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Tuesday, April 28, 2015

Greece - Reflecting On Past Optimism

Had lunch with my two best friends here in Kalamaria today, Christos (84) and Yiannis (59). As is usual, it didn't take long until we touched on the subject of the Greek economy and Greek politics. They asked me for my opinion as to what should be done in Greece. I had to collect my thoughts. During the last months, all my thoughts and writings had circled around negative things: how Greece might default; how Greece might exit the Euro; etc. It seemed so long ago, back in 2011-12, when I was completely positive; when I made proposals for a Long Term Economic Development Plan for Greece. As I said, I really had to think before I remembered what I had proposed in the times when I was in a proposing mood. But then I remembered quickly.

I likened the Greek economy to a young Greek soccer player in a regional club who is so superbly talented that his sponsors get him transferred to Real Madrid to play with the stars. After a year or two in Madrid, just when he has gotten used to the good life there, his coach tells him that he needs to beef up his game to the level of the stars or else leave the club. Obviously, he will have to leave the club. What should his sponsors have done? They should have allowed him to become a star in a big club at home before he would be sent to play with the big stars elsewhere.

I told my friends about our property in Austria which my ancestors had operated as a small farm. Today, we still have a lot of old fruit trees. I decided to plant new fruit trees. I purchased quite a few and dug them in. That was it. And after only a few days, the deer and other animals had killed the trees. What I should have done was to protect the trees with wire and water them regularly. Only if and when the trees would have been strong enough to survive on their own should I have taken the protection away.

The Greek economy was relatively quickly exposed to the Four EU Freedoms (free movement of people, goods, services and capital). And then the Euro-entry put a turbo on that development. Those were at least two freedoms too many for the Greek economy (free movement of goods and capital). If, for example, during Drachma-times, the Greek economy could produce electric ovens for the domestic market (I don't know whether it could), then that production would be forced out of business as soon as it had to compete with the likes of Miele in Germany. The same thing happened to production in the former East Germany as soon as it was forced to compete with the West. The West was forced to transfer money to the East as subsidies free of charge to sustain a living standard there. In Greece, the lenders sent money voluntarily to the South but that was interest-bearing debt.

The basis of my thinking was always the economic term of "infant industry protection" within a Long Term Economic Development Plan. You have to develop the young soccer player before you throw him into the arena full with tough stars. You have to protect the young tree so that it can get strong and survive on its own. And --- you have to develop an economy before you completely open it up to worldwide competition.

Yes, I am a believer in a market economy, preferably as free as possible, but, yes, I am also convinced that the free market can kill players who are not (yet) fit for it. And no previously closed economy can overnight become fit for free, worldwide competition.

What did I have in mind for Greece when I first wrote about this? Yes, I used those forbidden terms like 'selected import tariffs', 'subsidized export promotion' and 'capital controls'. The completely free movement of capital can kill any emerging economy when the owners of that capital go berserk. And, obviously, if imported products are better and cheaper than domestic ones and if there is no constraint of foreign currency availability, consumers will go for the imports and the domestic producers, if there are domestic producers in the first place, will disappear. Importers will boom and exporters will suffer. The production jobs, the associated wage/income taxes and social contributions, all revenues for the state, will go to other states.

The huge risk with any protection is that the protected ones abuse it for non-intended purposes; i. e. domestic producers would not use the benefits of temporary protection in order to improve their productivity but, instead, cash-in more profits. Particularly an economy like Greece's would be very prone to fall victim to such abuses. That is why I argued that one could never change (reform) an entire economy from A-Z within a reasonably short timeframe. Bearing that in mind, I recommended to begin with 'pockets' within the economy. I called them Special Economic Zones where one could implement perfect economic conditions from the start. If those zones turned out to be successful, they might rub off on the rest of the economy over the years.

It was in June of 2011 when if first proposed to the then Prof. Yanis Varoufakis that, instead of using all his brilliant talents for solving other people's problems (like the Eurozone's functioning, etc.), he should use them to develop a Long Term Economic Development Plan for Greece. I had begun following his blog and had become very impressed by his ideas to solve the Eurozone's problems ("Modest Proposal") but I never heard anything from him regarding what Greece should do on its own. His reaction then was: "During the Great Depression, there was nothing that the state of Ohio could have done on its own". That was a discussion-stopper. During the couple of months prior to the January election, I had an intensive email exchange with Varoufakis. By that time, our relationship had developed into a very constructive one. On his first day as Finance Minister, I again wrote to Varoufakis that the most important thing for Greece, more important than the debt negotiations, was the design of a Long Term Economic Development Plan. At that point, he forcefully agreed with me and promised that this would be his first priority. Todate, I have not seen a Long Term Economic Development Plan for Greece.

27 comments:

  1. No doubt that a "Long Term Economic Development Plan" is required. (Not only in Greece but in principle also in every developed country.)

    However, such a plan must be based on the actual situation of the country. It depends on all kind of taxes, on probable wages for all kind of labor, import prices, parts of the world economy etc. etc.

    These parameters depend on the legal system, on laws regulating labor, on unemployment rates, capabilities of the workforce, etc. etc.

    I do not know how long it takes for a professor together with a team of experts hopefully available at the government or elsewhere to finish such a plan.

    But I can imagine that this will take longer than a few months. And I can imagine that Varoufakis has not yet begun because he intends to either get more easy money from Eurogroup or default, possibly with Grexit.

    Both alternatives will require a very different plan and I think he has been busy planning Grexit.

    H.Trickler

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    1. ...Busy? With planning Grexit?
      What I see is what not any politician does, because of work, unless he is retired: he is busy with blogging, tweeting, writing articles for newspapers, making photo sessions for glossy magazines, reading tweets, critics, reactions, comments, being in TV programs, being in an interview, many of them,talking about nothing: nobody can understand where he is talking about, touring on his motor bike, walking, alone, through Athens while making a telephone call, walking alone in Riga, preferring to dinner alone, (will be continued with more entertainment...), answering telephone calls when he is filmed and "present" in the government.....He is so slow in >doing< something that the Grexit is already dead before he starts making a plan for it.

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    2. Dear Both,

      You can't jump to a conclusion that a plan has not been placed. Or at least general plan with fall backs. All the information that is flying out there in all media, bloomberg, reuters, usa media, german media, all media even many blogs, are conclusions based on hearsay, rumors, and squwealed disinformation.

      To be honest we have no real substantial clue of what is really being discussed. Even from site to site aside from the copy past mainstream media there are disferences on what is being reported. The are nearly no hard facts and no real plan being discussed. The real data i asses stays strictly between them. (the negotiating teams of both sides.) You really have to work hard to read between the lines because the disinformation and information is more of pressure being used to create people to fight between each other and form opinion of who is good or bad.

      even on the blogs when people site aticles as a source i am now more than certain that even the sources of sources is garbage. I am very distrout in general with the media.

      If there is any descent objective media, i would say that it is in the german media. (Accept Bild). Even though they report what the mainstream says, at least the german reporters try to take the information they get and analize it and try to draw theoretical conclusions.

      From one point of view Antoinette is right about the politicians speaking so much with media and not doing there jobs. But is not just Varoufakis but it is all the politicians in general constaintly in the face of tv and printed news. It is pathetic.

      A complete black out is needed moreso from the greek side which can at least indicate that they are working on a plan for each step.

      Long term plan. I and all the people have no clue if they have a plan. A gernal one for sure but a real plan i am unsure.

      We all need to find sources that give us clear and non mainstream media garbage.

      Here on the observing greece at least that which is blogged is constructive critism which for me is the best information.

      I have over 30 favourite links listed and over time the best sites are bumped to the top of the list. This blog is one of them. The garbage moves down the list and eventually i delete the links.

      Sincerely,
      V

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  2. Hi Mr Kastner,

    I hope you rae having some enjoyment time and not weighed down by the glum feeling in Greece.

    I enjoyed your article once again and i will further ellaborate tomorrow, but the conclusions about Yannis, i must comment on this now. The whole game is set up in a manner as so the political persons of this country have no time as to give the constructive plan that everybody is waiting for. Or at least publicly. Behind the closed doors maybe they have and i believe they have given a plan, but who knows with the media frenzy of what is real or not and what is proposed if good for Greece is immediately rejected for a and b reasons.

    The point i would like to make, is that this negotiation and not just Syriza but also ND/Pasok requires/ed all our political force, to sit and run to meet deadlines and meetings and spending time and energy for the eurogroup and various meetings of the eu giving little time to focus on work. I do not want to defend them outright and as they were sitting as the 2nd party for 3 years they should have been studying better (i would have) and been more prepared. In the end i believe Varoufakis probably wanted to close the debt restructuring deal 1st then see what "savings" can be made from there before restructing. The troika wants the reverse. Or in parallel.

    Personally in my job we are hugely over loaded with work, where meetings up to 3 months ago took 10 days out of my 25 formal work days. We decided to reschedual all meetings on every other month which had more contructive meetings meanwhile freeing up time to do our work. The beauty of the private sector to solve problems immediately.

    Tsipras mentioned last night that the negotiations take up 70% of his time. How can you plan for a complete country in 30% of your time for the next ten years. Very hard. He is not alone but the framework must be in your mind.

    Sometimes i wish i could get involved political and take on projects to get things done. Although i do not have a tough skin for politics.

    I will submit some more thought tomorrow on the issue of competitiveness.
    In Greece.

    Goodnight and Sleep Well,

    Sincerely,
    V

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    1. Very good Posting and very good answer.
      As
      Of course we all know that a major part of time in work life is not self determined. I suppose in high politics this part is even much higher than in many other parts of society.
      There is a "BUT": By realizing that you can use the limited time wisely. Politicians do not have to do all by themself, offen they should give directions, stimulate and motivate others to think, discuss and work in directions.
      I did not find the smallest hint that Varoufakis gave serious hints how to rebuild Greece.
      But regarding the lots of media appearances (that need preparation time as well) he seemed to have some spare time he used - for sometimes completely other things. When speaking at conferences as he still did he did not hint ideas to rebuild Greece but only to critizise the whole world, like "why go in detail if you can easily cloudily critizise globally"?
      I suppose you have good words for it in Greece and English, in German we call it "Schaumschläger", like swashbuckler or "hot-air-merchant".
      It is even more disappointing when I read he has known such proposals but did not propose them in any of the many many interviews, comments, twitter-feeds, lectures an so on he gave.
      It is hard to not react cynically.

      I mst admit I am also kind of disappointed because I hoped much from him (and Syriza) for own ideas to give Greece back energy, creativity and proud of rebuilding the country even with provocative demands toward Europe.
      I am shure they could have aquired a lot, even in Germany was a quite huge sympathy in the beginning (even if mixed with scepticism all time). With good and constructive proposals they could have reached quite a lot - but they wasted lots of it.

      It is Mind-boggling and hard to understand for me how they worked, successfully upsetting quite everyone abroad whom they need for help to rebuild Greece.

      As it is nearly never to late (only the bill gets higher) I hope they still can change their attitude and set Greece first - not a revolution in Europe they seem to dream about.

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    2. Hi Roger,

      Thanks for your comments. You also give some really interesting thoughts to this thread.

      I think Syriza made one big initial flaw and not so much the initial rhetoric of Varoufakis "spitting in the eyes" of his collaborators. Syriza had the idealogy that they will change europe or the constraints of Brussels europe. Or to a lesser degree change the way brussels europe works with Greece. After Feb 20th agreement i was hopeful constructive work would begin. I can say openly that i was disapointed by Varoufakis, as when you have major reknowned economists and high profile people like mr kastner suggesting collaborating and believing his theoretical ideas would bring change based on constructive work. Nothing so far. Only new austerity to be passed. Coming to greek home real soon. Is this because of the greek lead politicians only?

      (parathesis) i belive there is/was a plan, but i simply belive it was rejected as it does not fit the brussels agenda for europe. This for me is worrisome.

      Varoufakis continued... I also understand that he is playing/ed his game theory techniques, but i must say the stronger counter parts of the brussels legistlate mainly Germans FM, are just as good at this game, proven because they have survived so long in power. I a sense Varoufakis can talk and propose all day for eu and greece alike but Brussels is in the power position and needs not produce "hot air" as you say. In the end all the hot air produces nothing and they knew this from the start. I can openly say that i dislike many of our counter parts as much as i am disapointed with some of our PM's.

      The irony of everything is a slap in the face. You have ouddles of great minds in Greece and in brussels, aside from sentimental feeling and an agreement can not be made. Is this a europe that we want.

      I ponder many times what society my children will grow up in. My parents gave me the privelage of living in the usa and vacationing europe. Aside from our torn history this continent and people is by far the center of greatness. As i moved here and time went buy you see the concrete walls of this europe flaking and although one column of the EU (Greece) is corroded, there seems to be no end to keep watering the column until it collapses. And it is such policies which will bring this new modern empire to a collapse.

      continued....

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    3. Roger more and more i develop a hatred for the media as it is not as in the past with factual reporting. It is this media which uproots any good and helps flourish hatred and anomosity between the people of europe. Right now greeks are the most hated of europe. Some will say our political landscape. As i have stated many times there isn't a european person that i have not liked. Even Schauble. I also receive the same sentiment. But as we are guided down a road all together if one tries to try something different outside of the center agenda they are mastized for it.

      I can say some good (and we must always seek the good) out of this mess is that i have learned to accept the views of foreign politicians (some views) although there is animosity for them (as people in the manner they speak) at times. (Media in general knows how to make people hate someone and draw the new lines of a battle). I can also say that i have taken a liking to Mrs. Merkel and some other German PM's. I have also liked this new type of PM for Greece. Tsipras is quite honest. And i am sure you see when he talk there is not hot air. (post elections ofcourse). Although again you see in the German media many times simply pulling out exsurpse from speeches and creating hypotherical ideas. The give the wrong view of what was reall said.

      As for your conclusion. No a revolution will not come from Syriza. They do not want that. Do not listen to the lefts of the Syriza. More hot air. Try to read between the lines and the lines of those who report them.

      To be honest after all this blogging, one person that could help the situation is Mr. Kastner. Please go to brussels and become the advisor and link between us. There are very few foreigners who care enough to understand the greek problems meanwhile propose solutions which fit both Brussels and greek Agendas.

      Sincerely,

      V.

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    4. @ V at 12.27
      Thanks for your compliment. On his first day as Finance Minister, Yanis Varoufakis - with whom I had been in frequent contact during the previous weeks - asked whether I would come to Athens as a paid adviser to him personally. For family reasons I had to decline.

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    5. @kleingutApril 30, 2015 at 10:04 AM

      Klaus, I am happy to read that you got this offer, because it proves that your opinion is well founded and estimated.

      But I am also happy that you did not accept because we would have lost you as an unbiased blogger O_ô

      H.Trickler

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  3. Maybe Varoufakis understood you wrong? Long Term Delaying Development Plan for Greece, maybe? ;)

    Must say: a wonderful post, lovely to be in Austria, the former farm, in Greece also, to sit at the table with interesting people, all so nice!
    It is an inviting way to continue reading, even when the difficult issues come on the table (in a way of speaking), explained so well, and making all a bit more understandable and therefore interesting for even amateurs. Because Varoufakis proved to be an amateur when he is not blogging or writing a book, he should follow YOUR blog, to learn something and remember what he promised.

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    1. Antoinette,

      Varoufakis is be far not an amatuer. He has nothing to do with the political party. He is an economist and he is quite wise. Yes he has made mistakes but i believe he does not care because i am almost certain now that his job was predesigned to be for a short term. to get a deal and get out. Varoufakis is an advisor. he is not a politician. He is a theorist and other people must take his theories and make them into practice. we see this in everyday work. There are people who talk and get paid for their ideas alone. Others do the dog labour to get the job done. These two types of people are two different characters. One can not do the other by simple manner of nature.

      Sincerely,
      V

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    2. Dear V,
      Even if he was/is the highest of all among professors in economy: I consider science (and economy is not even an exact science) as a completely failing phenomenon in our world.
      Knowledge is more than the results of only brainwork, and intelligence is more than one sided, narrow minded, rational intelligence, which is based on just competition, like everything in this world, and reason for all what goes wrong because of egoism and the to that belonging greed.

      It is nice to entertain some students, to keep them busy with his game theory, excellent. Life however is more than theory.
      The situation in Greece is so bad that it needs people who have the knowledge of that what Plato names Πολιτικός (Statesman).
      It is criminal, a crime against humanity, to use a country, a people, to test a game theory as a working system to get what one wants.
      He plays with the Greeks, and he is unaware of that. Worse: he considers himself as doing something good. there is NO conscience.

      He is floating around in his own science fiction world and is on purpose delaying too important issues within the EU: all for what he pretends, the country, even if he has to blow the whole thing up. (His own words.) WHO can say that within the context of a people? Lives?
      He is doing that. With and by doing nothing.
      So deep down under is his human evolutionary level.
      Otherwise he would take all the responsibilities belonging to his task as a FinMin, being aware that he is failing, not capable, and resign. He does not. He is addicted to the attention he gets now: he is a narcissist. Not any doubt at all anymore.

      So, when using the term "amateur", I was even too much praising him because even amateurs would have done a better job, even without any study. I am fully aware of what I say here.

      Greece is in danger. Because of him, all, in that amateurish political party with not any experience in the complexity of politics of 2015.

      Taking responsibility belongs to a real statesman.
      Read Plato's "The Statesman"
      You will be shocked: as if Plato wrote it for this government.

      And instead of being a statesman Tsipras gives his task to the people and let them chose via a referendum. The people are in an agony. HOW can they make right choices NOW, in this phase of the growing catastrophe?
      The prove is complete. They have proved themselves not to be capable to govern Greece and should resign all.
      The entire Syriza party should be forbidden in Greece, as Golden Dawn. THEY are dangerous, Syriza also.

      Syriza wears a mask. Golden Dawn does not.
      The mask of Syriza is that this party is filled with professors, and we, the common people, have not been able to check, control, their qualities, their truth, their inner civilization, but life, time does. Varoufakis has exposed himself, his lack of true knowledge, as all have in this government.

      Not any title, focused on just one facet of the wholeness of All Sciences, has a meaning when there is no inner Gnosis.



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    3. A very interesting interview with Christopher A. Pissarides, Nobel Prize Economics 2010, broadcasted on april 28, 2015 by Nerit TV:

      28Απρ2015 – Στα Άκρα
      http://webtv.nerit.gr/katigories/politismos/28apr2015-sta-akra/

      Who is Christopher A. Pissarides?
      Wiki: http://en.wikipedia.org/wiki/Christopher_A._Pissarides

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    4. Dear Antoinette,

      I commend your passion in your statements and in your belief in them. But up to there.

      Varoufakis i have expressed my opinion in a post soon to listed by Mr. Kastner. For sure he is an arrogant, egotistical pompus bloak. But i would certainly prefer him over any politicians which is NOT a statesmen. A statesman should be for the people. Not for what everybody else wants, as in the past elustrious history of our modern politics. I also supported Samaras, but he had/has no backbone. To negotiate is to find ground on differences of opinion. Everybody brings their tools to the table and uses them as they can to negotiate something best for each side. In the past there was no negotiation but orders. And before the crisis unfortunately it was a big orgy of of gutting the whole economies of people of europe. Trust me the greek people did nto see a dime of those "living beyond those means."

      I commend your passion out of the diligent studying you have done to support your conclusions. The problem is the facts that are used, how are these facts are minipulated, to formulate the general publics opinion and disinformation. Likewise the lack of informative information of what good Syriza brings to Greece. It is the disinformation media trying to collapse this government of true statesmen out of fear of what they may expose.

      And please do not correlate Syriza to the hoodlems. You will be surprised that the known unknowns are not anti power nor anarchists but well educated persons fighting their battles in a different way.

      Have you every thought to ask why there is a ton of information spuing out data the negative data about Syriza? I am not saying they are good people or great politicians. One thing for sure though is they are "CLEAN." When i mean "clean" they have had no time in the growth spurt in the last 3 years to be corrupted by a oligarch system which has trenched its claws in the greek people.

      Did you know that Syriza released a system of government debt owed by people with a system 100 installments? Troika was against this for x reasons. Syriza went against their will and have already received in 3 weeks 160 mil euro in debt owed to the government. No media saying this in the mass media. The 160 mill is only a fraction of what has been mediated between governement and debtors, totaling over 1,5bil unpaid debt. Furthemore of those paid, are btw 70% are physical person WHOM HAVE NEVER PAID TAXES. Tax evaders are scared because they do not have their lap dogs politicians in their pocket to cove them.

      Did you know that a high profile person "Bobos," bankrupt construction group owed 1,9 million to the government from the last 15 years. Just simply never paid. A warrant for his arrest came and to not go to jail he paid 1,8million euro. He tweeted, it was my duty as patriot of Greece. (A loser but at least they brought him in to pay up.) It made last page after the comics of 2-3 newpapers only and was not mentioned in the news.

      Yesterday i read that finally, greek officials will meet with Swiss officials about the 100,000 banks accounts of greeks in Swiss banks. Tax evaders be wary. God willing they will dig up some nice bones in those accounts.

      ....continued....

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    5. ...continued....

      Syriza was torpodoed from day one. actually from day 3 years ago. I am not saying they are not without problems for example i strongly object to the possible release of Savas Tsiros, the terrorist of 17th November group who murdered multiple people for 'political reasons." I believe he should rot in jail. But you can not expect any government to fulfill all requirements.

      With 70% positive approval rating of Syriza how they handle the negotiations, they are not far from being true statemen who are FOR THE PEOPLE.

      Did you every think something else? Being with "Clean" government, maybe it is not just the greek tax evaders or phony politicans who took brides for deals, but also criminal charges to lets say persons at: Lock heed, Siemens, Eu Military corps, Banks. It would be a smear on any european based company that was "awarded" contracts only because dirty greek politicians and oligarchs "cooked books" to get their and their counterparts of those companies kick backs? hmm? How bad would that look on those company's furthemore the "idea of europe?"

      As for the negotiations. we can never have a clear picture of what is really going on in there. From a source read today based on spiegals article today, there are arguments and disagreements between IMF, Eu commisions and ECB on various issues of Greece and the Greeks basically sit an watch them fight.

      I fear i can not enlighten you are as you have already picked a side but i would like for you to be more objective. ( try to read all key sources everyday but also mainstream media garbage as it is a source of information or disinformation, many German blogs many right blogs and sometimes i even read the Greek communist party blog to get a laugh.) It is the only way to get a well roundd opinion. I very much like your passion even though sometimes it may come off as hatred. You are a spirited person as i am but we should think more and source more. No government is perfect only the people they govern are. Especially europeans.

      BTW: Tid bit: did you know that only 10% of the greek population wants to exit? do you know who these people are? 70% of the gold dawn votes. That 7% of the voting structure voting for them. Do you know what type of people are behind the curtain? Very very very poor people. Only a fraction are true believers. This comes and compliments Mr. Kastners article of Greek being a part of the west. Ofcourse we love our eastenr friend. russia. Sometimes i think the west for Greece is the "wife" and Russia is the "mistress" we would LIKE to have.

      Take Care,

      V.

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    6. Dear Antoinette,

      I was also thinking further. As it has been reported the last remaining issues that are still in deliberations on the table are the social welfare system and worker labour laws. Have you ever seen what is being requested in relation to these two aspects? Furthermore, you are not aware of the locality of such measures requested in Greece what it will result in.

      The media tends to never mention details of negotiations or the points in themselves. They generalize negotiations to the point of austerity verus anti austerity. Good institutions bad greek rebelious politicians. This is supported by a smear campaign which as i wrote earlier formulates opinions. Had the media did realistic reporting which the only sources that come close are the Germans (the good ones at least), of the individual issues, i am pretty sure the people of eur would not be so harsh as to critisize greeks. The troika board also always has the "candy in the mouth" that there are poorer and smaller economies worse off than Greece that can not support the "richer greeks." But details are not mentioned. ever. or at least in full detail.

      So to pass judgement one needs to have full information. Most people don;t care and say "do as the experts say as you greeks are irresponsible." This is irresponsible action by people as not to dig for the real information.

      If you are aware of the formal issues on the table which is the basis of the agreement we can open a discussion.

      One myth is that we are not competitive in Greece and labor laws need to be curbed and salaries need to go further down. What is that "down" in salaries requested and what reprucutions does that lead to, what good does it do for the greek economy and bad?

      Sincerely,

      V

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    7. " I am not saying they are good people or great politicians. One thing for sure though is they are "CLEAN.""
      This is a main reason why I supposedly would have voted for them as well in February.

      "Did you know that Syriza released a system of government debt owed by people with a system 100 installments? Troika was against this for x reasons. Syriza went against their will and have already received in 3 weeks 160 mil euro in debt owed to the government. No media saying this in the mass media. The 160 mill is only a fraction of what has been mediated between governement and debtors, totaling over 1,5bil unpaid debt. Furthemore of those paid, are btw 70% are physical person WHOM HAVE NEVER PAID TAXES. "
      Sounds interesting. Is there any english source where I can read more about it?

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    8. Hi Roger,

      Here below are english links which state of the high tax evader paying up.

      http://in.reuters.com/article/2015/04/23/us-eurozone-greece-taxevasion-idINKBN0NE1WO20150423
      http://www.tovima.gr/en/article/?aid=699158

      As for the instalments program, i am completely flabbergasted. Do you know after googling for a minmum of 30 minutes of rephrasing the program, the name the sums made, there is NO ENGLISH ARTICLE. The only thing you will find is that TROIKA request and demands that Greece takes back this bill.

      In greek you find the normal tons of google sources but in english 2 pages maximum and all have nothing to do with the program.

      This is the disinformation I am talking about. The black out of what good this government is doing. I am so pissed off.

      Specifically the bill contains two aspects. An allowable of 100 installment of debt owed to the governement which can be ammortized. Under this program depending on what installments you select the added fines are reduced analogically. If you pay off the complete debt in a lump sum you have 90- or 95% discount of penalties and fines. The program has been allowed and extended for another month as thus far 160 million have been collect whereas 1,5bil euro in debt has been controled. So the 1,5bill in the next ten years will be on the budget books and not debt that is "UNPAID". This is an income for the country. A way for poorer people and tax evaders to come clean. It is a great program which troika does not like and you can easily think of reasons as to why.

      The 2nd tax is large debtors. Come clean or go to jail directly. "Do not stop at GO" :-) i read yesterday that Mrs. Valavani of the ministry of economics and finance, has collected in 10 days 2 bilion euro from such people under this program. Again nothing in english found. The largest sum paid was not the 1,8 you read above bu 5!!!! MIL euro in debt in one lump sum.

      Things are moving. Troika does not like this new government making programs that are ideas from the Greek POV.

      I am so surprised about the english media black out in these issues.

      To be honest i was unsure if they had the backbone to make such reforms. Tax reforms and chase debtors and evaders. ND/PASOK did NOTHING!!!!!!!

      Sincerely,

      V

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  4. "If, for example, during Drachma-times, the Greek economy could produce electric ovens for the domestic market (I don't know whether it could)"

    Yes, it could!
    http://en.wikipedia.org/wiki/Izola_%28appliances%29
    http://en.wikipedia.org/wiki/Eskimo_%28appliances%29

    The 1970's oil crisis, the competence with the W. European companies after Greece joined the EU and PASOK policies in the 1980's damaged severely the Greek industry.

    [I am tempted to say, even though I understand that what I am saying might be considered gossip, that Y. Varoufakis's opinion on this issue would be very interesting, since his father is the President of Halyvourgiki's Board of Governors and his wife is a member of the Stratos family. The Stratos family used to own Peiraiki-Patraiki. Halyvourgiki is still one of the largest industries in Greece, whereas Peiraiki Patraiki ceased to exist.]

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    1. Dear Christos,

      In theory yes it could. In practice though after a x amount of time, when a country loses an industry based on a compeititve market it very hard to regain lost industries. This for the simple fact of knowledge. Once you lose the practice of working in a specific industry you lose the edge of competiviness hence you lose the ability to provide a competitive product.

      See my below comment.

      Sincerely,

      V

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    2. He's replying to Herr Klas' question about the past, about Greek history; "could" here is in the past tense, not a hypothetical, a modal, not a judgement about the future. (Also where "competence", read "competition".)
      This short comment of fellow-Anonymous is excellent, it's a little gem; trying to find e.g. a VSP from Greece that has to say anything about the state and causes of Greek manufacturing other than the mantra "Andreas Papandreou destroyed everything" is an...extreme sport.

      PS It's not that the A.P. years were not indeed a major cause of said decay, don't misunderstand me. It's that these people have nothing else to say and then they all go ultra laissez-faire in unison. Oil shock? What's that? When? Infant industry argument? You communists!!

      PPS And here is where I disagree with Herr Klaus. His text(s) is a welcome breath of fresh air up until "Special Economic Zones" where it gets silly and ahistorical. Even including SEZ as a working hypothesis, this kind of policies would probably be illegal in the EU context. And then there are the major present and utterly urgent macroeconomic stuff; Greece for example has not received the last tranche of money since last summer. It has since been operating on condensing the fumes of previous fumes of past fumes of long-gone fumes; it's a bit naive to think that any long term plan could be planned, let alone implemented under such conditions.
      I won't even bother to critisise the stocks vs flows debt argument, stated elsewhere (OK just a hint: in essence it presupposes among other things Troika funding to Greece for ever)...

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    3. Your answer made me smile. If I recall right, we used to have Izola. There was also Pitsos. I don 't know how good they were, I need to ask my mom about it. :-)

      Remember though, these were the times when a lot of households had some big wood thing with big ice cubes at the bottom and they called it refrigerator. I still remember the time, mid 70s, when a guy would go around the neighborhood distributing those ice blocks.

      We have come a long way and we better not turn back. I refrain from ranting against Syriza because of those sweet Izola memories.

      Peace.

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  5. Again, Mr. Kastner, and with the danger of boring you with the repetition:
    Planning whaterver plan is futile as long as you do not posess the appropriate infrastructure to implement whatever (god or bad) plan. Take that often mentioned OECD paper and add orderly functioning juristiction. After completen those challanges, there is justified reason to talk about whatsoever plan, but not earlier

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  6. interesting and somehow very replicable to see that YOUR two best friends are Greek :-)

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  7. Sounds like a really good plan.
    And it offers good hints where German economists usually still have blind eyes that already made the reunification and rebuilding of the economy in eastern Germany much more difficult and expensive than it could have been. EG a "temporary infant industry protection" sounds really important for me.
    I think these economical mistakes of the Nineties have yet not been understood by many German economists and politicians and hence they may propose repeating the same mistakes elsewhere. With their loud voice in Europe that can get to repeating problems.

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  8. Dear Mr. Kastner,

    I would like to mention that Greece is competivie in specific markets and i would like to add are extremely efficient as well.

    I will take my area of work as an example.

    A competitive multinational product in other countries and greece have a x price, y cost and z profit. There are also other factures which help the balancing of the above numbers as market contribution and cost of scales.

    1 vs 1 Greece versus the multinational can not compete directly as the output that these behemouths as infrastructure can not be covered even if you used slavery as labour force. But smaller mdeium sized greek companies have flexibility and the ability to find niche markets to grow an then find ways to compete, eventually competing head on with the behemouths.

    To compete you need a descent infrasture of sources and likewise and descent infracture to produce. Likewise you need knowledge. Knoweldge observed at the competitors and the competitors sources and doing it even better. Also improvising new ideas in way of work to increase efficiencys where multi nationals do not have the policy to change so quickly due to high investment costs.

    Many sectors in Greece mainly pharma and consumer market products have achieved this. We are even more efficient because we need to factor in the high tax environement high labour law pension system to sustain. we are already from start with one hand tied behind our back bt remain on the most part very competitive. We (or our sector) then needs to break down all costs and compare list price of multi nationals to see if we can compete. We do this and put a 20% handicap, as well to make sure the gpm is achieved. We take the knowledge found elsewhere and apply or enforce it to our sources locally making them efficient meanwhile rebuffing our own output efficiency.

    In my specific sector design is also a substantial factor in the final costs. After design and planning and output production efficiencies are met the green light comes from managment. 1 project success brings the next. One group of projects successes bring growth and reinvestment. Suddenly ther is a need for a desire to build more factories in Greece.

    With economical stability the private sectors i mention will further flourish.

    Factual comparitive studys made and shown in our sector at a medium to large quantity equivalent, shows that Greece (in our sector i mention) is more competitive than compartive companies in China, Bulgaira, Turkey, Germany, Italy, ireland and Portugal. proven!

    The importance for a sector anywhere in any country is the knowledge. And the knowledge of sector. This brings competitive edge. Spreading this knowledge is also necessary which i do on a daily basis. I was even asked to help with design ideas for a factory layout for a specific source. Helping my sources, help mes and my company. Helping one, drives sources competitors to do the same. When you lose contempory knoweldge and minds to pass on this knoweldge is when the society production and structure will collapse. Greece is far from that.

    Sincerely,
    V

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    1. @V: I agree with all of your comments here. Very wise and informed. Of course, we do not know what Varoufakis is actually doing, but obviously some of his time is spent in publicity, as with all politicians and most academics in Greece. That he is successful in that specific activity seems to annoy some people.

      I always recall a very interesting remark, I think from Pangalos when he was foreign minister in the late 1990s. He noted that in northern Europe, ministers spent about 90% of their time on ministerial duties, and about 10% on publicity and personal contacts etc. Whereas in Greece, he felt obliged to spend 90% of his time on publicity and personal meetings and suchlike, leaving only 10% for actual work. According to his account, if he did not do this, he would be unable to get anything done by his ministry and would ultimately be unable to retain his position as minister.

      Of course, this problem is compounded by the general lack of expertise and professionalism of most of the ministries: foreign affairs is actually one of the better ministries for that.

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