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Saturday, July 18, 2015

Why Not Simulate Grexit?

With all this discussion about a temporary or permanent Grexit, I want to come back to an idea which I first floated in June 2011: if Greece can't make the necessary adjustment within the Eurozone but if Grexit is the worst option of all, why not hold on to the Euro but simulate Grexit for a certain period of time?

The benefits of a Grexit, according to textbooks, seem obvious: imports become more expensive so that domestic production becomes more interesting; exports become cheaper so that the economy gets further stimulated that way; overall, Greece becomes 'cheaper' and thus, again according to textbooks, more competitive. What the textbooks do not explain are all the possible collateral effects of a Grexit.

There is another way to make imports more expensive: selective inport taxes! Through the selection, one could steer economic effects. For example, absolutely necessary imports could be exempted from import taxes. On other products, the import taxes could be staggered all the way up to 100% (as, I believe, Greece once charged on imported cars). The higher the luxury and/or non-necessity of an import, the higher the import tax. Particularly products which are currently imported but which could also be supplied in Greece should carry high import taxes (such as some agricultural products) to stimulate import substitution.

There is another way to make exports cheaper: subsidize them! How this would work in practice is too complicated to analyze here but there must be ways how the objective can be accompished, namely to export more so that domestic employment goes up.

All of this would have to be incorporated into a longer-term 'infant industry protection and industrial development plan' and it would have to be carefully monitored (preferably by someone like the OECD) so that the system is not misused for short-term gains. The basic principle is simple: increase domestic economic activity by exporting more and by substituting certain imports.

There would be the immediate outcry that all of this would be in violation of EU treaties. It definitely would be. But frankly, how compliant with EU treaties would be a Grexit?


  1. As you say, definitely in violation of EU common market, and even of GATT (So not an EU issue only).

    And, if GR were to be allowed to reinstate protectionism and keep an unbarred access for its exports to EU common market, there will be little motivation to dismantle those barriers and dumping measures after GR has found a new equilibrium

  2. By the way, I read your post a second time. It does not simulate Grexit (wages, rents and all internal costs devalued...) , but an exit from EU and its common market, with an euroized economy ( currency pegged to Euro or using Euro)

  3. Sounds like a good idea for me, many countries used tax policy as a tool to breed own industry. But it would face several problems:
    - An outcry from Europe as it collides with european laws.
    - An outcry from almost every neoliberal as it collides with the dogma of globalization and global tax free trade, seen again and again, at last at the TTIP. IMW and WTO could hate it too.
    - Perhaps an outcry from Greeks as many products would get more expensive.
    - Problems for an economy that seems to be partly based on trading. (I understand the improtance of shipowners that way, and as well the hopes to develop the Greek ports to hubs for Europe, the first entry for ships coming from asia and
    - Additional incentives for organized smuggling and tax fraud in a country that has already huge problems with smuggling (petrol...) and tax fraud. It could further aggravate already difficult cultural traditions.

    A good idea, but less for Greece than for other countries?

  4. The other EZ countries will never accept this.

    I have a feeling that the Greek politicians won't accept this either. Their main interest in Grexit isn't in making Greece more competitive, but rather in getting the "printing press" back.

  5. > kleingut

    How about viewing the situation by switching the perspective. -
    There are rules against prohibiting imports , but there are not rules against promoting imports.

    The Creditor countries could promote imports from Greece. Sales that assist in the loan repayments. It would be in their own self interest as it would attend to concirns about credit repayment speed and they would get goods, services and beach holidays.

    1. "The Creditor countries could promote imports from Greece. Sales that assist in the loan repayments."

      In other words you interprete Klaus suggestion of a "simulation of a Grexit" as not quite connected to the complete tax cut that according to Schäuble, a Greek Euro exit would be connected with.

      I am not sure what he means. Maybe since textbook-wisdom drew more of my attention.

      Concerning your aka. Is it meant to suggest you are Spanish and support a Euro exit or support the Spanish left.

      Do you think a promote import, in spite of the apparent raise in price, may help to have the well-off classes pay back the credit this way?

      What type of PR strategy would you suggest?

      Don't you think the selective import taxes could be easily circumvent by e.g. these classes buying their Jaguar or Mercedes in their respective place of alternative residence?

  6. I am again in the difficult position of disagreeing with everybody and having to use difficult arguments against Nobel prize winners (like Mr Krugman) or very knowledgeable people like Klaus. I have already mentioned ergodicity (I think) so I will not go into it again.
    The problem stems from the fact that we never look deeply into our assumptions. All discussion about Grexit make, among others, the following assumptions:
    a) Economics is a reversible process. Going from the Euro to the drachma is obviously a reverse. This is a highly theoretical assumption aimed mainly at economists, but it is a vital basic assumption that nobody discusses. Unfortunately the relevant scientific literature is clear: complex systems are not reversible and an economy like Greece is clearly a complex system.
    b) Even if we try to reverse something then we must take into effect the transient effects of the effort. I will try and explain this with an example: We have an airplane flying at 4000 m. We want to move it to 5000 m. however during the maneuver the plane has certain limitations, the most important of which is the maximum rate of ascent.If we try to go faster we will have the so called stall (wing stops functioning and there is no lift), a transient effect and the plane will crash. Similar with engineering
    changes in countries. When we talk about going back to the drachma, one way or another, we must explain how the transition will happen without side effects. The most important side effect is that banks will
    be closed for several months (8 at least) to avoid panic while the technical transition to the drachma takes place. Obviously this is a nonstarter.The transient effect of the closed banks will be equivalent to the plane crashing.
    c) All these discussions assume that Greece is a separate market from the rest of the Eurozone.Just because Greece has the trappings of a different country it does not make it a different market. The degree of integration is such that talking about Greece going, in any way, to the drachma is like talking about 1980's Carinthia leaving the shilling for some strange currency. There are several examples as to why this is so. The car example mentioned above is telling: yes, Greece was taxing heavily
    cars once upon a time, but for this to work now the cars with non-Greek numbers must be forbidden to operate in Greece, as they were forbidden back then.However, given the number of non-Greeks permanently
    (or semipermanently-in theory neither you nor your wife will be allowed to use your car in Greece in such a case) in the country and given that many non-Greek car numbers are nominally registered to companies, you must be willing to severe the connections with these companies, most of which are vital tothe Greek economy. If you try the drachma or some drachma like solution, then you will do a SYRIZA: you will discover that the underlining structures of the old, closed economy are gone and everybody
    will start screaming at you for different reasons,creating a cacophony that will force a retreat. continuing....

    1. ergodicity? I told-you-so-ism?

    2. Hmm, I wasn't aware of this comment but it is obvious:

      "but for this to work now the cars with non-Greek numbers "

      May I adress you slightly nationalistically, as a citizens of Athens and thus Greece?

      No doubt: If you have enough money you can do pretty much anything, without any rules applying to you. When did that change during the last century? When we started to fight wars (Western wars) for freedom?

      The rest are pipe dreams. Or aren't they? Did Syriza, based on the expertise of Yanis Varoufakis economic expertise offer a solution beyond this? Thus he doesn't have any egoistic impulses, and is only concerned for the larger US/European good?

      But if the US cannot introduce regulations concerning speculations, how would a divided Europe be ever able to? Not least after the UK may want to opt out? It seems the left wing of the Liberals is quite fond of Syrizas anti-Euro arguments. While the economic health forces that make a lot of money for all of our elites and a huge part of our respective publics for that matter, the speculators are simply on the look out for not so healthy influences on the larger public welfare? Is that what Yanis wants to tell me. And all would be good if there weren't these evil German oligopolistic structures?

      At least it seems - notice, I have no idea why but page 271 to 280, is missing in the linked document, or another bit of evidence of Germany's conspiracy against Europe:

      "The problem was that speculators, with George Soros the better known amongst them, could see that the currency pegs of the ERM/EMS were unsustainable given the pressures on the balance of payments of Germany’s European partners. So they bet massively against it, until the EMS broke down. At that point the Bundesbank understood that nothing short of a currency union will allow it to see its grand plan through. It was a gamble. And it came with a sizeable psychological cost, given the voluntary abandonment of the DM. But it was deemed essential given the greater ‘good’ to be had from turning the RoE into the economic zone onto which Germany’s shifted the burden of its adjustment, thus allowing German oligopolistic multinationals to maintain ad infinitum their net exports (of goods and production units) to the rest of the world."

      Look, I am not interested in Soros, specially, other then his more recent ideas about how Europe could sponsor the Ukraine.

      Thus, I would be interested in a bigger macroeconomic thesis by "leftist" Yanis Varoufakis concerning Greece.

      And notice, I am quite open to Germany's new "economical guilt", but I would also like to understand it better then I do. Or for that matter Yanis ever explained to me.

      Notice also, I have not much expertise in economics. So far I thought there is nothing unusual about an alliance between banks and firms or business. Thus I would love to understand what Halevi is trying to tell us. (some parts of his article are missing in the link - page 271-282, if I recall correctly)

    3. Athens, if you allow me to leave out the dog,

      What is wrong about the story circulating here in Germany. Apparently the once social democrat mayor of Munich,

      owns a house in Greece. He went to the Greek municipalities to pay something he is used to over here, a tax connected to this type of ownership. After all you may have water there, or streets leading there and so on.

      We are told he was sent back, and we are also told in his desire to be legally on the sure side he needed to hire a lawyer to be taxed at all?

      Is this a manipulative fairytale for us Germans? So we do not notice to what extend we are guilty for the Greek dilemma?

  7. One final point: up to about 10:30 this morning I was convinced that the latest memorandum was a case of choosing the temporarily bad over the infinitelly worse.At about 10:30 I had a phone call with my brother, a "farmer" in Kalamata. The man essentially spends his portion of the family money and pretends to produce olive oil. My brother and many others like him essentially produce very little to nothing and expect the political system to pay for everything, except pocket money, in exchange for votes. Up to now they paid practically no taxes and no social security contributions and their sales were exempt from VAT. Now they must pay as much as me and my brother is furious, describing a situation of near revolt among his fellow farmers. Good. It means that the farmers, for most of whom the only object in life was to pretend to be potentates at the village coffee house (the essential characteristic of the Greek
    village potentate is to spent time relaxing with someone else footing the bill) must now get off their asses and do some meaningful work.

    1. "The man essentially spends his portion of the family money and pretends to produce olive oil. "

      Ok there is quite possibly another German fairytale that may be connected to the story of your brother.

      There is a Greek expat living here in Germany, if I recall he is working as journalist in Hamburg, and for several years now he intends to move new olive presses to Greece, he has a Greek associate for this enterprise. It feels your brother could cooperate with these guys.

      But apparently he had no chance at all to get Greek allowances for this start up. Now I check. Ok I guess that may be him. Or on first sight I can't get closer. But he looked into the market, and there are indeed some curiosities from my limited perspective.

    2. No, its no fairytale, I contacted Michalis Pantelouris, it is almost as I remember it. Already for three years Pantelouris tried to found a firm in Greece with a very special type of olive oil mills For whatever bureaucratic reasons he didn't succeed. But apparently he also works with and buys olives in Greece, Spain and Italy.

      Pantelouris originally worked as a journalist. He was offered a job by the owner of Artefact while researching a story. Here is a bit about the olive oil firm he works for, the process, their idea:

      Seems they also are interested in longterm relationships with olive farmeres. And apparently still interested in making it possible to produce it themselves down there.

      The passage where he talks about the three years he started to found a business in Greece starts around 40 min into the video.
      But of course it is in German. Pantelouris holds both a Greek and a German passport, his father is Greek, his mother German. I am sure his Greek is perfect, but he grew in Hamburg.

      One has to scroll down for the video on the page of the talkshow, 40 minutes in he talks about his efforts to start the business in Greece.,griechenland622.html

    3. Thank you for the information.

      Hopefully i can gain some ideas with this company to see if i can export in the future.


    4. I would assume you are cynic, are you? Should I have paid more attention on your not-my-brothers-keeper element? Or was your brother faked? Are you an agent playing the Greek, but your intend is to show they are all lazy?

      Admittedly I am a bit puzzled about what is going on from what I I observe on the olive oil market for much longer now. Maybe that's why Michalis caught my attention. And I would assume that the only way out of dilemmas in that as I encounter it in the supermarket is, to work on whatever type of direct marketing tools. Or consider the chances in a field your brother (fake brother?) may like, an "individualist" strategy. Some chease-makers from Switzerland do this for a long time. I doubt your brother or his friends can fight the larger market, or the giants that try to take over via respective upsellers. Really "cheap" olive oil has been relegated to the lower layers that buyers don't pay attention to, as supermarket design wisdom goes, for much longer now. At least over here in Germany.

      Thus there may be something going on on the olive oil market, and if you ask me for longer now. In Germany that would mean as farmer you have to deal with one way or another concerning the German market--last time I reflected on it it were-- four giants, which of course tend to be able to dictate prices to their customers. But maybe in the olive oil market not to the extend they would want to, or alternatively they may indeed have started to listen. Who knows???

      The next question would be - European regulations in the wider agrarian field and olive groves. ... Did Greece always need a protection in this context, since the economical powers don't have any farmers with olive groves?

    5. sorry, "cheese" with was spelled "chease". I get really bad in spelling once emotions enter the scene.

      I do have struggles with my own brother, but I would never, never ever disown him the way you do here.

    6. I didn't want to play into Yanis Faroufakis hands, by missing a comma here. Fact is, Germany has no olive trees, but consumers more and more love olive oil. I do.

      "deal with one way or another, (OK, maybe it is much better to put a point here, but I am really bad with the mental shift between English and German commas too) Concerning the German market--last time I reflected on it it were-- four giants, which of course tend to be able to dictate prices to their custom.

      Does that play into Yanis mercantile theory, in other words the evil German market force. I do not really care.

      Besides I rarely care about anyone's theories. And to the extend I understood I could declare myself as a follower of the "doctrine of ergodictity", at least it seemed to target something essential, never mind what nationality, but it may well be.

      It's no doubt the most interesting neologism I have encountered for a long while.

  8. Like it or lump it, there is a perception that Greece is a serial breaker of rules - agitating for something that further challenges the rules won't fly

    Why not agitate for something that won't challenge the rules, such as the UK Enterprise Zones.

    One thing I learnt from decades of negotiating contracts (selling and buying) in the private and public sectors is that you'll get a lot more respect from the other side of the table if you establish what the boundaries are up front and negotiate within them.

    I once favoured a GrEMUexit, but I've now changed my mind - its either a GrEUexit (probably too hard, too dangerous, and too painful for most people) or remaining in the EU and EZ.

    I don't have much time for Syriza or T&V, but the economies of Germany, New Zealand and Australia were turned around by centre-left governments, so if, maybe... Interestingly NZ and Aus reshaped their economies at the same time as Thatcher was re-engineering the UK. It could be argued that Lange, Hawke, and Keating invented 'the third way', long before Blair, Brown, Clinton and Schroeder were running their respective countries.


  9. Addenda: oops - I forgot Roger Douglas, who was Lange's Treasurer (FinMin). Here's an essay from him ==>> '9. Entrenching ‘Rogernomics’ in New Zealand.

    The collection - Delivering Policy Reform - can be downloaded for free, most of it is very readable.

    One observation I would make of the modern day Europe is its myopia, it rarely looks beyond the Atlantic basin for ideas and lessons to be learnt.


  10. Here is a question?
    Greece has 28% unemployment. Greek has a shadow economy of 30%.
    Who is working in the shadow economy ?

    1. Well this is another issue. Actually you need to study what is considered as unemployment. Before austerity one was considered unemployeed if you worked less than 12 hours a week. As so the real umployment figures did not sky rocket during the austerity period, the government adjusted this to a lower figure. I think 6 or 8 hours a week on annual average.

      If you consider the old figure + the 250,000 greeks who have left the country unemployment would be close to 40%. But having such a figure would trigger a revolution.

      Realistically? the current 28% of unemployed? Yes it is plasmatic as there is a large black market of labor. I know many people who work off the books. In the black market though you may not pay taxes but you have no benifits or insurance. You also get slave wages. So if you are construction worker you are at high risk if you get injured.

      Governement can not control this as it actually needs to send out people to find people "not on the books." I do not know if they do not go out to check purposely or just can not. I believe if they did go out and caught employeers, based on the penalties they would close and closing companies will further send us into more economical turmoil.

      The general problem in the market for me, the free market, is the tax collection. If you enforce tax collection at the transaction, it forces all businesses to on the books. If you generate a healthy business economy then you go after the black market. This can only be done by enforcing plastic transactions.

      For me unemployment i figure is around 18-20%. Maybe less if you consider part time black market work.

      Where do you think alot of the refugees we have go? Fields and factories.


  11. It is brilliant idea,and of course an internal devaluation.

    At teh moment an internal devalutaion is achieved through deflationary policies. That has caused massive damage to the Greek economy, leading to 26% unemployment.

    Import taxes would of course have an opposite effect, as import substitution could be achieved.

    I think a general import tax on all goods would be preferable and easier to implement. A supplementary Car Tax could still be proposed, if that was needed.

    An alternative might be simple taxes on money being sent abroad. So all money leaving the country via the banking system could have a 10% transaction tax on it. It would not be against trade tariffs or Gatt rules, but would have the same effect.

  12. @ theAthensdog
    Your olive farming brother is partly a result of disconnecting CAP money from produce harvested, and base it only on area cultivated. It is not difficult to claim that an olive groove is being cultivated.

  13. Hi All,

    I was having a discussion today with some colleagues and we were discussing privatizations. How it would be good. Well i have commended one privatization which the Greeks Athens Airport.

    I was flabbergasted when i found out that the owner of the airport, Hochtief, has not paid any taxes or insurance for the last decade. They have run arrears up to 1 billion euro and has been in the courts for this whole time.

    If privatizations are to occur under such circumstances then what is the point? Unfortunately, there is no english link mentioning this but many greek only. I wonder why.

    If anybody has any information as to shed some light on this matter please submit a reply and link.



    1. IMHO the privatisation of public infrastructure can only work with good controls and checks. It can help to tear up sluggish, ineficient and corrupt public service structures, but without controls it will easily be replaced by corrupt private structures.
      And the mixture of public and private structures, like PPP (public-private partnership) often combines the worst of both worlds. Even in efficience-driven Germany I know much more failed PPP-projects than succesful ones.
      Regarding Hochtief: It was not yet in the big German media, I only found an German article in this quite small blog about Greece:
      And, to enrage you even more, I found this Spiegel-article from 2011, were Hochtie and Siemens (Yeah, this Siemens) complained about bills not paid by Greek state:

    2. Hi Roger,

      I found some new information on the greek airport and Hochtief. There are some court battles but itis not for the sums depicted in Greek Sites. I guess it is disinformation from greek blogs.

      I will post the links a friend fowared to me on Monday. One link is a press release from the greek international airport website. And it states that they have paid in full everything to date. And that Hochtief is a seperate issue.

      Have good weekend. We are boiling down here at 35-40 degrees.



  14. One of quite few essays, that claim with a quite coherent logic, that the Greek deal will work.

    I can follow its claims that for the EuroZone major construction mistakes have been made, but that they are reparable (and the main reparations already are achieved) - and that you shall never underestimate the adapting ability of capitalism.
    I like the references to comparably bad suited currency-areas of Italy and the United States in the 19th century, that also did not result in break ups.

    As well I can follow this dry evaluation of political realities:

    So I would propose again to Greeks: Impose the nessecary reforms to rebuild Greece, try to swallow and forget the suffered humiliation, take care of a balanced budget and don't worry too much about about the old debts as these finally should be the least problem for Greece. Interest and/or debt reductions will follow by the time.

    I would be glad if Greece can go and succeed this way.

    1. Dearest Roger,

      Thank you for your comment. And the article posted. I have been reading many such articles as of late and see a new calm both internally and externally from all the political and troika positions. I only hope that this is not a the calm before yet another storm.

      But the history of austerity has proven what it has done and also the tactics of what the above article economist states. That missing budget targets will be over looked. Troika in that aspect in the up to now 2 bailouts has shown no mercy in such cases. Everytime a budget missed more measures anti growth measures where implaced.

      As for the privatizations as i have expressed i am all for it but if you read my previous comment, if the big companies that do buy our pblic companies are just as bad tax dodgers as the incompitence of public managment, i see no end to the gernal peoples suffering. A big fault ofcourse is the government which can not force the hand as to collect taxes. Ad is why i hope and believe that (SDOE) greek tax authority is sperated from the government as to do their job with the proper legal backing. I wish this happens because some of the richest people in greece right now are former taxt authorities. I know one of them and it makes me puke. I beleive tax dodgers of the past are protected by these former tax authority people and have buried old files. If they are dug up many people both private and publc will be burned. So it is quite difficult for the government even a clean new government can enforce. It is why seperating the tax office authority a priority. Sometimes i wish we had the IRS here in Greece. You simply do not fck with them. The dodgers and the tax authorities need to be brought to justice and pay for their crimes.

      I understand also the pension requests that they are unsustainable. Ask a pensioner in greece how he will live on 450 euros a month. We will do it most probably and enforce this but many people will indeed starve. The system is also ailing because of unemployment. If the black market was of labor was minimized and more people worked such pension reductions would not be necessary or at least not so harsh.

      As for the labor market. I am unsure what is being requested in detail nor where it will end. But if it is based on American model where after working for 10 years somewhere you are given a one week salary and you are on the road, this is quite not fair.

      Changes will happens and Tsipras has come out of his coccon and now he is becoming a butterfly. it is eveident everyday that goes by. I also believe all will be enforced regardless of the skeptics. The whole greek political landscape of the past has completely capitulated. They have no choice and the people know this as well. Lets see how this goes, but i only hope that in 1-2 years down the line if a 4th program is needed you are not scorning the greek people, even if the program is met.

      A few days ago i posted the next steps of what will happen. So far i am on target with my forecast. Hopefully come oct/nov after the election win of Tsipras, the Ellinikos property, and the peripheral airports, bid winners will be allowed to proceed to the full privatizations. Meanwhile, off the record 3-4 islands have already been sold. Johnny Depp is confirmed, Brad Pitt and Wife another, Warren Buffet unconfirmed and some arab prince also unconfirmed.


    2. Dear V,
      Article: Yes, a success is anything but shure. The reason to show the article was, that it is one of really few who show a positive perspective with a strong logic.
      Austerity: Hmm, I dont understand the meaning of this word when at the same time a treatment is prepared with 80 Billion € for Greece.
      IMHO austerity means NO new, foreign money, not 80 Billion € new money. And Europe was the only source for Greece to get new money as no one else made offers. So IMHO Europe was the only chance for Greece to AVOID real austerity, real "living by its means". It angers me if someone gives money and is scolded as thanks. (Even if I have huge problems with other parts of the agreement).
      Forecast: I am still impressed how good your forecast worked, at least regarding the Greek side.

      I hope the reforms will also help to make the daily life more cheap for Greeks. Today I read the questions why in Germany 3/4 of all sold medical drugs are (cheap) Generica, while in Greece 95% are (expensice) original drugs. (
      Why is food in Greece more expensive than in Germany or eastern Europe, why are houses and flats and the rents for it that expensive? And how can this get changed?
      Lowering daily costs should be as helpful to fight poverty as increasing incomes, but it costs much less.

    3. Hi Roger,

      I was going to wait till Monday, but i just got on to express the truth of Austerity hitting home less then a few days after the newly voted laws.

      My wifes grandmother, mother of three, working legally in odd jobs for 40+ years husband died of cancer 10 years before she went into retirement. Built a small house in Evia and mainly worked as a cleaning lady in the homes of well off. We saw her today as to visit her and did not speak. Only tears came down her cheek. She mustarded to say, No EKAS. (Subsidy pension). The subsidy has been stopped. She worked all of here life like a dog to earn now 320 euro a month. (Good Job Paul Thompson, Mission Achieved)

      I am not posting this as to express a sad story but only to express some truths that the majority of the people feeling the austerity are the poor. (Tomorrow i will also post you a nice site i found which compares countries incost of living) I tried to confort her by informing her that she is entitled to the food welfare card of another 120 euro a month, but i felt it was the wrong thing to say after saying it. She gazed at me as if she was saying, I am no beggar of food. I felt like an ass.

      I am a bit sad, but Roger, but i would like to express my gratitude to you. You are someone on the "other side" who is writing here and trying to learn the truths and the falses about this crisis when you could easily just "right this off" and say i simply don't care goon with your life without caring. Just writing here shows the opposite.

      If there are other people like you out there maybe some message of what is really going on Greece might get out.

      As for my grandmother, well she is lucky she has children and grandchildren who can support her unlike many others her age. I couldn't sleep last night and some weird thoughts came to me. I remembered speaking with my grandfather back in the 90's when he found the courage to open up to me about WW2, what I remembered distinctly from his words was every family in greece mourns many casualities of the war. I can't help but feel like i am living in a new type of war, where many families will feel the pains and angioushes of war. Unemployment, suicides, deaths from stress, loss of pride and integrity.

      I will get back on other issues tomorrow.

      Thank You Roger for talking with me here and exchanging information it helps me cope and try to give hope that the dark days will one day end.


    4. Sounds ugly. Ugly and unjust.
      I feel sorry for your steep-grandma. And all others with similar experiences.

      I fear that any further answer will be wrong.

      But I will try it anyhow.

      In Germany we have a lot of political discussions about pensions as well. The common impression is "The future pensions is not safe (at this level) as we the money for pensions has to be earned by the working people." But this is lament on a high level.

      I suppose there are three questions central in a society: (1) Are the people earning enough beeing able to pay money and help for weak? (2) Are they paying taxes and pension payments or do they prefer to hide it? (3) Is the society distributing its earnings in a fair and efficient manner so even the weakest get their fair and necessary part?

      Germans discussion about Greece preer to concentrate on failings in the second and third question. I suppose many Greeks mainly claim failings in the first question, calling it the unjustice of austerity but thinking less on the many other restrictions that slowdown the greek economy.

      Both positions are onesided. They help more to increase prejudices than help the weak.

      I contradicted your word that Europe imposed austerity. Europe offered to pay 80 Billion for the next three years, but for harsh terms. OK, perhaps only 30 Billions for Greece after "credit games". That are still 1.000 € for EACH Greek and year, that come additionally to the Greek budget from own taxes and so on.
      So as I understand it, Greece should have more than enough money to help its weakest people. At least if it organizes a fair and solidaric contribution and it repairs its own systematic money traps like corruption, inefficiency and so on.

  15. It may not be relevant to this post but certainly to the situation. Klaus, can you cast some light on the Greek bank deposit insurance scheme? In a simple way?
    There is wide spread trust in the population that deposits up to EUR 100.000 are covered by the EU or EZ, that has also been touted by Greek politicians lately. It is my impression that to have it is an EU rule, but the form and establishment is a national matter. I'm familiar with some of the EU countries combinations of the coverages (interbank, independent institutions, re-insurance, national central bank, government). If I try to check Greece (Wikipedia) I find that contrary to other European countries there is no deposit insurance organization. Do I take it that the Greek government is the only back stop, or has the ECB Banking Supervision taken over that role?

    1. I think this issue is still wishy-washy until the Banking Union fully falls in place except that even then the insurance fund will be minute and build up only after years. I believe the 100.000 limit is still very much of a national issue. Under the new EU laws which Greece has just installed into domestic legislation (but still not effective), deposits up to 100.000 will be exempt from any bail-in's.

  16. Meet the Goldman Sachs bankster who set up the costly tricks for getting Greece into the euro. She got richly rewarded by GS.

  17. I've never understood why something such as this A better deal for Greece is possible hasn't been in place since 2010. Surely it would been much easier then than now. Was such a thing ever discussed. I know some elements have been discussed here - but maybe not the conditionalities - is that an EU word? :)

    OT : The international mainstream media rarely mentions the influx of refugees into Greece (1,500 this weekend). I hear a lot about the influx into Italy on BBC, NPR, CNN, AJ etc but much less about the influx into Greece. I would not be surprised if the influx on a per capita basis is higher Greece than in Italy.