Greece is broken. How would you fix it? nt

[redwitch]

[rogerashton]

1. If they don't have a contingency plan

to roll out Drachmas by next Monday, then Varoufakis isn't the game theorist he has seemed to be.

[Warpy]

7. Apparently they destroyed the engraving plates when they joined the Eurozone

because it was so great it was going to be permanent.

They're probably getting pretty panicky right now, but the easiest thing to do is make it all electronic money in the beginning.

[brooklynite]

17. Because all the Greeks have computers and online access?

Add to which, a large portion of the Greek economy's problem is the large proportion of (under the counter) cash transactions.

[Warpy]

23. You don't need a computer and online access.

You need a piece of plastic with a magnetic strip. Hookers and drug dealers will have to rely on there being a few Euros still in circulation.

[brooklynite]

25. 1. how are you going to pay to produce them?

2. What if the businesses don't trust them, because they don't trust the banks they're linked to?

[Warpy]

29. They're incredibly cheap to produce, even offshore, cheaper than commissioning new plates

and printing drachmas with them. If businesses want to sell anything to anyone, they'll trust the cards. They won't make enough to survive on Euros, alone.

Now let's hear your proposals, if you have any.

[brooklynite]

31. "Incredibly cheap" is not free...

..add to which, the "drachmas" they're electronically linked to will inflate horribly once Greece formally defaults on it's debts and nobody want drachmas (electronic or otherwise) for the food and medicine Greece has to import.

[Warpy]

34. I see, everything needs to be free in your world.

Good luck with that one. And everything needs to be easy, and perfect.

There is no free, easy or perfect way out of this one, that's rather the point.

Now let's hear your proposals, if you have any.

[brooklynite]

43. I don't WANT things to be free...

...but if they're not, the Greek Govt won't be able to pay for them. The banks barely have enough cash to get through the week, and Greece has a notoriously bad record at collecting taxes owed.

My solution is far simpler. Stop posturing and come back to the table for some serious negotiating about Greece's debt obligations.

[Warpy]

46. I see, you've got absolutely nothing.

Bye.

[KamaAina]

22. That wasn't too B-R-Y, as Grandma would have said

they should have stashed them in a museum somewhere on the Acropolis.

[KamaAina]

2. I'd look north to Iceland.

They were just as broken -- but not structurally. Things up there just got out of control. As for Greece, I'd reform the tax system so that taxes actually get paid, so the government doesn't have to keep borrowing money.

[Betty Karlson]

5. Iceland still had its own currency.

The two situations are not comparable.

Another difference is that years of austerity have now crippled the Greek economy: Iceland never was that far gone.

[brooklynite]

26. ...and a relatively healthy economy.

[redwitch]

6. I think that has to happen. And quickly!

I feel terrible for the people there.

[Warpy]

3. Two things

An audit to see where the money went and determine from banking records and spending whether bribes were responsible for incurring a lot of it, especially on military hardware the Greeks did not need. The doctrine of "odious debt" might be applied to get rid of a lot of it.

Tighten the tax laws and put some teeth into them. It's estimated that they've been collecting only about 40% of what they're owed since the system has largely been an honor system and we all know how much honor a lot of people, especially the rich, have when it comes to supporting their countries with money.

Of course, I'd also nationalize the banks and jail bankers and politicians according to what the audit showed.

Another idea is to put some of that military hardware on the auction block. I'm sure the west would cough up to keep it out of the hands of ISIS.

[Betty Karlson]

4. "A modest proposal" - by Varoufakis would be a good start.

See also his TED-talk. It's on youtube.

(Decentralised Europeanisation.)

[Warpy]

10. The problem with his proposal is that the rich do not share power with the poor

unless they are forced at the point of a gun to do so. That applies on an international as well as local basis. That time might be on the way but it's not here yet.

[Gregorian]

8. I think something that I can only say after you've watched some of this video by Richard Wolff

He's very clear that the only humane way forward is through what most resembles profit sharing. Getting rid of the big, greedy guys, and keep the surplus work we do for ourselves rather than giving to the boss. It can be done. That's why I'm watching this video again. Came from this thread:
http://www.democraticunderground.com/1017276914

?t=753

[MoonRiver]

9. Why do we have to fix Greece?

[redwitch]

12. We don't have to fix Greece. nt

[Motown_Johnny]

13. To avoid a possible global economic collapse.

Or this could just be an intellectual exercise.

[redwitch]

16. Global economic collapse is a very real possibility.

I hope that we can pull back from the brink.

[Yo_Mama]

36. Greece is a very small country with a very small GDP

It can in no way cause global economic collapse.

[Motown_Johnny]

50. but if it drags the Euro down with it

then it could cause major problems.

Yes, I overstated the danger. Even so, this is a useful thought experiment.

[Yo_Mama]

59. ECB is trying to drag the Euro down itself. It's not about Greece -

it's about Italy, Spain, and then France. Spain's probably going to be okay - they are out of the worst of it.

This will be a couple of interesting weeks, to be sure. But the end game is going to come 5-7 years down the line.

[bhikkhu]

14. We don't and we aren't, but its a valuable question anyway

as they are a real country, made up of real people, with many of the same kinds of problems we have here. Think of it as a mental exercise in understanding other people's problems.

[yurbud]

11. first, find the bankers and pols who set up debt and put them in prison for life...

find all their assets and use them to pay toward Greece's debt.

Enshrine this action in law.

Then figure out what to do next.

[NobodyHere]

56. So you would make loaning money illegal?

[yurbud]

57. Do you think what bankers do to countries is the same as individuals?

[underahedgerow]

15. Eliminate the social services & pensions fraud that brought them to ruin. Billions every year in

fraudulent claims, including thousands of pensioners over the age of 100 (they're dead, but the families continue to take the money) and the one island with more than 600 'blind' people (thanks to ONE eye doctor and his phony papers) including a blind taxi driver.

Thank greedy, lazy people who like to suck their own government dry. Look where it got them!

This article is from 2012, they all saw this coming. http://www.telegraph.co.uk/news/worldnews/europe/greece/9233670/Greece-tries-to-crack-down-on-fraud-as-mayor-of-Zakynthos-faces-revolt.html

I wish I had more pity. They need to get off their butts and start cashing in on tourism & export and stop relying on fraud and social services.

[EL34x4]

18. Add to this, an income tax that lets you self-report your income

Leading high-earners to report annual incomes under 12k Euros a year and thus pay no income tax. They live in opulent, gated mansions but on paper, these doctors, lawyers and business leaders are paupers. And they buy camouflaged tarps to cover the swimming pools that they never paid a luxury tax for.

Public transportation that relies on the "honor system" for payment. The subway in Athens has no barriers. Millions ride for free.

The rampant disability and pension scams you mentioned above.

There's a damning new book out that paints a picture of fraud and abuse perpetrated at all levels of Greek society:

http://www.dailymail.co.uk/news/article-3148451/A-island-pretending-blind-benefits-8-500-pensioners-faked-aged-100-lawyers-claim-earn-just-12-000-New-book-reveals-Greeks-cheated-ruin.html

If these allegations are true, half the country belongs in prison alongside the bankers and politicians many are blaming.

[brentspeak]

19. Oh, look a right-winger

Probably also believes that it was "greedy, undeserving homeowners" which made Wall Street rip off and destroy the US' economy in 2008.

[B2G]

28. What are you talking about?

Both articles are aimed at people gaming the system, particularly the wealthy.

Try reading the links before you react.

[LittleBlue]

20. It can't be fixed

Unless they are willing to tax their wealthy citizens, the underlying problem will continue to create deficits that Greece will require debt to fix. That debt is currently well past the amount that they are able to repay.

1) dump the euro for a drachma. Short-term pain, long-term stability and monetary sovereignty regained

2) crack down on tax evasion schemes

That won't solve the problem, but it will begin the process of healing a broken country

[PoliticAverse]

54. Why do unpleasant things like really enforce tax law if you can just get someone to lend you more

money instead?

[LittleBlue]

55. Yep. More rope please

We can't have the great business magnates paying their taxes, ohh no

[derby378]

21. "So, uh, how much for the Acropolis?"

Just wait for it...

[neverforget]

24. They have to get their people back to work which will get their economy going and

people paying taxes. The Greeks are in a difficult spot, but paying back the loans without a growing economy is a recipe for disaster.

[Nye Bevan]

27. Partial debt forgiveness in exchange for economic reforms

including things like making the income tax system compulsory instead of voluntary.

[jeff47]

30. 1) Negotiate a haircut on EU/IMF debt.

2) If 1 fails, point out to Russia and China that a Greek default to the EU/IMF would be a big fuck you to Europe. And some new loans would be helpful.

Couple this with GrExit, and printing Drachmas again. Use devaluation to make Greek goods and vacations competitive.

And no matter which of 1 or 2 occurs, fix their corrupt tax system.

[WDIM]

32. Default on all foreign held debt and debt owned to anybody

With a net worth of more than one million dollars.

The wealthy have taken enough they dont need more money.

Nationalize the banks and the currency with a publically held central bank.

Put the people back to work building community and a country that will make democracy proud.

[Nye Bevan]

35. So you would exit from the Euro against the wishes of 75% of the population?

Certainly a possibility, but not what the people of Greece want.

[WDIM]

42. The people still dont understand the evils of a private central bank.

Nationalizing cental banks for the benefit of the people and not the super wealthy will create prosperity for all people.

[Yo_Mama]

38. They still wouldn't have money to cover needed imports

You don't seem to be engaging with how bad the Greek economy really is.

The private debtholders were already forced to take a huge write-down - this is now basically about foreign debt. And sure, you can repudiate it. But don't then expect other countries to pay for your food, fuel and medicine.

[WDIM]

41. The greek people have survived on that land for centuries.

They can continue to survive with local food fuel and medicine.

Having a public central bank instead of a private multi national central bank will create prosperity the country has never seen. No longer will you have the succubus elitist at the top skiming off the nation's wealth.

[Yo_Mama]

45. Bank of Greece was always public.

Don't get me wrong, they are not going to pay a lot of that debt because they can't. They need a write-down to about 80-85% of GDP to be able to dig out, plus austerity.

I think they are right to reject this pointless austerity. But the country is in desperate straits.

[brooklynite]

48. You won't be coming back for loan from the millionaires any time in the future?

Won't be buying any imports with the money you don't have?

[WDIM]

52. Nope debt is nothing but a tool of oppression.

Canceling debts and telling the millionaires to stick it would be the best thing people could do.

The wealthy have exploited and extorted the people long enough. They dont deserve any more money.

[Romulox]

33. US government bail out of affected international banks. nt

[B2G]

37. And give them ponies.

They need ponies.

[WDIM]

39. How about seizing the assets of all international banks

And redistributing that wealth to the people.

[MFrohike]

40. Three things

I'm assuming they'd rather stay in the Eurozone than not.

1. Germany has to see reason on its trade surplus. It either has to give up the surplus or, like America did to rebuild Europe after the war, it has to recycle euros into its trading partners for the purpose of productive investment. No more lending for speculation. It means that Germany will see its trade surplus decline as its trading partners in the Eurozone become more able to compete, but that's fine. The measure of a healthy economy is not how much it exports. It's internal demand.

2. The Greek tax system needs to work. It's broken as hell. Tax evasion is notorious and, from what I understand, is kind of a national sport. Since they don't issue the currency, they have to fix their tax system in order to fund their government (currency issuers don't have this problem).

3. Building on point one, the Eurozone needs a central fiscal authority. In the US, the states have spending constraints while the federal government has none. That's a key element of fiscal and political union. Money has to be redirected from more prosperous areas to less prosperous areas or you get disorder. The current system the EZ uses would be like if the federal government had to balance its budget every year. There would be no ability to smooth out problems among the states, like the automatic stabilizers, and the states would be stuck in their balanced budget constraints. It's a quick path to a right-wing regime that doesn't mind spending hand over fist for war-minded purposes and to tell with any kind of good governance.

[MrMickeysMom]

44. First, I'd go to someone smarter… like Janet Tavakoli

She is one of the world's foremost experts in credit derivatives, complex derivatives, interest rate swaps, collateralized debt obligations, and securitizations. She is the president of Tavakoli Structured Finance, Inc., a Chicago based consulting firm founded in 2003.

The Financial Report
By Janet Tavakoli

Home » The Financial Report » Greece and the Troika: Next Moves
Greece and the Troika: Next Moves
Posted July 6, 2015By Janet Tavakoli
Europe is snared in its own web of false narratives. The first being that Greece can and will repay its debts. Those holding PIIGS’ debt are squealing today.

All the roads ahead will be hard for Greece. Some Greek corporations have already issued scrip, due to the shortage of Euros. Handelsblatt reported that Greek banks will be tapped out by the end of the day today. Greece could go back to its own currency, but what will back it? Or as others suggest, Greece can nationalize its Central Bank and print Euros at will, but the Troika’s next move will probably be to label that a criminal act, because it desperately needs to keep other fringe debtors in line. Demonizing Greece may be the temporary fallback position.

The Eurozone may try to cut off currency compliant paper and ink to Greece–if Greece didn’t have the foresight to secure supplies.

Greece prints Euros that start with Y in the serial number. If Greece does nationalize its Central Bank and starts a massive Euro printing program, Draghi may suggest that Euros with serial numbers starting with Y are counterfeit currency. He probably wouldn’t dare say that explicitly, but there will have to be a mechanism to warn other countries it won’t be tolerated.

Here’s a bonus question: How many unauthorized Euros have already been printed, not just by Greece, but by other European countries?

[Blue_Tires]

47. Some basic steps

1. Start collecting taxes, since 80-90% of them go uncollected

2. Cut military spending (Greece imports more weapons and armaments than all but 4 nations)

3. Try (as best as they can) to root out the inherent graft and corruption in their economic system

4. Try (as best as they can) to prevent the one-percenters from taking their billions out of their country and storing them in foreign banks...

[DFW]

49. Get a good time machine and liberate Greece from the Ottoman empire 200 years early

I'm reading a long article about the history of Greece since before their independence from the Turks in 1830. There was a system in place to make every fourth person some kind of civil servant. Every FOURTH person. No wonder the government allowed retirement with full pay at age 55. They were giving themselves a massive handout at everyone else's expense. No wonder tax evasion became the national pastime for a population unwilling to subsidize it. Today, the Germans have every twelfth person working for the government, and they gag at how many unnecessary government employees THEY have.

The Greeks also have basically NO registry of ownership of real estate property. If you own a hovel, you declare it. If you own a mansion with vineyards and olive orchards, you declare a hovel anyway. Who is going to check? No one. Remember all those forceful steps Tsipiras and Varoufakis were going to take to reform this immediately? Don't worry, neither does anyone else.

If I get time, I'll post the most important passages later (11PM here, and I have to get up for work tomorrow at 4:20). I'll have to translate into English, so it'll take longer than just looking it up and pasting.

So, like any broken country, there is a huge difference between recognizing what needs to be done, and telling/forcing them to do it. National Pride (hubris is a Greek word, after all), local political considerations, and the fact that this system is the end product of centuries of developments that are (mostly) the fault of no one alive today.

Tsipiras wins over the population because he is one of them. He knows what they want to hear, and how to say it. Who cares if it's true or not? He's not the first charismatic guy to come to power in economic hard times and convince people he's a great patriot who is going to make things better when, in fact, he has no clue how to do it. Remember a guy named Ronald Reagan?

[CajunBlazer]

51. One of the downsides of Euro-Zone

The are huge advantages for the countries of Europe when they formed the Common Market. One of advantages comes from the fact that "they are all in it together", but that is also one of the downsides. Before they joined together, each country was responsible for its own economy. Government tried not to make stupid economic decisions (like those of Greece outlined in this tread), because other countries were not likely to bail them out if their mistakes lead to serious financial problems.

Also, since each country had its own currency, when one country had financial problems the situation was to some extent self regulating. The financial problems would cause the problem country's currency to drop against the currencies of other countries with whom it traded. Thus the problem country's imports would become very expensive causing consumers to prefer home grown products, and the country's exports would become less expense increasing exports. Both of these developments would help the problem country's economy. In addition tourists would find visiting the problem country less expensive resulting in more tourism, again boosting the economy.

The problem is that Greece uses the Euro as its currency, just like every other country in ECU. The EURO which is not going to float up and down solely of the health of the Greek economy.

In the nutshell, the ECU went to a common currency without enforcing common economy policies among the member nations. Greece is what happens when one country plays fast and loose with its economic policies while the other, like Germany, does all the hard stuff necessary to remain financially stable and prosperous. What happens in the Greek situation will set a precedent as to what will happen to Euro-zone countries which do not follow sound economic principles in the future.

[hunter]

53. An economy is like a pond.

When the scum at the top gets too thick it blocks oxygen and light from the lower levels and everything gets stinky and anaerobic.

To fix it you have to pump fresh "oxygenated" money into the lowest levels, and skim the scum off the top.

That's the exact opposite of what the scum at the top of the European Union are doing.

They need to keep the money flowing to the ordinary people at the lower levels of the economy and besiege the very wealthy of the economy with forensic accountants, even turning the glass upon their own leadership.

The trouble with banks is their propensity to launder money for the other scum at the top.

None of the uber-wealthy morons who ignited this catastrophe are going to suffer for it, except maybe a little on paper. They won't starve, they won't have their home foreclosed upon, they won't go to prison. In fact quite a few will profit from it. What do they care if the peasants get hurt?

Hell, the uber-wealthy, their lackeys, their whores, and their squeaky unknown money worshiping sycophants, are all to happy to blame the peasants for their own troubles, just as the English lords treated the Scots and the Irish in the Clearances, telling them that if they had simply worked harder, put the land to "better" use, then none of the cruelties would have happened!

That's bullshit, that's blaming the victim.

[bigwillq]

58. I would like to fix the United States first (nt)

[moondust]

60. *Might* be better off with their own currency.

Decentralization *can* offer smaller players more flexibility to act and react to changing conditions.