Again, source?
You expect me to provide sources for elementary background information?
Okay...
http://www.economics.uci.edu/files/docs/workingpapers/2014-15/14-15-11.pdfThe Greek governments could have been highly competent and the objectives would still
have failed. They have not been that competent, but they still implemented a large
number of measures that were highly unpopular and against stiff opposition. Examples
of such measures just for the Papandreou government (up to the end or 2011) included:
Increased the VAT to 23%, from 19% or 13% originally, despite all the calls that
it would reduce competitiveness and possibly reduce VAT receipts.
Eliminated the two “extra” months of pay (Christmas, Easter, and vacation
bonuses) and replaced them with fractions of the original pay, before eliminating
them altogether.
Eliminated the raises for seniority in the public sector.
In addition to the above, it cut a 10% of salaries of public servants (with
reductions that came later totaling more than 30%).
Similar, in some cases higher, cuts as the above were implemented on pensions.
Equalized the pension requirements for men and women.
Reduced the tax-free income to 5,000 from 12,000 euros.
Reduced medical expenditure tax deductions to 20% (from 40%) even for income
earned in 2010. After 2012, these deductions were effectively eliminated for the
vast majority of tax-payers, as a 10% deduction applies only to expenditures
exceeding 5% of annual income.
Considerably increased car registration charges from 2010 onwards.
Implemented a new special “solidarity” tax from ranging from 1% to 6% of
income.
Increased bus ticket prices by 20% and subway ticket prices by 40%.
Reduced severance pay that private employers pay by up to 50% (depending on
length of notice that is given).
Introduced new house property taxes.
Preempitively for the next time you call Greece corrupt: Source?
And I want something with numbers done by an economist or a political scientist, not media hearsay.
Edit: I got to musing about a hypothetical... What if these events had happened without a foreign government to act as a scapegoat?
A countries government senior officials have close personal and professional ties to a number of investment firms. These investment firms own nearly all the corporate bonds of an emerging market firm. It is discovered that the emerging market firm made a bad set of investments. They can't afford to service their debt so bankruptcy is inevitable unless they get bought out and there are no buyers.
Holding tens of billions of euros of useless paper, the investment firms reach out to their contacts in the government. The government extends credit to the emerging market firm despite that firm not being able to point to a revenue source. This lets the investment firms avoid writing off tens of billions of euros in bad paper and possibly being made bankrupt themselves. Instead the investment firms start buying even more of the bad paper at hugely profitable rates. In a few short years they collect a huge profit buying a useless asset.
Eventually the purchases of this useless asset becomes non-sustainable. The government buys out the investment firms at the new (reduced) face value of the bad bonds. The investment firms walk away having made no profit but having benefited from a "float" of several years that let them leverage their useless paper to profitable investments in other assets. The investment firms lost none of the money they sunk into their bad investment. The president of the emerging market firm is fired and joins a regulatory agency working with the investment firms who have benefited from the government intervention. He leaves the firm in worse shape then it's ever been but is personally in the black.
The government has now put taxpayers on the hook for not just the bad paper by the investment firms. Even more troubling the government has put taxpayers on the hook for tens of billions of euros that went directly to the profits of the investment firms that made these bad decisions. This money was funneled through the defunct shell of the bankrupt emerging markets firm but that firm merely acted as a middle man for money to go directly from the government to the firms holding the bad paper. In order to deny complicity in what is essentially graft, the government insists that the bankrupt emerging markets firm is in fact not bankrupt and they were paying good money for good assets. They pour even more money into the firm to stave off the inevitable bankruptcy to keep up the illusion.
Pouring money into the bankrupt firm lets the corpse shamble along but it's horrendously expensive. The firm has a number of contracts that could be renegotiated in the event of a bankruptcy to return it to profitability. Postponing bankruptcy leaves the firm legally obligated to honor these contracts even though they make no sense. Stuck with the bad contracts, the firm has no chance to return to profitability because they would need a vast profit to outweigh the losses on these obsolete contracts. Since they are a walking corpse they are about as likely to make new contracts as a leper and can't try to find profitable developments. The government refuses to put enough money into the bankrupt firm to allow it to make these developments because that would undermine their pretense that the firm is not bankrupt.
Eventually the corporate board of the emerging market company revolts. They throw out the new president, where he has a golden parachute to a comfy government position. They get another president who takes the company to a bankruptcy court and demands that the company be put into receivership. Receivership would be horrible but the company can't make payroll anyway so they consider that worth it. If such a thing happened the government would lose hundreds of billions of Euros of corporate debt. The executive branch of the government issues threats against the judicial branch of the government to discourage.
So, what would we think of this hypothetical with no foreigners to scapegoat? We were dealing with a government that bailed out bad investments, threw good money after bad and did it all among a network of politically connected executives and high ranking government officials who all walked away rich. The government took tens of billions of euros of private losses and turned them into hundreds of billions of liability for taxpayers. I for one would conclude that the government was both spectacularly incompetent and corrupt... Imagine what we would do to the senior government and corporate officials who participated in this corruption. Good thing they have a scapegoat!
Poll
Author
Topic: Sheb's European Megathread: Remove Feta! (Read 1771104 times)