The 19 Euro Area (EA) economies have agreed to a debt deal that should see Greece limping through to 2018 with increased cost of living, longer hours of work, later retirement, VAT of above 23% and importantly, half of the country’s assets sold off to pay back reckless lending during the decades of malfeasance and political corruption.
Greeks and world civilisation
The Greek people are a proud nation with a deep sense of patriotism. The nation is mentioned in the Bible and counts several biblical patriarchs among its number. The Greek people birthed democracy, enriched literature, architecture, Olympic games, science, mathematics, philosophy and politics. It’s a sad irony that the mathematics used to check on Greece’s debt today is a Greek tool and invention.
Greeks lazy people?
Contrary to stereotypes, the Greeks are hard working people, topping the list of Europe’s 28 nations in terms of hours worked per man per week.
The governance and promises
Before the emergence of the extreme-left Syriza party, which governs Greece’s coalition government with the centre-right Independent Greeks, Prime Minister Alexis Tsipras of Syriza vowed to renegotiate the austerity terms of its bailout deal. He personally promised to write off half the Troika Greek debt and end his nation’s “humiliation and pain”.
The Greek economy is going through financial collapse after years of financial bailouts by EU and IMF. These bailouts have so far totaled approximately €240 billion (at least R3.3 trillion). Last month Greece failed to repay €1.5 billion to the IMF on time and it has now become the very first in the Euro Area and European Union country in history to be in arrears on a loan. The unglamorous Bretton Wood defaulters and countries in arrears have mostly been in Africa, such as Zimbabwe, Somalia and Sudan.
Banks have been closed for normal business by government decree designed to manage cash. Citizens are restrained to a set amount of cash they can withdraw from banks daily.
Greece’s social fabric is also collapsing with the number of suicides going up to a record 10,000 this year alone. New findings revealed, after the passage of the 2014 austerity measures, suicides among Greek women rose an astonishing 35.8% and 18.5% among Greek men.
It is estimated at least four to five businesses are closing down each day, making this one of the fastest downward spirals in any economy.
After exhausting negotiations with the Troika, Tsipras assisted by his pundit turned finance minister Professor Varoufakis, who led a disastrous negotiations with a well-oiled and experienced Troika negotiations team, Tsipras decided to take the bitter pill to the people to decide on whether to accept spending cuts in return for more overdraft, at the time the overdraft would have given Greece at least $10 billion of spending cuts.
The Greeks voted an overwhelming NO! This gave Tsipras new political capital to march to Brussels a hero backed by his people, at least 62% of them – compare that with his election win of around 35% national vote, which enabled him to form a coalition government.
After the referendum vote, it is clear Tsipras realised the bad counsel he had been getting from his chief adviser Varoufakis. Varoufakis was unceremoniously booted out of his posh offices with his deputy, a career politician replacing him immediately. Immediately reality returned.
Tsipras has now managed a preliminary agreement on bailout that unfortunately is far more stringent than the pre referendum deal. The cuts are now to be at least $4 billion more.
A lesson here for the South African public is that indeed, banks will close down, currency will be eroded and the systems will collapse in the event that an emotional decision is made in the polls based on extreme left ideals that do not get to grips with reality of how global economy is currently structured and its rules too. Zimbabwe is also a clear case study, and so is Venezuela. There will be queues for milk and bread and indeed queues for restricted cash at the bank ATMs.
Where did it all begin?
Greece’s situation is over a century in making. It propelled US President Truman in the early 1940s after the World War to go to Congress to ask for a Greek and Turkey bailout. Greece got a large portion of that aid. With that in mind, let us move quickly to September 2004. The New York Times reported that Greece had that week confessed to having repeatedly misrepresented significant economic data before it joined the Euro Area.
It became clear that Greece might not have qualified to be part of the Euro Area had the true figures been disclosed in its application to join the new currency then. Then finance minister George Alogoskoufis made the admission after an audit by European Union Commission found that Greece’s debt and deficit figures had been revised after the discovery of ‘manipulation’ in accounts provided by Greece.
Alogoskoufis said “creative accounting”, was the work of his socialist predecessors, whom conservatives ousted March that year. Fast forward from 2004 to 2015, and a socialist government is back in Athens.
Alogoskoufis continued in his parliament response in 2004 saying, “The problem would not be so serious if it had happened only one year,” he said in a parliamentary debate. But “the fiscal derailment is due to actions and omissions by the previous government, and we cannot hide behind our little finger anymore.”
Ten years later we are back to it and blaming everyone else but Greece.
The Lagarde List
In years 2006 and 2007 a bank data technician at HSBC Geneva branch, Herve’ Falciani, is said to have made copies of client data, from several EU countries and tried to pawn these for cash to various spy agencies across Europe.
In 2009 in what was soon know as the Falciani List, police raided the French home of Falciani and found memory sticks on 130,000 suspected tax evaders and soon launched an investigation, sharing information with several EU countries.
Among the countries that refused to prosecute the heavyweight people in the list were the United Kingdom and Greece. For some strange reason, the French intelligence service DGSE informed the Greek National Intelligence agency (NIS) that many of those named in the Falciani memory sticks were Greek citizens.
DGSE passed the edited version of the Falciani List to now IMF head, then French finance minister Christine Lagarde who met with her Greek counterpart and handed over the ‘Lagarde List’.
George Papaconstantinou took the list that named 2,062 Greeks with secret bank accounts in the Geneva branch of HSBC for the express purpose of pursuing tax evaders. Three of Papaconstantinou’s relatives were among the names, but disappeared from the list. Nothing serious has been done about the list to date. Greece continues to be the lowest tax collector in Euro Area.
While South Africans can rest assured that the governing ANC knew to place serious emphasis on fiscal management, with salutes going to Tito Mboweni and Pravin Gordhan in SARB and SARS respectively, the Greek’s various governments seem to have benefitted from the chaos and deteriorating institutions.
In this article we have now identified a second foundation to building a strong nation: first election of non-populist government and second building strong, reliable and trusted fiscal and revenue management institutions.
In January 2015, Greek citizens owed their nation €76 billion (R870 billion), about 90% of South Africa’s annual tax receipts, in unpaid taxes accrued over time, over 50% of which was from tax dodging in 2009. The Tsipras government said most of the unpaid taxes are uncollectable, bringing in just €9 billion. It is interesting that this is the total bailout plus aid Greece needs.
Greeks also promoted the creation of an underground market as South Africa has in its mini bus taxis or in opposition Democratic Alliance proposals to turn the country into a vendor country as Zimbabwe is today. Often, these businesses do not pay tax and are off the grid. Greek tax billions are owed on never-reported revenue from a large underground economy, which includes bars and other tourist spots.
As is, it is rather easy to blame the greedy lenders or Germany’s tough stance but Greece lied its way into the Euro Area, abetted political corruption for decades with no institutional building while its grants to businesses were huge.
After a NO vote, it is impossible to be optimistic that the Greek parliament will not split over the new Tsipras deal, which represents a 180-degree turn. New elections in short term with street protests are likely while at least one or two banks fall this month.
Want to watch Richard Poplak’s audition for SA’s Got Talent?
Who doesn’t? Alas, it was removed by the host site for prolific swearing*... Now that we’ve got your attention, we thought we’d take the opportunity to talk to you about the small matter of book burning and freedom of speech.
Since its release, Pieter-Louis Myburgh’s book Gangster State, has sparked numerous fascist-like behavior from certain members of the public (and the State). There have been planned book burnings, disrupted launches and Ace Magashule has openly called him a liar. And just to say thanks, a R10m defamation suit has been lodged against the author.
Pieter-Louis Myburgh is our latest Scorpio Investigative journalist recruit and we’re not going to let him and his crucial book be silenced. When the Cape Town launch was postponed, Maverick Insider stepped in and relocated it to a secure location so that Pieter-Louis’ revelations could be heard by the public. If we’ve learnt one thing over the past ten years it is this: when anyone tries to infringe on our constitutional rights, we have to fight back. Every day, our journalists are uncovering more details and evidence of State Capture and its various reincarnations. The rot is deep and the threats, like this recent one to freedom of speech, are real. You can support the cause by becoming an Insider and help free the speech that can make a difference.
*No video of Richard Poplak auditioning for SA’s Got Talent actually exists. Unless it does and we don’t know about it please send it through.
Towns near Fukushima are now being plagued by hordes of rampaging radioactive wild boars. Where are Asterix and Obelix when you need them?