Tax Break

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Archive for the category “Greece”

Send in the clowns

Traditional Silly Season Fare

Traditional Silly Season Fare

One of the highlights of my week is reading The Economist from cover to cover (normally starting with the Obituary at the wrong end). Several hours of sanity and good syntax. Come August and the Silly Season each year, I know I can take my foot off the pedal and glide through the depleted pages of archived material and non-news. Not this year. The world didn’t stop as Europeans headed for sand and sun. Ironically, though, the one country that was missing from last week’s edition – for the first time in living memory – was Greece, the silliest of European countries. This was clearly more an issue of fatigue, than not having anything to write about.

So, that leaves me to fill you in about the goings on in South East Europe’s favourite loony-bin.

As everybody knows, last month the Greek Parliamentary Circus approved an agreement reached by its leading clowns, headed by the comi-tragic Alexis Tsipras, to sell Greece out to the European Union, European Central Bank, IMF and Universe. Pivotal to the success of the agreement will be Greece’s ability to substantially increase tax revenue. Enhanced tax collection and enforcement in a country that sees no wrong in tax evasion is going to be a real trapeze act, but it was the VAT reforms that caught my eye.

The European Union does not have a unified VAT rate system – as long as a country’s standard rate is at least 15% and there are no more than two reduced rates of at least 5%, members can do what they like. Members other than Greece, that is. Already toting a standard rate of 23% with reduced rates of 13% and 6%, the Government had to find another 1% contribution to GDP from ‘the silent killer’. Taking the standard rate any higher would have been the equivalent of a collective downing of hemlock, so the solution was ‘found’ in scrapping the reduced rates on all sorts of things.

This would be far more palatable to the Greeks

This would be far more palatable to the Greeks

The 13% rate is now to apply only to basic food, energy, hotels and water (hotels were previously at 6.5%, so they don’t really count as a benefit). What is amusing is that a new super-low rate of 6% will apply to, wait for it, pharmaceuticals (logical), books (ugh?) and theatre (they’re having us on). As much as I love literature and the performing arts, they can hardly be classified as No. 1 in Maslow’s Hierarchy of Needs. In any event, Homer, Herodotus and Plato are all pretty much out of copyright,  so their works tend to be quite cheap anyway. And, as far as theatre is concerned, while it might be reasonable for the desperate Government to be praying for a Deus Ex Machina to get them out of this appalling Greek Tragedy, Sophocles is not going to do it for them this time.

I would actually expect the conniving Greeks to take a leaf out of the Spaniards’ book. When Spain was hit with the need for reform at an earlier stage of the Euro crisis, some Spanish theatre owners found a novel way to get around the increased VAT on tickets. They sold carrots (which due to their basic food status were taxed at the reduced rate) at inflated prices and added a theatre ticket free of charge.

Holidaymakers in Greece can no longer afford everything

Holidaymakers in Greece can no longer afford everything

The other great change in Greek VAT is that the Aegean Islands are to lose their reduced VAT rate status from October 1. The result will be that, whatever nudists save on their holiday clothes will now go on their hotels and food. Bare-faced cheek, if you ask me.

Have a wonderful summer.

Greecing the wrong palms

'This is what you get for telling teacher'

‘This is what you get for telling teacher’

Sneak, snitch, grass – those one syllable words do not convey an aura of approval. In school, where we imbibe the morality that plagues us for the rest of our lives, a telltale can expect a bigger punishment than the class-mate he is squealing on. The sheer number of synonyms (I have just used five) shows how frowned-upon the practice is.

Governments – rarely the symbols of propriety we would like them to be – have a long history of encouraging informants. I have always been haunted by W. F. Yeames’s portrait of a boy being questioned as to the whereabouts of his father during the English Civil War. And then there were all those ‘Wanted $$$$$$’ posters plastered across the Wild West, not to mention the bank whistle-blower payouts over the last few years.

But the Greeks (who else?) have now raised the rat stakes a notch. Desperate to placate the Troika (now for some reason referred to – in deference to the Greeks – as the ‘European Commission,  ECB and  IMF’), the new Government has proposed employing tourists as tax spies.

The Greek Government does not seem to have thought through where tourists will hide the surveillance equipment

The Greek Government does not seem to have thought through where tourists will hide the surveillance equipment

The idea is that tourists will be asked, in return for  an hourly fee, to be wired up to audio or video equipment that will provide evidence of cash transactions between themselves and their Greek hosts.

I am afraid that I cannot get my head around this particular kind of international espionage.  I am a fan of spy novels – I have read almost the entire product of John Le Carre’s fecund imagination – but there is an underlying assumption that a spook is: (a) operating for his own government against a foreign government (a patriot); or (b) for a foreign government against his own government (a traitor); or (c) for his own government against a foreign government while making the foreign government think he is working for them against his own government –  and vice versa (double agent); or (d) for his own government against his own government (a shtinker). The CIA/MI6 exams do not have an ‘(e) none-of-the-above’ option, even when allowing for the widest possible definition of the word ‘government’ – but that is precisely what the lunatic Greeks are proposing.

The idea is both obscene (that word has plenty of life beyond porn) and insane. Greece has long passed into the realm of obscenity, but insanity should still worry them. Do they not realise that, by recruiting tourists who are coming to Greece for a good time, they risk destroying the whole underbelly of the Greek tourist industry – its goodwill? What is more, visitors from countries where the National Tax Authority is a feared institution, similar to a man-eating shark, are not likely to want to play with the Greek version, even if continues to prove it has no teeth.

Harry, watch where you take that photograph

Harry, watch where you take that photograph

Sorry, Mr Alexis Tsipras, you are going to have to do better than that if you don’t want the Troika to tread hard on your oxygen tube. This is one potential tourist who will now definitely not being coming to Athens this year. I think I will go to Russia instead – at least there they do things the right way round,  and will probably be spying on me.

Trying to keep the relationship platonic

Following the recent news of Greece’s continuing woes, and thinking about what to write, I soon realized that very little has changed since I penned the two Posts below in 2012. The country’s new whacko Government has won a reprieve from a fatal dose of international hemlock by promising to come up with alternative measures to meet the ‘Troika’ demands for a formal extension of its bail-out package. It looks like the great deficit-plug is to come from the ruthless prosecution of tax evaders (ha, ha). Indeed, a former finance minister went on trial yesterday for allegedly removing relatives’ names from a list of unreported offshore bank accounts (see Post from 2012 below – and ponder the relative amount of time it took to get him and the whistleblower to court). Furthermore, another former finance minister received a four year sentence last November for undereporting his income, although ‘four years’ subsequently turned into a €14,500 fine (the annual price of freedom in Greece, it turns out, is €3,625. Cheap at half the price). In short, Greece continues to be a hopeless case. The only question is whether foreign creditors are actively engaged in allowing the wool to be pulled over their eyes. Read on (I apologize in advance that you may be seeing this again in 2018):

Olympic spirit lost

My trip to New York cancelled last week courtesy of Superstorm Sandy, I decided to take advantage of the hour before anyone realized my calendar was empty to clear my desk. Forgetting the utterly ignored disposable cup of coffee nestling under a sheet of foolscap, I watched in helpless horror as it tipped drunkenly on its side and lazily cast forth its contents over my diary and neighbouring assorted papers. My barely legible handwriting disappeared as the ink, dissolving into the coffee, was dispersed across the open page. Taking a leaf out of the book of the intrepid New Yorkers, by midday I had a spanking new diary and only the merest hint of brown on numerous documents newly piled at the edge of the desk.

The experience took me back 40 years to the summer of 1972 when we were just finishing 8th Grade (in England it was called the 3rd Form which was a bit confusing since we had already had one of those several years earlier). Our Form Master was Severus Snape minus the charm with whom one messed at one’s peril. Of course, as healthily idiotic teenage grunts we messed at our peril – but we all knew our limits. All of us, that is, excluding one. There is one in every class. A totally incorrigible youth with no academic aspirations who is programmed to kick back at all cost against authority. Civilly disobedient – Mahatma Gandhi without a cause. Anarchic without knowing the meaning of the word. Angry young man who wasn’t even angry. If we were told to write the address on our report envelopes in the centre, he wrote it in the top left-hand corner. If we were told to sit down, he stood up. Told to write in pencil, he wrote in ink. You get the picture.

In those days part of the daily ritual was the redundant task of calling the register to corroborate the evident fact that, while so-and-so’s desk was clearly empty, he (we were all He’s) was not hiding somewhere else in the room. Each morning the dreaded Commandant would labour through the 31 names and mark squares on that term’s page with an alternating diagonal pencil-mark producing, over time, a herring-bone effect that was quite aesthetic. Trusting in his absolute power over us, the register was left in his unlocked desk – a Holy Ark that we assumed, if touched, meant instant death.

Then came that fateful morning when our revered leader marched to his desk, removed the register, opened it, fell totally silent, shook with rage and then sat down with his head buried in his hands. Carnage. Somebody (guess who) had poured an entire bottle of Parker Quink over the sacred tome. I don’t remember precisely what happened next but, despite the temptation to embellish the story, I am pretty sure there was no blood and there was definitely no ambulance.

Why am I writing all this? Because the European Union appears these days increasingly like a class of juveniles. And no prizes for guessing the incorrigible country. They were at it again last week.

Last Sunday, the editor of an investigative magazine published a list of over 2000 names of account holders in the Geneva branch of HSBC bank and was promptly arrested for breaching privacy laws. What is more, in a show of absolute legal efficiency, he was brought to trial on Thursday and, equally promptly, acquitted of the charges against him.

This all sounds quite impressive, if a waste of taxpayers money, other than for one thing – all the actors in this little play were Greek. The list, transferred to the Greek Government two years ago by the then French Finance Minister and now Head of the IMF, ostensibly pointed to wealthy Greeks who may be running a sideline in tax evasion. Somebody (the hot potato is now passing between former government ministers) stuck it in a drawer and “forgot” about it. Meanwhile, as I noted on this blog back in February there are (or, at least, were) over 165,000 (one hundred and sixty-five thousand) cases awaiting trial in the Greek court system. But they still managed to get this guy up in front of the Beak within 4 days.

I am not a lawyer and I do not know how heinous it is to breach someone’s privacy when it is in the public interest (if I am not mistaken Woodward and Bernstein did something similar 40 years ago that rather inconveniently brought down the President of the United States – and nobody tried to put them in the Electric Chair). However, even I know that there is something absolutely heinous with the government of a country that is struggling on the ropes with its budget deficit, not pursuing tax evaders. The fact that this case was taken to trial so fast is not heinous – it is just a sign of how morally bankrupt and obviously beyond the pale Greece is. I had goose pimples when the current Greek Front Man, Antonis Samaras was praised by Angela Merkel in Berlin. I know that a Greek exit from the Euro would not be simple for the creditor nations and that fact is heavily influencing Germany’s approach. But sometimes the school principal has to realise that it is not enough to make the errant youth write a thousand times “I must not tell lies in class” or “I must keep my promises”. If he proves himself totally incorrigible he needs to be expelled.

The Greeks like to keep telling us that they are the cradle of modern civilization and also the inspiration for the world’s greatest sporting event – the Olympics. Agreed. And what is the greatest problem facing competitive sport in the 21st century? Doping. Greek governments have been “enhancing” their statistics and breaking their promises, rather than records, for years.

It is clearly time to expel Greece from the Eurozone and disqualify it, for a period of several years, from the benefits of EU membership.

The Greecy pole

When it was suggested last week by a sympathetic BBC interviewer that the Italian government’s decision not to fund Rome’s bid for the 2020 Olympic Games had cost Italy the chance of taking its place on the world stage, the interviewee retorted sharply “Italy has been on the world stage for 2000 years”. Meanwhile, the Greeks keep reminding us that, as the cradle of democracy and western civilization, their continued hammering by the European Union is beyond comprehension. We should be thankful, at least, that the Germans have not yet chosen to harp back to the past.

Greece really does appear to be sliding down a greasy pole. The new government has continued its predecessor’s vain attempts at improving tax collection while trying to make new taxes stick in a country in which, thanks to rampant corruption, tax evasion is effectively state sponsored.

On January 22, a list of 4152 tax cheats was published in an effort to shame people – they must be joking – into paying up. Most fascinating was the fact that, even though the authorities know where they live, most of them have not been prosecuted. This is evidently thanks to there being a backlog of 165,000 cases in the courts. One prominent exception is, top of the list, Nikos Kassimatis (an accountant!) with an amazing 952 million euro owed, who is currently serving a prison sentence for VAT fraud which has probably taken away his appetite to settle. In a country where the judiciary clearly has a problem getting its act together, this may not be a case of the punishment not fitting the crime but – to put it in perspective – had he been convicted just before Henry VIII became King of England in 1509 he would be looking at walking free about now (not allowing for a couple of hundred years knocked off from his 504 year sentence for good behaviour).

An earlier list of 6000 major corporate delinquents was made public in September 2011. First prize went to the Hellenic Railway Organization which was running incredibly late with an unpaid tax bill of a whopping 1.26 billion euro – a real achievement given the fact that its owner is none other than the Greek government.

The now famous aerial inspection of houses with undeclared swimming pools, reported as carried out at great government expense by helicopter surveillance when the same result could have been achieved on Google Earth, has at least caused economic growth in the form of an increased demand for camouflage material. It has not been reported whether swimming pool owners have been paying cash for these purchases.

Meanwhile, while various officials have been forced out for either having their palms greased or turning a blind eye to the actions of others, the government came up with two quite ingenious methods of improving collection. Firstly, the new and much hated (along with every other) property tax is to be collected through household electricity bills. Non payment would result in disconnection from the National Grid and, in winter, death from hypothermia. Secondly, there is some madly complex , novel system using a smart card that enables the authorities to track a taxpayer’s payments. In keeping with Greek tradition, use of these cards is voluntary although it is not clear why the authorities don’t just start by looking up the names on that tax dodger list in the telephone directory and go knocking on their doors.

Alongside tax collection, privatization and reduced salaries, Greece has also been told by the EU and IMF to revamp its tourist industry. Knowing the Greeks’ record on compliance, left to their own devices, this will probably result in a new set of floodlights for the Acropolis and creation of more , euphemistically titled, clothing-optional beaches where German tourists can get an all-over tan while they are being burnt at home by the forced write-off of Greek sovereign debt.

Olympic spirit lost

It didn’t say “Wet”

My trip to New York cancelled last week courtesy of Superstorm Sandy, I decided to take advantage of the hour before anyone realized my  calendar was empty to clear my desk. Forgetting the utterly ignored disposable cup of coffee nestling under a sheet of foolscap, I watched in helpless horror as it tipped drunkenly on its side and lazily cast forth its contents over my diary and neighbouring assorted papers. My barely legible handwriting disappeared as the ink, dissolving into the coffee, was dispersed across the open page. Taking a leaf out of the book of the intrepid New Yorkers, by midday I had a spanking new diary and only the merest hint of brown on numerous documents newly piled at the edge of the desk.

The experience took me back 40 years to the summer of 1972 when we were just finishing 8th Grade (in England it was called the 3rd Form which was a bit confusing since we had already had one of those several years earlier). Our Form Master was Severus Snape minus the charm with whom one messed at one’s peril. Of course, as healthily idiotic teenage grunts we messed at our peril – but we all knew our limits. All of us, that is, excluding one. There is one in every class. A totally incorrigible youth with no academic aspirations who is programmed to kick back at all cost against authority. Civilly disobedient – Mahatma Gandhi without a cause. Anarchic without knowing the meaning of the word. Angry young man who wasn’t even angry. If we were told to write the address on our report envelopes in the centre, he wrote it in the top left-hand corner. If we were told to sit down, he stood up. Told to write in pencil, he wrote in ink. You get the picture.

We “knew” our limits

In those days part of the daily ritual was the redundant task of calling the register to corroborate the evident  fact that, while  so-and-so’s desk was clearly empty, he (we were all He’s) was not hiding somewhere else in the room. Each morning the dreaded Commandant would labour through the 31 names and mark squares on that term’s page with an alternating diagonal pencil-mark producing, over time, a herring-bone effect that was quite aesthetic. Trusting in his absolute power over us, the register was left in his unlocked desk – a Holy Ark that we assumed, if touched, meant  instant death.

Then came that fateful morning when our revered leader marched to his desk, removed the register, opened it, fell totally silent, shook with rage and then sat down with his head buried in his hands. Carnage. Somebody (guess who) had poured an entire bottle of Parker Quink over the sacred tome. I don’t remember precisely what happened next but, despite the temptation to embellish the story, I am pretty sure there was no blood and there was definitely no ambulance.

Why am I writing all this? Because the European Union appears these days increasingly like a class of juveniles. And no prizes for guessing the incorrigible country. They were at it again last week.

Last Sunday, the editor of an investigative magazine published a list of over 2000 names of account holders in the Geneva branch of HSBC bank and was promptly arrested for breaching privacy laws. What is more, in a show of absolute legal efficiency, he was brought to trial on Thursday and, equally promptly, acquitted of the charges against him.

This all sounds quite impressive, if a waste of taxpayers money, other than for one thing – all the actors in this little play were Greek. The list, transferred to the Greek Government two years ago by the then French Finance Minister and now Head of the IMF, ostensibly pointed to wealthy Greeks who may be running a sideline in tax evasion. Somebody (the hot potato is now passing between former government ministers) stuck it in a drawer and “forgot” about it. Meanwhile, as I noted on this blog back in February there are (or, at least, were) over 165,000 (one hundred and sixty-five thousand)  cases awaiting trial in the Greek court system. But they still managed to get this guy up in front of the Beak within 4 days.

What privacy?

I am not a lawyer and I do not know how heinous it is to breach someone’s privacy when it is in the public interest (if I am not mistaken Woodward and Bernstein did something similar 40 years ago that rather inconveniently brought down the President of the United States – and nobody tried to put them in the Electric Chair). However, even I know that there is something absolutely heinous with the government of a country that is struggling on the ropes with its budget deficit, not pursuing tax evaders. The fact that this case was taken to trial so fast is not heinous – it is just a sign of how morally bankrupt and obviously beyond the pale Greece is. I had goose pimples when the current Greek Front Man, Antonis Samaras was praised by Angela Merkel in Berlin. I know  that a Greek exit from the Euro would not be simple for the creditor nations and that fact is heavily influencing Germany’s approach. But sometimes  the school principal has to realise that it is not enough to make the errant youth write a thousand times “I must not tell lies in class” or “I must keep my promises”. If he proves himself totally incorrigible he needs to be expelled.

The Greeks like to keep telling us that they are the cradle of modern civilization and also the inspiration for the world’s greatest sporting event – the Olympics. Agreed. And what is the greatest problem facing competitive sport in the 21st century? Doping. Greek governments have been “enhancing” their statistics and breaking their promises, rather than records,  for years.

It is clearly time to expel Greece from the Eurozone and disqualify it, for a period of several years, from the benefits of EU membership.

The Greecy pole

The World Stage

When it was suggested last week by a sympathetic BBC interviewer that the Italian government’s decision not to fund Rome’s bid for the 2020 Olympic Games  had cost Italy the chance of taking its place on the world stage, the interviewee retorted sharply “Italy has been on the world stage for 2000 years”. Meanwhile, the Greeks keep reminding us that, as the cradle of democracy and western civilization, their continued hammering by the European Union is beyond comprehension. We should be thankful, at least, that the Germans  have not yet chosen to harp back to the past.

Greece really does appear to be sliding down a greasy pole. The new government has continued its predecessor’s vain attempts at improving tax collection while trying to make new taxes stick in a country in which, thanks to rampant corruption, tax evasion is effectively state sponsored.

On January 22, a list of 4152 tax cheats was published in an effort to shame people – they must be joking – into paying up. Most fascinating was the fact that, even though the authorities know where they live, most of them have not been prosecuted. This is evidently thanks to there being a backlog of 165,000 cases in the courts. One prominent exception is, top of the list, Nikos Kassimatis (an accountant!) with an amazing 952 million euro owed, who is currently serving a  prison sentence for VAT fraud which has probably taken away his appetite to settle. In a country where the judiciary clearly has a problem getting its act together, this may not be a case of the punishment not fitting the crime but  – to put it in perspective – had he been convicted just before Henry VIII became King of England in 1509 he would be looking at walking free about now (not allowing for a couple of hundred years  knocked off from his 504 year sentence for good behaviour).

It is not just their trains that are late

An earlier list of  6000 major corporate delinquents was made public in September 2011. First prize went to the Hellenic Railway Organization which was running incredibly late with an unpaid tax bill of  a whopping 1.26 billion euro –  a real achievement given the fact that its owner is none other than the Greek government.

The now famous aerial inspection of houses with undeclared swimming pools, reported as carried out at great government expense by helicopter surveillance when the same result could have been achieved on Google Earth, has at least caused economic growth in the form of an increased demand for camouflage material. It has not been reported whether swimming pool owners have been  paying cash for these purchases.

 Meanwhile, while various officials have been forced out for either having their palms greased or turning a blind eye to the actions of others, the government came up with two quite ingenious methods of improving collection. Firstly, the new and much hated (along with every other) property tax is to be collected through household electricity bills. Non payment would result in disconnection from the National Grid and, in winter, death from hypothermia. Secondly, there is some madly complex , novel system using a smart card that enables the authorities to track a taxpayer’s payments. In keeping with Greek tradition, use of these cards is voluntary although it is not clear why the authorities don’t just start by looking up the names on that tax dodger list  in the telephone directory and go knocking on their doors.

The brochure said "clothing-optional"

Alongside tax collection, privatization and reduced salaries, Greece has also been told by the EU and IMF to revamp its tourist industry. Knowing the Greeks’ record on compliance, left to their own devices, this will probably result in a new set of floodlights for the Acropolis and creation of more , euphemistically titled, clothing-optional beaches  where German tourists can get an all-over tan while they are being burnt at home by the forced write-off of Greek sovereign debt.

A Greek tragedy – the gods’ revenge

If you were Angela Merkel, would you take them seriously?

The scene: a windswept precipice at the very edge of Europe overlooking the Aegean Sea. A little man in a business suit stands nervously  behind a robust middle-aged woman dressed in what appears, in the failing light, to be a teletubbies jumpsuit. Both are a safe distance from the cliff-face.  She is evidently in charge. Two nondescript blacksuited men stand dangerously hunched over the precipice.

“Mario, Jose – pull him up a little – schnell!”, barks the boss at the two bent-over goons as it becomes clear to the innocent bystander that each is holding a trousered leg of a person suspended vertically over the edge and staring down into oblivion.

“Save me, please!” , calls the hapless victim in a distinctly Greek accent, his suit jacket flapping about his topsy-turvy head. “What do you want? We have agreed to a cut of 22% in the minimum wage and a freeze for three years, no salary increases, a cut of 150,000 government jobs. What else can I do? All this austerity will destroy us. We need Keynesian policies that will expand the economy – increased expenditure by the government, reduced taxes and quantitative easing of money.”

The little man taps the boss nervously on the shoulder and whispers: “Angel, we have to keep him alive otherwise we are not going to save ourselves. Greece must stay in the Eurozone for now, or default will be total and there will be a knock-on effect to Portugal, Spain and maybe even Italy.The Euro will be finished and our dream  of a United Europe will be in tatters. Let’s bring him up before he pulls the ECB and European Commission down with him”. She swats him off “If you can’t stand the heat, get back in your haute cuisine kitchen, Niko. Leave this to me.”

Greek Tax Authority - Please Give Generously

“Lucas. I want so much to feel your pain. Your people have  been so naughty. All those lies about deficits. All those broken promises. Why do you talk to me of Keynes? He is dead – long term. We politicians believe in free market classical economics, the Chicago School – Al Capone, George “Bugs” Moran, Milton Friedman, George Stigler. We might let you off this time but it is not going to help if you don’t reform your public sector, revamp your tourist industry AND – LISTEN CAREFULLY – CONVINCE PEOPLE, INCLUDING THE MEMBERS OF YOUR GOVERNMENT  THAT PAYING TAXES IS NOT VOLUNTARY.”

“OK! OK!  Just save me!” cries Lucas.

“Sacre bleu, I can’t take this anymore!  We must save him”, pleads  Niko.

“You galling man! Of course, I am going to save him. But he has to be fooled into agreeing to die slowly and painfully over the next ten years instead of a quick end now. Boys, pull him up! I think he has learned his lesson, but next time it will be the cement shoes “.

The sovereign debt crisis, as it relates to Greece, is turning into a tragedy. The country is clearly between a rock and a hard place.  If it defaults on its debt (which thanks to last Thursday’s agreement and last night’s Greek vote will probably not happen this time) it will likely exit the Euro, resulting in exchange rate chaos as the Drachma goes into free-fall from Day 1 and inflation rears its ugly head. There will be wide-scale business failures as corporate debt denominated in Euros becomes hyper-expensive and the public and private sectors will  face closed doors to credit markets.  On the other hand, by accepting the onerous conditions of  the European Central Bank, European Commission and International Monetary Fund , it is starting to look like the Post World War I Treaty of Versailles all over again when Germany was pinned to the wall by the victorious allies and forced to make reparations that pushed the country into crisis. If saddled with its current debt and required to go the whole way on this (albeit including a haircut for private investors) the Greeks really could become the long-term hewers of wood and drawers of water for Europe.

John Maynard Who?

For all the righteous indignation of European leaders towards Greece’s dishonesty over its statistics and its diabolical record on tax evasion, a line in John Maynard Keynes’s General Theory (his masterwork) is particularly apt: “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist”. Although largely discredited in the 1970’s and replaced by the theories of the Chicago School, a modified Keynesianism has made a comeback since the turn of the century – but the politicians are, in computer terminology, “not responding”, preferring to harp back to earlier, widely discredited, laissez faire policies which have little chance of working in the current circumstances. In the past, Keynesianism scored some great successes and, indeed, in the 1950’s British Prime Minister Harold Macmillan was able to boast: “You’ve never had it so good” although it was not entirely clear whether he was talking to the general public or his older brother Dan who had been Keynes’s first love at Eton.

The Greeks could do with a few new ideas

A sanity check suggests that, hopefully, this is one big international confidence trick – the plan being to string Greece along until it gets its house in order while allowing time for Portugal, Spain and Italy to climb totally clear of the danger of default.  Once Greece has made itself more competitive by reforming its public sector, revamping its private sector (significantly, tourism) and ensuring that the tax collection system works, debt will be forgiven, credit lines will be opened up and Greece can get going again.  Wishful thinking? Perhaps, but don’t go out and buy the cement shoes just yet.

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