EU Elections

[Flames Fan, Ph.D.]

Originally Posted by CaptainCrunch

Totally busted on that one, I was going off of a news report that I had heard a while that mentioned that Turkey had some fairly significant debt problems that still needed to be addressed.

I'm completely freaking wrong on that one.

I don't doubt the gist of the report you're relaying.

However, Turkey has its own currency, a very diversified economy and arguably the youngest workforce when compared to any European country.

They were effed about 10 years ago but undertook some major reforms to promote foreign investment, streamline tax collection (this used to be a problem), and reduce the retirement age along with some modest roll-backs on pensions*.


* This seems counterintuitive, but with a large population of 20-35 year olds looking to enter the workforce, the productivity gains and entry of younger, lower salaried people reduced their unemployment while still managing to take care of pension obligations.

[CaptainCrunch]

Originally Posted by Flames Fan, Ph.D.

I guess I don't understand what measures you want them to take? What would be "austerity" in your eyes, specifically?

Also, pushing the retirement age to 67 won't do anything. Their problem is debt and unemployment.

right now one of their biggest problems is based around program spending. Pension spending and civil service spending.

Again they tried to use government employment as a way to balance off employment so they now have a incredibly bloated civil service, where they're paying out a wack of money and its not bringing in any revenue at all.

You can somewhat balance off government spending by bringing in tax revenue, they're not doing that well.

MAybe someone can confirm it for me, but somewhere around 2 million people are government employees, at least that's the number that I read. In a country of what 11 million people, that's seriously a money pit. Civil or government service shouldn't be the largest employment sector in any country. Its revenue negative, they're getting paid out far more then they generate.



If you raise the retirement age to 67 then you can at least collect an additional 7 yers of pension contributions and tax people for an additional 7 years in the work force so to me that does make a difference, your also not paying out 7 years worth of pension payments. It should make a fairly significant income growth and spending cut on its own.

Greek fundamentals are poor, so stimulous spending won't get them out of the ditch as long as their ygdp is outstripped by debt.

riight now Greece debt to GDP is 160%, that means to me that for every dollar that your average Greek produces towards the economy the government is spending 1.60, and most of that is not spending that will stimulate the economy.

Until the Greeks cut their payroll, address their underfunded pensions, and find a way to generate more money through taxation, stimulus money is a nearly worthless endever it just increases their debt load for very little gain.

[Flames Fan, Ph.D.]

Originally Posted by CaptainCrunch

right now one of their biggest problems is based around program spending. Pension spending and civil service spending.

Again they tried to use government employment as a way to balance off employment so they now have a incredibly bloated civil service, where they're paying out a wack of money and its not bringing in any revenue at all.

You can somewhat balance off government spending by bringing in tax revenue, they're not doing that well.

MAybe someone can confirm it for me, but somewhere around 2 million people are government employees, at least that's the number that I read. In a country of what 11 million people, that's seriously a money pit. Civil or government service shouldn't be the largest employment sector in any country. Its revenue negative, they're getting paid out far more then they generate.



If you raise the retirement age to 67 then you can at least collect an additional 7 yers of pension contributions and tax people for an additional 7 years in the work force so to me that does make a difference, your also not paying out 7 years worth of pension payments. It should make a fairly significant income growth and spending cut on its own.

Greek fundamentals are poor, so stimulous spending won't get them out of the ditch as long as their ygdp is outstripped by debt.

riight now Greece debt to GDP is 160%, that means to me that for every dollar that your average Greek produces towards the economy the government is spending 1.60, and most of that is not spending that will stimulate the economy.

Until the Greeks cut their payroll, address their underfunded pensions, and find a way to generate more money through taxation, stimulus money is a nearly worthless endever it just increases their debt load for very little gain.

My point is that if you have high unemployment, then who are you going to make work until they're 67?

And if these people are government employees, not paying out 7 years of pension payments but paying them 7 more years of salary would increase government outlays.

[Azure]

Originally Posted by CaptainCrunch

Not to brag, but I've predicted in the distant past that we will see the rise of European facism again this century as more and more of these nations drown in their own debt, they will externalize the current issue and blame it on immigration influences and nationalism will rise as nations like Greece and Spain will blame outside influences like Germany for their problems.

While we won't see true malignant facism like we saw in Germany and to an extent Japan and Italy where they become militiarist repressive regimes that decide to deal with what they perceive as an immigration problem with harsh measures (not extermination, but ejection), a victory of 20 seats out of 300 is significant in that those seats could become vital in any coalition.

We've seen a lot of these race based nation first parties rise up over the last few years, and they aren't as marginalized as they used to be.

All of this has happened before, and all of this will happen again.

[CaptainCrunch]

Originally Posted by Flames Fan, Ph.D.

My point is that if you have high unemployment, then who are you going to make work until they're 67?

And if these people are government employees, not paying out 7 years of pension payments but paying them 7 more years of salary would increase government outlays.

Except that those people in government employment are not generating government revenue they're revenue negative. It would actually be cheaper for the government to lay them off or fire them and pay them a much smaller percentage in employment benefits.

The pension's in Greece for government workers is/was 80% of their final years salary. I somewaht agree with you about the 7 year salary issue except that you are paying them 80% of their salary for 7 years not to work so the savings in letting them retire at 60 is negligible until you consider that they stop paying into their pension at 60 instead of 67.

[CaptainCrunch]

Originally Posted by Azure

All of this has happened before, and all of this will happen again.

At this point, I would welcome our Cylon overlords who would put us to work polishing their silver under carriages.

[chemgear]

Originally Posted by CaptainCrunch

At this point, I would welcome our Cylon overlords who would put us to work polishing their silver under carriages.

Where do I sign up for . . . polishing duty?

[Flames Fan, Ph.D.]

Originally Posted by CaptainCrunch

Except that those people in government employment are not generating government revenue they're revenue negative. It would actually be cheaper for the government to lay them off or fire them and pay them a much smaller percentage in employment benefits.

The pension's in Greece for government workers is/was 80% of their final years salary. I somewaht agree with you about the 7 year salary issue except that you are paying them 80% of their salary for 7 years not to work so the savings in letting them retire at 60 is negligible until you consider that they stop paying into their pension at 60 instead of 67.

So what else would be part of your austerity, other than government pensions?

Also, as you reduce government outlays, you also reduce public spending, which is a part of the profit equation for private companies. How do you propose to avoid the aggregate fall in demand which will worsen the recession?

[Slava]

Originally Posted by Flames Fan, Ph.D.

So what else would be part of your austerity, other than government pensions?

Also, as you reduce government outlays, you also reduce public spending, which is a part of the profit equation for private companies. How do you propose to avoid the aggregate fall in demand which will worsen the recession?

Well with Greece, therein lies the rub. Everyone wants the government to cut spending, but the government spending accounts for about half of the economy. It will be a punishing blow to the citizens, and while its easy for us across the pond to say "well it has to be done", its also hard not to vote with your wallet.

[chemgear]

For those interested in this European drama, this is a great thing to listen to if you haven't already. I absolutely recommended it if you have some spare time.

http://www.thisamericanlife.org/radi...nental-breakup


It is about an hour long though. The highlight for me starts at 38:00. It also cements my view at how wacky things are over there. Basically they sent in a "technocrat" to determine what the actual deficit Greece had in 2009 (the original government department responsible had no idea what the number was and kept revising the number higher and higher ). Anyhow, the technocrat did his work and this same department turned around and demanded the chance to "vote" on the his work. (Don't ask me, I don't know how you vote on that kind of thing apparently math is a democratic process in Greece.)

Anyhow, they turned around and threatened him instead and are now trying to charge him with an actual crime - "break of faith against the state" or something. He is facing life in prison.

http://www.npr.org/blogs/money/2011/...rat-in-trouble


This is the delusion I think of whenever Greece comes to mind.

[Itse]

Originally Posted by CaptainCrunch

I would disagree with you about it being simply a taxation problem.

Which is why I said "for the most part a taxation problem".

You always have to pay attention to spending too, basic economy wisdom.

For starters, stop using government money to bail out private investors. It's insanely expensive and creates an unhealthy business environment.

Plus it's actually rather hard to control if they truly need the money or not. (Example: Landsbanki has eventually been able to pay back it's Icesaves debts, despite originally claiming otherwise. It did go bankrupt in the process though.)

[icarus]

I was in Paris during the election. There was much elation in the city when Sarkozy was ousted and everyone seem thrilled at the election result. People I spoke to thought Hollande would be good not only for France but for the world too. Not sure where all the Sarkozy supporters were hiding; I think I might have seen a political argument between some people on the street in the Marais late on Sunday night but I was a bit too liquored to remember clearly.

[Knalus]

At the heart of it though, would it be fair to state that Greece's true problem is an employment issue? They have very low employment, and when you take government jobs into effect, the actual employment is abysmal. If the economy isn't actually doing anything productive, it makes it hard for the government to actually be able to pay for anything it does.

[ah123]

I remember reading that tax evasion is a national sport in Greece; and the government is not very good at collecting outstanding taxes...

From afar, it seems like Greece is going to be in a world of hurt, even if they are allowed to stay in the Eurozone

[FlamesAddiction]

Originally Posted by Knalus

At the heart of it though, would it be fair to state that Greece's true problem is an employment issue? They have very low employment, and when you take government jobs into effect, the actual employment is abysmal. If the economy isn't actually doing anything productive, it makes it hard for the government to actually be able to pay for anything it does.

The employment rate is bad, but the numbers are misleading when you consider that many people who are "unemployed" statisitically just work under the table to avoid paying taxes.

It's true that they don't have a lot of industry though and they have become too reliant of tourism (which makes societies lazy). They are lucky that they are in Europe and surrounded by neighbours that have an interest in seeing them do well. There are 3rd world countries with more resources/industry. They are lucky that people from northern Europe and North America spend so much money to hang out there.

[GP_Matt]

I read an article about tax collection in Greece a while a go and it talked about people bribing the tax collectors to look the other way. Apparently it is much cheaper to pay minimal taxes and then just kick some money to the auditor to sign off on your taxes.

Somehow I think they need to change the culture to establish paying taxes as the patriotic thing to do; maybe coupled with tax reform to make things simpler. The mentality has to change from a view that not paying taxes is one upping the government to a view that not paying taxes is stealing from your neighbors.

[macker]

Originally Posted by ah123

I remember reading that tax evasion is a national sport in Greece; and the government is not very good at collecting outstanding taxes...

From afar, it seems like Greece is going to be in a world of hurt, even if they are allowed to stay in the Eurozone

Boomerang :

The vast economy of self-employed workers-everyone from doctors to the guys who ran the kiosks that sold the international Herald Tribune-cheated (one big reason why Greece has the highest percentage of self-employed workers of any European country). It's become a cultural trait, he said. The Greek people never learned to pay their taxes. And they never did because no one was punished. No one has ever been punished. It's a cavalier offense-like a gentleman not opening a door for a lady.

The scale of Greek tax cheating was at least as incredible as its scope : an estimated two-thirds of Greek doctors reported incomes under 12,000 euros a year - which meant, because incomes below that amount weren't taxable, that even plastic surgeons making millions a year paid no tax at all. The problem wasn't the law - there was a law on the books that made it jailable offense to cheat the government out of more thatn 150,000 euros - but its enforcement. If the law was enforced the tax collector said every doctor in Greece would be in jail.

Courts in Greece take up to 15 years to resolve tax cases. The easiest way to cheat on the one's taxes was to insist on being paid in cash, and fail to provide a receipt for services.

[CaptainCrunch]

Its tough and its not an easy fix for Greece, however they are bleeding money with government spending and employment that could represent massive savings if it was culled. Sure if you sh%t canned half of their government work force either through attrition or outright killing a massive amount of jobs your short term pain would be immense with your unemployment skyrocketing. However you would save money in paying unemployment at a percentage of pay as oppossed to full pay.

Either they have to get rid of the retirement by 60 or drop the pension payout from 80% of their last years pay to something way more reasonable.

Basically their debt to GDP ratio is ludicris at 1.60 to 1.

They also have to work on their tax system, and encouraging people to be patriotic and Pay their taxes



Might sound good, but they've got a culture of cheating happening there that won't easily be changed. They have to create a whole new system of enforcement where they look really hard at self employed earnings and find a way to call B.S., they also need to encorporate a punative fines punishment where they can run things through the court systems fairly quickly.

But they have to find a way to improve government revenue, and if they can't stem the tax cheats then maybe they go to a zero income tax heavy sales tax system which forces everyone to pay something.

Maybe drop thier income tax rate to zero and increase their sales tax rate from 19% to 39% or something, I don't know.

They could then chop their income tax collection department to zero and geet rid of any loop holes and ease things up on the courts.

If you chop government spending and find a way to increase revenue then you can tax the real and implied savings and dump it into debt servicing at a faster rate which will ensure that you will still get a temporary bailout package from Germany and not create upword pressure on your currency.

You can then take another part of the savings and plow it into stimulus spending.

Greec does have several dwindling industries.

Obviously Fisheries, They have one of the largest merchant navies in the world, they need to encourage growth there. At one time not too long ago, Greece had one of the fastest growing industrial sectors in the EU, but they lagged far behind in worker productity (figures ;() Maybe they could use the stimulus spending to encourage more automation in plants so that they can reduce the cost of goods for exports.

Just spitballing.

[Jacks]

Looks like Germany may be cutting off jr's allowance.
http://news.nationalpost.com/2012/05...terity-no-aid/

[CaptainCrunch]

Isn't the next big check run in Greece in September, if they don't get the bailout money, they're done.

I hope the people that are rioting realize that.