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Originally Posted by jyl
I agree Greece and Greeks need to undergo beaucoup pain to fix that country. But I think the media is missing a big part of the story. The easy media story is that Greece's problem is too many direct and indirect benefits and that cutting spending (austerity) is the sole solution. That is the story that Germany and other Eurozone powers want to tell. The under-told story is that Greece has a revenue collection problem which is at heart a high level corruption problem. In 2009, Greeks concealed EUR28BN of income which is about EUR11BN of tax revenue lost, which is IIRC larger than Greece's budget deficit was at that time. The primary tax evaders are the higher income and highest income Greeks (business owners, professional class). That happens to include much of the Greek parliament. I wonder why the Greek govt has not acted more forcefully to collect taxes?
Greece is a real time experiment. Can austerity alone fix that country? So far, not working. Actually it is simply plunging that country into an extremely deep recession, pretty close to a depression, and causing the budget deficit to explode.
The reason the country is doing that experiment is because, as I explained above, the Eurozone's primary goal is not actually to fix Greece.
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Yes, but. It has been clear from day one that austerity alone cannot fix the country. You just have to run the numbers. The population is too small for the external debt.
Yes, Greece is deeply and fundamentally corrupt. A few years ago I was tasked to explore setting up an office in Greece for the international law firm in which I was a partner. I spent a lot of time on the ground speaking with hundreds of lawyers, businessmen and politicians. It really takes a long while to understand the deep antipathy that Greeks have for authority and government (after many generations of corrupt government) — and the resulting almost anarchic spirit that rules the place. The corruption in high places is legion. In some respects the country really is an oligarchy.
Of course the Eurozone is more concerned about keeping the Eurozone intact, than it is about fixing Greece. The latter really cannot be done. Greece has to implode and start again. The only thing the EU can do try to manage the impact of that implosion. That is what EU policy towards Greece is all about.
I have a huge amount of sympathy for your average Greek. They have been royally f_cked by their politicians. They have a high-spirited and deeply anarchic streak that I have always admired. I wish them well.
I was on the phone just now with a wealthy Greek businessman who is a very close friend - and who was the best man at my wedding. When I asked how things were in Athens he laughed and replied "I'm having dinner with six Chinese businessmen tonight who want to give me large amounts of money. That's got to be a good sign right?"
I said, "No, no, no...when the Chinese want to give you large amounts of money its a bad sign."
He thought about this for a moment and said, "Well then God help us, because my only alternative is the Turks I had dinner with last night."
The only thing that is sure in Greece is that it is going to get a hell of a lot worse before it gets better.