive amounts for purchase of property. This injection of cash into the economy was visible, as opposed to salary increases. And this additional retail sector spending was the cause of increased employment levels.

      Now, what many Greek families do have, is unearned income or rents. The property market did change in character over those years, at least in Athens. The main change was that very small apartments rose highly in rental value, while medium sized also increased but large apartments decreased in rental price. The reasons for that are indicative of some structural changes, which I observed, but I did not see much research on this. First, is that students from across Greece had small apartments in Athens and elsewhere paid by their parents. This would support your claim that there were increased income levels. The second would also support your claim, while the third is perhaps the most important. Why did large rented apartments collapse in value? This is because Greeks bought apartments with the cheap credit offered with the low euro interest rate, whereas previously they had rented.

      Now, the rental market has collapsed, with rents as low as 30% of their 2010 value and also lower than in 2000. The property sales market has also collapsed, largely owing to the massive property tax imposed by Samaras. Therefore, the rents collected by households which since time immemorial have been essential components of family income, have either collapsed in value or disappeared entirely.

      Anyway, although your claim that "everyone ate the money" has some plausibility in a rather technical sense, its impact was zero or minimal for the poorest sectors of the economy, and massive for the party elites. I do not consider these things to be comparable, and claiming that everyone in Greece benefited from the increased GDP is merely playing with words. There is no comparison with the increased income levels for the poor which occurred with the policies of Andreas Papandreou in the early 1980s: that really did make a difference to poverty in the country. The euro primarily benefited the rich and the moderately rich.

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    8. @ Guest(xenos) at 2.47

      "I also recall that most people with property were borrowing money from banks merely for consumption goods. Others were borrowing massive amounts for purchase of property. This injection of cash into the economy was visible, as opposed to salary increases. And this additional retail sector spending was the cause of increased employment levels".

      At long last, our views are coming together; not totally but quite a bit! Bear in mind that, in addition to the retail sector, the public sector also contributed enormously to employment increases as long as it benefited from foreign funds flow.
      The thing about the +26% in wages I read in an article which I don't remember now. I, too, was suspicious whether that could be correct.

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    9. Yes, if you accept that a significant part of the population had a trivial benefit from the increased debt, we are in agreement. I am reluctant to put a number on it, but my hypothesis would be that at least 30% of Greeks had no benefit from the increased indebtedness of the country. Moreover, the richest 10% benefited massively.

      This pattern is actually similar to the income distribution of economic growth in the UK, where instead of clientelistic corruption the distribution is through clientelistic government and business connections, of which only some are illegal.

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