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September 25, 2011

"I'm not going to pay it"

New taxes are running into the phenomenon of empty pockets

New York Times article "Worried Greeks Fear Collapse of Middle Class Welfare State" and the hopelessness of the situation:

"Sitting in the modest living room of the home she shares with her parents, husband and two teenage children, Stella Firigou fretted about how the family would cope with the uncertainties of an economy crashing all around them. But she was adamant about one thing: she would not pay a new property tax that was the centerpiece of a new austerity package announced this month by the Greek government.

“I’m not going to pay it,” Ms. Firigou, 50, said matter-of-factly, as she lighted a cigarette and checked her ringing cellphone to avoid calls from her bank about late payments on a loan. “I can’t afford to pay it. They can take me to jail.”

....The so-called troika of foreign lenders — the European Central Bank, the European Commission and the International Monetary Fund — is increasingly playing hardball with the Greek government, insisting it meet its deficit-reduction goals before it decides whether to release the next installment of $11 billion that Greece needs to meet expenses starting in mid-October."

Another related NY Times article titled "Europe Looks for Ways to Prod Growth in Greece" seems to suggest the austerity measures were intended to produce economic growth, which is certainly not the case (nor result, as witnessed throughout the Greek economy):

"The European Union said on Thursday that it was exploring new ways to try to stimulate economic growth in Greece, with one senior official acknowledging that Greek citizens were on the verge of rejecting any more austerity measures."

As Greece is forced (literally, via the pressures of the troika loan deals) to create and expand every tax and fee possible to raise money and to please the terms of the deal by at least implementing its terms, regardless of the result (which has been the measured contraction of the Greek economy quarter after quarter), keeping Greece inside the eurozone is still paramount, with the fear that a Greek exit will domino Italy, Spain and many others which will devastate the european banking system.

The effects in Greece or both negative and positive. The negative is obvious, but the positive is that the reduction of the public sector and the truncating of privileged political/union groups clears the way for modernization of the handicapped industrial, educational and even the tourist segments, all hampered by legendary layers of government bureaucracy, corruption in the form of graft and bribes, and quality standards hardly in keeping with European ideals.

"Mr. Venizelos appealed for greater honesty in the debate over the economy, saying that the country’s political class must be clearer about the situation and what is required.

“The lies to the Greek people must stop,” he said, adding that now it was time for “work, work and more work” to meet fiscal targets and revive the economy.

The European commissioner for economic and monetary affairs, Olli Rehn, said Thursday that Greece would remain within the euro zone but did not explicitly rule out the possibility of a default.

“An uncontrolled default or exit of Greece from the euro zone would cause enormous economic and social damage, not only to Greece but to the European Union as a whole, and have serious spillovers to the world economy,” Mr. Rehn said during a speech to the Peterson Institute for International Economics in Washington. “We will not let this happen.”

The water level seems to be reaching the top of the flood gates, and it is a question whether European leadership will be able to contain the pressures building. In Greece, where revolution, civil war, dictatorships and coups are all 20th century experiences, the question is will Greece carry through to the other side of the austerity program where the benefits are supposed to lie waiting? A rejuvenated Greek private and public sector seems like a phantom at this point of crisis, but the entrepreneurship that is basic to Greek people's history will surely reassert itself, if all the overhead of the recent disaster can be cleared out of the way. But the last questions is, would it be easier and better for Greece to to finally orchestrate an orderly default, and to push aside the fears of the European Commission from the equations of how to ressurrect Greece?


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