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Ed Breen
Registered: Jan 2010
Posts: 484 |
09-30-11 01:55 AM
I am trying to be clear. It simply means you can't pay your debt. When you can't pay your debt then you won't pay your debt. The guy you owed money to doesn't get paid. He has to write off his investment. You can't pretend or paper it over...the investment is gone...if you lend the guy who can't pay you more money, so that he has some to pay you back with...then you will lose even more money, becuase he doesn't have enough income to pay you back and he has no plan to earn enough money to pay you back. Same as it ever was.
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TGregg
Moderator*
Registered: Jan 2002
Posts: 7089 |
09-30-11 01:33 PM
Troika meeting rescheduled for this evening (local time). Heh, nice move to delay the announcement `til post close Friday evening.
ATHENS, Greece (AP) -- Striking civil servants occupied the Transport Ministry building in Athens early Friday, forcing international debt inspectors to reschedule a meeting where they were to discuss reforms, including new licensing laws for taxis.
Transport Minister Yannis Ragoussis's morning meeting was delayed to the evening after the debt inspectors, collectively known as the troika, arrived to find the building under occupation and protesting employees in the courtyard.
http://finance.yahoo.com/news/Greek...2&asset=&ccode=
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Ed Breen
Registered: Jan 2010
Posts: 484 |
10-03-11 02:25 AM
This was all obvious when the first crises appeared to 2010...the plan all along was been to loan Greece more money on the condition that it cuts government expenditures, sells off government enterprises an assets and raises taxes. This IMF standard scheme is promoted to reduce debt to GDP ratio. Buy if you think about it at all you can see that in a country like Greece that would never happen. Consider what the denominator of this ratio is...GDP. GDP is made up of Consumption Spending, Investment Spending and Government Spending (Plus net of imports/exports). So the plan is to increase debt (the numerator of the ratio) and then to cut the Government spending componant of GDP, to raise taxes and further reduce the investment componant that has already been running away for years, and with all the lay offs, cut in government pay, destruction of tourism with strikes and chaos, consumption is plunging. It is intellectually dishonest to say that you are trying to improve the debt/GDP ratio when your actions pointedly raise the numerator debt and reduce the denominator GDP. It could never have worked in the first place.
The real question is what can they do to encourage investment?
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morganist
Moderator
Registered: Sep 2008
Posts: 3404 |
10-03-11 02:37 AM
Quote from Ed Breen:
This was all obvious when the first crises appeared to 2010...the plan all along was been to loan Greece more money on the condition that it cuts government expenditures, sells off government enterprises an assets and raises taxes. This IMF standard scheme is promoted to reduce debt to GDP ratio. Buy if you think about it at all you can see that in a country like Greece that would never happen. Consider what the denominator of this ratio is...GDP. GDP is made up of Consumption Spending, Investment Spending and Government Spending (Plus net of imports/exports). So the plan is to increase debt (the numerator of the ratio) and then to cut the Government spending componant of GDP, to raise taxes and further reduce the investment componant that has already been running away for years, and with all the lay offs, cut in government pay, destruction of tourism with strikes and chaos, consumption is plunging. It is intellectually dishonest to say that you are trying to improve the debt/GDP ratio when your actions pointedly raise the numerator debt and reduce the denominator GDP. It could never have worked in the first place.
The real question is what can they do to encourage investment?
I would cut taxes for foreign businesses then use the ports as a way of getting stuff in from the East and then put construction factories there. That would give them investment and the Chinese a cheap way of getting goods to Europe and vice versa.
What do you think Ed?
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Ed Breen
Registered: Jan 2010
Posts: 484 |
10-03-11 04:23 PM
Morganist, I encourage your thinking about how to get investment going but I don't think your suggestions are unrealistic. Certainly lowering tax for inward investment would encourage such investment. However, I think what is necessary is a context change, a cultural change in business and taxes in Greece focused on Greeks. I don't think you can waive a wand and make something happen quickly (in terms of months and a few years...I am thinking years and decades). It takes more than a focused tax incentive from a desperate and unreliable political class to drive long term inward investment. To build and invest in Greece requires a positive local economy, an infrastructure of utilities, labor, law, transportation and personal security that works every day and that is predictable and stable looking forward. It will be a while before Greece can put all that together. So, much of the Greek economy is underground, off the tax rolls and sub rosa on a regulatory basis that it is cultural.
Greece needs to admit its default and write down the debt to what it can realistically pay. Then Greece needs to create a low flat tax for its citizens and enterprises. It can charge the same low tax for inward investment, but it shouldn't count on much. Certaily its ports will be usefull for trade inward and out but that will depend on a domestic Greek recovery. You can't order up construction plants at ports and a designated trade partner in a controlled economy way, the growth has to come in a broad market sense with decision made by private micro actors wihout the repression by its own government. The natural state of life and certainly all economies which the aggregations of living beings, is to grow. When they are not growing it is because they are being supressed. The sub rosa untaxed black market in Greece is simply a reaction to market suppression.
Then Greece needs to live with its existing revenue stream. Reduce its government employee base, privatize state owned enterprise in controlled way and try to keep the peace in the street. After an unavoidable period of distress, the Greek people can start again with enterprises and efforts that are entirely Greek, much like the Icelanders did.
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