The US has a housing problem because there aren't jobs left that pay enough for folks to buy those houses.
There is hardly any industry left, how much of their economy is based on weapons and war?
Greece given world's lowest credit rating
- Thread starter danmand
- Start date
There is hardly any industry left, how much of their economy is based on weapons and war?
This is false. Employment in the US is still at much higher levels than in most European countries, and salaries are relatively higher than elsewhere in the world too.
The problems in the US are financial in nature. There's a lot of debt, and it's painful to unwind it. It grew because of stupid deregulation of the financial industry, leading to aggressive and risky behavior that eventually exploded into a debt crisis that should have been entirely preventable. The US, like many countries, is also facing growing entitlements in the areas of pensions and healthcare. However, unlike other countries, for the US there is a light at the end of the entitlements tunnel: The US population is not actually aging, the US is one of the few Western democracies where the birth rate is high enough to grow the population into the long run.
This is primarily due to the birth rate in the hispanic population, but it's a true fact nonetheless--the US will remain a young country, perhaps more of a hispanic country, but young nonetheless, while other countries age, and suffer the problems of aging populations.
Europe on the other hand is suffering under structural problems that will not simply work themselves out over time. Europe, especially places like Greece and Spain, suffer under incredibly high levels of structural unemployment, with no relief in sight, and no apparent political will to face the problems that cause it.
'Germany Was Biggest Debt Transgressor of 20th Century'
http://www.spiegel.de/international/germany/0,1518,769703,00.html
Think Greece's current economic malaise is the worst ever experienced in Europe? Think again. Germany, economic historian Albrecht Ritschl argues in a SPIEGEL ONLINE interview, has been the worst debtor nation of the past century. He warns the country should take a more chaste approach in the euro crisis or it could face renewed demands for World War II reparations.
SPIEGEL ONLINE: Mr. Ritschl, Germany is coming across like a know-it-all in the debate over aid for Greece. Berlin is intransigent and is demanding obedience from Athens. Is this attitude justified?
Ritschl: No, there is no basis for it.
SPIEGEL ONLINE: Most Germans would likely disagree.
Ritschl: That may be, but during the 20th century, Germany was responsible for what were the biggest national bankruptcies in recent history. It is only thanks to the United States, which sacrificed vast amounts of money after both World War I and World War II, that Germany is financially stable today and holds the status of Europe's headmaster. That fact, unfortunately, often seems to be forgotten.
SPIEGEL ONLINE: What happened back then exactly?
Ritschl: From 1924 to 1929, the Weimar Republic lived on credit and even borrowed the money it needed for its World War I reparations payments from America. This credit pyramid collapsed during the economic crisis of 1931. The money was gone, the damage to the United States enormous, the effect on the global economy devastating.
SPIEGEL ONLINE: The situation after World War II was similar.
Ritschl: But right afterwards, America immediately took steps to ensure there wouldn't be a repeat of high reparations demands made on Germany. With only a few exceptions, all such demands were put on the backburner until Germany's future reunification. For Germany, that was a life-saving gesture, and it was the actual financial basis of the Wirtschaftswunder, or economic miracle (that began in the 1950s). But it also meant that the victims of the German occupation in Europe also had to forgo reparations, including the Greeks.
SPIEGEL ONLINE: In the current crisis, Greece was initially pledged €110 billion from the euro-zone and the International Monetary Fund. Now a further rescue package of similar dimensions has become necessary. How big were Germany's previous defaults?
Ritschl: Measured in each case against the economic performance of the USA, the German debt default in the 1930s alone was as significant as the costs of the 2008 financial crisis. Compared to that default, today's Greek payment problems are actually insignificant.
SPIEGEL ONLINE: If there was a list of the worst global bankruptcies in history, where would Germany rank?
Ritschl: Germany is king when it comes to debt. Calculated based on the amount of losses compared to economic performance, Germany was the biggest debt transgressor of the 20th century.
SPIEGEL ONLINE: Greece can't compare?
Ritschl: No, the country has played a minor role. It is only the contagion danger for other euro-zone countries that is the problem.
SPIEGEL ONLINE: The Germany of today is considered the embodiment of stability. How many times has Germany become insolvent in the past?
Ritschl: That depends on how you do the math. During the past century alone, though, at least three times. After the first default during the 1930s, the US gave Germany a "haircut" in 1953, reducing its debt problem to practically nothing. Germany has been in a very good position ever since, even as other Europeans were forced to endure the burdens of World War II and the consequences of the German occupation. Germany even had a period of non-payment in 1990.
SPIEGEL ONLINE: Really? A default?
Ritschl: Yes, then-Chancellor Helmut Kohl refused at the time to implement changes to the London Agreement on German External Debts of 1953. Under the terms of the agreement, in the event of a reunification, the issue of German reparations payments from World War II would be newly regulated. The only demand made was that a small remaining sum be paid, but we're talking about minimal sums here. With the exception of compensation paid out to forced laborers, Germany did not pay any reparations after 1990 -- and neither did it pay off the loans and occupation costs it pressed out of the countries it had occupied during World War II. Not to the Greeks, either.
SPIEGEL ONLINE: Unlike in 1953, the current debate in Germany over the rescue of Greece is concerned not so much with a "haircut", but rather an extension of the maturities of government bonds, i.e. a "soft debt restructuring." Can one therefore even speak of an impending bankruptcy?
Ritschl: Absolutely. Even if a country is not 100 percent out of money, it could still be broke. Just like in the case of Germany in the 1950s, it is illusory to think that Greeks would ever pay off their debts alone. Those who are unable to do that are considered to be flat broke. It is now necessary to determine how high the failure rate of government bonds is, and how much money the country's creditors must sacrifice. It's above all a matter of finding the paymaster.
SPIEGEL ONLINE: The biggest paymaster would surely be Germany.
Ritschl: That's what it looks like, but we were also extremely reckless -- and our export industry has thrived on orders. The anti-Greek sentiment that is widespread in many German media outlets is highly dangerous. And we are sitting in a glass house: Germany's resurgence has only been possible through waiving extensive debt payments and stopping reparations to its World War II victims.
SPIEGEL ONLINE: You're saying that Germany should back down?
Ritschl: In the 20th century, Germany started two world wars, the second of which was conducted as a war of annihilation and extermination, and subsequently its enemies waived its reparations payments completely or to a considerable extent. No one in Greece has forgotten that Germany owes its economic prosperity to the grace of other nations.
SPIEGEL ONLINE: What do you mean by that?
Ritschl: The Greeks are very well aware of the antagonistic articles in the German media. If the mood in the country turns, old claims for reparations could be raised, from other European nations as well. And if Germany ever had to honor them, we would all be taken the cleaners. Compared with that, we can be grateful that Greece is being indulgently reorganized at our expense. If we follow public opinion here with its cheap propaganda and not wanting to pay, then eventually the old bills will be presented again.
SPIEGEL ONLINE: Looking at history, what would be the best solution for Greece -- and for Germany?
Ritschl: The German bankruptcies in the last century show that the sensible thing to do now would be to have a real reduction of the debt. Anyone who has lent money to Greece would then have to give up a considerable part of what they were owed. Some banks would not be able to cope with that, so there would have to be new aid programs. For Germany, this could be expensive, but we will have to pay either way. At least Greece would then have the chance to start over.
Interview conducted by Yasmin El-Sharif
http://www.spiegel.de/international/germany/0,1518,769703,00.html
Think Greece's current economic malaise is the worst ever experienced in Europe? Think again. Germany, economic historian Albrecht Ritschl argues in a SPIEGEL ONLINE interview, has been the worst debtor nation of the past century. He warns the country should take a more chaste approach in the euro crisis or it could face renewed demands for World War II reparations.
SPIEGEL ONLINE: Mr. Ritschl, Germany is coming across like a know-it-all in the debate over aid for Greece. Berlin is intransigent and is demanding obedience from Athens. Is this attitude justified?
Ritschl: No, there is no basis for it.
SPIEGEL ONLINE: Most Germans would likely disagree.
Ritschl: That may be, but during the 20th century, Germany was responsible for what were the biggest national bankruptcies in recent history. It is only thanks to the United States, which sacrificed vast amounts of money after both World War I and World War II, that Germany is financially stable today and holds the status of Europe's headmaster. That fact, unfortunately, often seems to be forgotten.
SPIEGEL ONLINE: What happened back then exactly?
Ritschl: From 1924 to 1929, the Weimar Republic lived on credit and even borrowed the money it needed for its World War I reparations payments from America. This credit pyramid collapsed during the economic crisis of 1931. The money was gone, the damage to the United States enormous, the effect on the global economy devastating.
SPIEGEL ONLINE: The situation after World War II was similar.
Ritschl: But right afterwards, America immediately took steps to ensure there wouldn't be a repeat of high reparations demands made on Germany. With only a few exceptions, all such demands were put on the backburner until Germany's future reunification. For Germany, that was a life-saving gesture, and it was the actual financial basis of the Wirtschaftswunder, or economic miracle (that began in the 1950s). But it also meant that the victims of the German occupation in Europe also had to forgo reparations, including the Greeks.
SPIEGEL ONLINE: In the current crisis, Greece was initially pledged €110 billion from the euro-zone and the International Monetary Fund. Now a further rescue package of similar dimensions has become necessary. How big were Germany's previous defaults?
Ritschl: Measured in each case against the economic performance of the USA, the German debt default in the 1930s alone was as significant as the costs of the 2008 financial crisis. Compared to that default, today's Greek payment problems are actually insignificant.
SPIEGEL ONLINE: If there was a list of the worst global bankruptcies in history, where would Germany rank?
Ritschl: Germany is king when it comes to debt. Calculated based on the amount of losses compared to economic performance, Germany was the biggest debt transgressor of the 20th century.
SPIEGEL ONLINE: Greece can't compare?
Ritschl: No, the country has played a minor role. It is only the contagion danger for other euro-zone countries that is the problem.
SPIEGEL ONLINE: The Germany of today is considered the embodiment of stability. How many times has Germany become insolvent in the past?
Ritschl: That depends on how you do the math. During the past century alone, though, at least three times. After the first default during the 1930s, the US gave Germany a "haircut" in 1953, reducing its debt problem to practically nothing. Germany has been in a very good position ever since, even as other Europeans were forced to endure the burdens of World War II and the consequences of the German occupation. Germany even had a period of non-payment in 1990.
SPIEGEL ONLINE: Really? A default?
Ritschl: Yes, then-Chancellor Helmut Kohl refused at the time to implement changes to the London Agreement on German External Debts of 1953. Under the terms of the agreement, in the event of a reunification, the issue of German reparations payments from World War II would be newly regulated. The only demand made was that a small remaining sum be paid, but we're talking about minimal sums here. With the exception of compensation paid out to forced laborers, Germany did not pay any reparations after 1990 -- and neither did it pay off the loans and occupation costs it pressed out of the countries it had occupied during World War II. Not to the Greeks, either.
SPIEGEL ONLINE: Unlike in 1953, the current debate in Germany over the rescue of Greece is concerned not so much with a "haircut", but rather an extension of the maturities of government bonds, i.e. a "soft debt restructuring." Can one therefore even speak of an impending bankruptcy?
Ritschl: Absolutely. Even if a country is not 100 percent out of money, it could still be broke. Just like in the case of Germany in the 1950s, it is illusory to think that Greeks would ever pay off their debts alone. Those who are unable to do that are considered to be flat broke. It is now necessary to determine how high the failure rate of government bonds is, and how much money the country's creditors must sacrifice. It's above all a matter of finding the paymaster.
SPIEGEL ONLINE: The biggest paymaster would surely be Germany.
Ritschl: That's what it looks like, but we were also extremely reckless -- and our export industry has thrived on orders. The anti-Greek sentiment that is widespread in many German media outlets is highly dangerous. And we are sitting in a glass house: Germany's resurgence has only been possible through waiving extensive debt payments and stopping reparations to its World War II victims.
SPIEGEL ONLINE: You're saying that Germany should back down?
Ritschl: In the 20th century, Germany started two world wars, the second of which was conducted as a war of annihilation and extermination, and subsequently its enemies waived its reparations payments completely or to a considerable extent. No one in Greece has forgotten that Germany owes its economic prosperity to the grace of other nations.
SPIEGEL ONLINE: What do you mean by that?
Ritschl: The Greeks are very well aware of the antagonistic articles in the German media. If the mood in the country turns, old claims for reparations could be raised, from other European nations as well. And if Germany ever had to honor them, we would all be taken the cleaners. Compared with that, we can be grateful that Greece is being indulgently reorganized at our expense. If we follow public opinion here with its cheap propaganda and not wanting to pay, then eventually the old bills will be presented again.
SPIEGEL ONLINE: Looking at history, what would be the best solution for Greece -- and for Germany?
Ritschl: The German bankruptcies in the last century show that the sensible thing to do now would be to have a real reduction of the debt. Anyone who has lent money to Greece would then have to give up a considerable part of what they were owed. Some banks would not be able to cope with that, so there would have to be new aid programs. For Germany, this could be expensive, but we will have to pay either way. At least Greece would then have the chance to start over.
Interview conducted by Yasmin El-Sharif
It's a little bit rich to go back to pre-war Germany and assert that its policies reflect on the modern German state.
The war reparations imposed on Germany after WW1 are also widely regarded as having been unfair and punitive. I'm not aware of anyone who thinks that any unfair and punitive debts have been piled onto Greece. Greece's democratically elected government willingly took on all of those debts, and nobody complained about it at the time when they were living high on the hog.
On the other hand I agree in part with the idea behind the article--that whatever happens to Greece, it should be with a view to creating a positive future. The Greeks fucked up badly, and it's tempting to be vindictive and say that they should go to hell, but the example of Germany in 1931 shows that this sort of punitive approach leads to future problems.
Greece is a real mess.
The war reparations imposed on Germany after WW1 are also widely regarded as having been unfair and punitive. I'm not aware of anyone who thinks that any unfair and punitive debts have been piled onto Greece. Greece's democratically elected government willingly took on all of those debts, and nobody complained about it at the time when they were living high on the hog.
On the other hand I agree in part with the idea behind the article--that whatever happens to Greece, it should be with a view to creating a positive future. The Greeks fucked up badly, and it's tempting to be vindictive and say that they should go to hell, but the example of Germany in 1931 shows that this sort of punitive approach leads to future problems.
Greece is a real mess.
Let's go back to Czarist Russia. I think some members of the Rockslinger family are still holding worthless Czarist Russian bonds.
Yes fuji, Greece is a real mess.
Still, an interesting and informative interview from an economic historian.
Sara
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..for everyone that wants to visit Greece and know better the ... most well-known Greek dishes are stuffed tomatoes, pastitsio, mousaka ... and Souvlaki !
It's all Good !!
Did you know that Cleopatra was a Greek woman ?
It's all Good !!
Did you know that Cleopatra was a Greek woman ?
Last edited:
Yup, she was a descendant of one of Alexander The Great's Greek generals who was granted Egypt as a reward for being a good general.
Did you know that Alexandria is named after Alexander the Great?
Hispanic roots run deep in the U.S. I wonder if it is possible that Hispanics were actually the majority in the early days of the Republic. Think Florida, Texas, New Mexico, California, etc.
The Big Fat Greek Gravy Train
http://www.dailymail.co.uk/news/art...ture-greed-tax-evasion-scandalous-waste.html#
Andrew Malone
25th June 2011
Even on a stiflingly hot summer's day, the Athens underground is
a pleasure. It is air-conditioned, with plasma screens to entertain
passengers relaxing in cool, cavernous departure halls - and the trains
even run on time.
There is another bonus for users of this state-of-the-art rapid transport
system: it is, in effect, free for the five million people of the Greek
capital.
With no barriers to prevent free entry or exit to this impressive tube
network, the good citizens of Athens are instead asked to 'validate'
their tickets at honesty machines before boarding. Few bother.
This is not surprising: fiddling on a Herculean scale — from the owner
of the smallest shop to the most powerful figures in business and politics
— has become as much a part of Greek life as ouzo and olives.
Indeed, as well as not paying for their metro tickets, the people of
Greece barely paid a penny of the underground’s £1.5 billion cost
— a ‘sweetener’ from Brussels (and, therefore, the UK taxpayer)
to help the country put on an impressive 2004 Olympics free of the
city’s notorious traffic jams.
The transport perks are not confined to the customers. Incredibly,
the average salary on Greece’s railways is £60,000, which includes
cleaners and track workers - treble the earnings of the average private
sector employee here.
The overground rail network is as big a racket as the EU-funded
underground. While its annual income is only £80 million from ticket
sales, the wage bill is more than £500m a year — prompting one Greek
politician to famously remark that it would be cheaper to put all the
commuters into private taxis.
‘We have a railroad company which is bankrupt beyond comprehension,’
says Stefans Manos, a former Greek finance minister. ‘And yet, there
isn’t a single private company in Greece with that kind of average
pay.’
Significantly, since entering Europe as part of an ill-fated dream by
politicians of creating a European super-state, the wage bill of the Greek
public sector has doubled in a decade. At the same time, perks and fiddles
reminiscent of Britain in the union-controlled 1970s have flourished.
Ridiculously, Greek pastry chefs, radio announcers, hairdressers and
masseurs in steam baths are among more than 600 professions allowed to
retire at 50 (with a state pension of 95 per cent of their last working
year’s earnings) — on account of the ‘arduous and perilous’
nature of their work.
This week, it was reported that every family in Britain could face a
£14,000 bill to pay for Greece’s self-inflicted financial crisis. Such
fears were denied yesterday after Brussels voted a massive new £100bn
rescue package which, it insisted, would not need a contribution from
Britain.
Even if this is true — and many British MPs have their doubts —
we will still have to stump up £1billion to the bailout through the
International Monetary Fund.
In return for this loan, European leaders want the Greeks’ free-spending
ways to end immediately if the country is to be prevented from
‘infecting’ the world’s financial system. Naturally, the Greek
people are not happy about this.
In Constitution Square this week, opposite the parliament, I witnessed
thousands gathering to campaign against government cuts designed to save
the country from bankruptcy.
After running battles with riot police, who used tear gas to disperse
protesters, thousands are still camped out in the square ahead of a
vote by Greek politicians next week on whether to accept Europe-imposed
austerity measures.
Yet these protesters should direct their anger closer to home — to
those Greeks who have for many years done their damndest to deny their
country the dues they owe it.
Take a short trip on the metro to the city’s cooler northern suburbs,
and you will find an enclave of staggering opulence.
Here, in the suburb of Kifissia, amid clean, tree-lined streets full
of designer boutiques and car showrooms selling luxury marques such as
Porsche and Ferrari, live some of the richest men and women in the world.
With its streets paved with marble, and dotted with charming parks and
cafes, this suburb is home to shipping tycoons such as Spiros Latsis,
a billionaire and friend of Prince Charles, as well as countless other
wealthy industrialists and politicians.
One of the reasons they are so rich is that rather than paying millions
in tax to the Greek state, as they rightfully should, many of these
residents are living entirely tax-free.
Along street after street of opulent mansions and villas, surrounded
by high walls and with their own pools, most of the millionaires living
here are, officially, virtually paupers.
How so? Simple: they are allowed to state their own earnings for tax
purposes, figures which are rarely challenged. And rich Greeks take
full advantage.
Astonishingly, only 5,000 people in a country of 12 million admit to
earning more than £90,000 a year — a salary that would not be enough
to buy a garden shed in Kifissia.
Yet studies have shown that more than 60,000 Greek homes each have
investments worth more than £1m, let alone unknown quantities in overseas
banks, prompting one economist to describe Greece as a ‘poor country
full of rich people’.
Manipulating a corrupt tax system, many of the residents simply say
that they earn below the basic tax threshold of around £10,000 a year,
even though they own boats, second homes on Greek islands and properties
overseas.
And, should the taxman rumble this common ruse, it can be dealt with
using a ‘fakelaki’ — an envelope stuffed with cash. There is even
a semi-official rate for bribes: passing a false tax return requires a
payment of up to 10,000 euros (the average Greek family is reckoned to
pay out £2,000 a year in fakelaki.)
Even more incredibly, Greek shipping magnates — the king of kings
among the wealthy of Kifissia — are automatically exempt from tax,
supposedly on account of the great benefits they bring the country.
Yet the shipyards are empty; once employing 15,000, they now have less
than 500 to service the once-mighty Greek shipping lines which, like
the rest of the country, are in terminal decline.
With Greek President George Papandreou calling for a crackdown on
these tax dodgers — who are believed to cost the economy as much as
£40bn a year — he is now resorting to bizarre means to identify the
cheats. After issuing warnings last year, government officials say he is
set to deploy helicopter snoopers, along with scrutiny of Google Earth
satellite pictures, to show who has a swimming pool in the northern
suburbs — an indicator, officials say, of the owner’s wealth.
Officially, just over 300 Kifissia residents admitted to having a
pool. The true figure is believed to be 20,000. There is even a boom in
sales of tarpaulins to cover pools and make them invisible to the aerial
tax inspectors.
‘The most popular and effective measure used by owners is to camouflage
their pool with a khaki military mesh to make it look like natural
undergrowth,’ says Vasilis Logothetis, director of a major swimming
pool construction company. ‘That way, neither helicopters nor Google
Earth can spot them.’
But faced with the threat of a crackdown, money is now pouring out of
the country into overseas tax havens such as Liechtenstein, the Bahamas
and Cyprus.
‘Other popular alternatives include setting up offshore companies in
Cyprus or the British Virgin Islands, or the purchase of real estate
abroad,’ says one doctor, who declares an income of less than £90,000
yet earns five times that amount.
There has also been a boom in London property purchases by Athens-based
Greeks in an attempt to hide their true worth from their domestic tax
authorities.
‘These anti-tax evasion measures by the government force us to resort
to even more detailed tax evasion ploys,’ admits Petros Iliopoulos,
a civil engineer.
Hotlines have been set up offering rewards for people who inform on tax
dodgers. Last month, to show the government is serious, it named and
shamed 68 high-earning doctors found guilty of tax evasion.
‘We will spare no effort to collect what is due to the state,’ said
Evangelos Venizelos, the new Greek finance minister of the socialist
ruling party. ‘We promise to draft and apply a new and honest tax
system, one that has been needed for decades, so that taxes are duly
paid by those who should pay.’
Yet, already, it is too late. Greece is effectively bust — relying on
EU cash from richer northern European countries, but this has been the
case ever since the country finally joined the euro in 2001.
Two years earlier, the country was barred from entering because it did
not meet the financial criteria.
No matter: the Greeks simply cooked the books. Two years later, having
falsely claimed to have met standards relating to manufacturing and
industrial production and low inflation, the Greeks were allowed in.
Funds poured into the country from across Europe and the Greeks started
spending like there was no tomorrow.
Money flowed into all areas of public life. As a result, for example, the
Greek school system is now an over-staffed shambles, employing four times
more teachers per pupil than Finland, the country with the highest-rated
education system in Europe. ‘But we still have to pay for tutors for
our two children,’ says Helena, an Athens mother. ‘The teachers are
hopeless — they seem to spend their time off sick.’
Although Brussels has now agreed to provide the next stage of its debt
payment programme to safeguard the count ry’s immediate economic
future, the Greek media still carries ominous warnings that the military
may be forced to step in should the country’s foray into Europe end
in ignominy, bankruptcy and rising violence.
For now, the crisis has simply been delayed. With European taxpayers
facing the prospect of saving Greece from bankruptcy for the second
year in a row, some say even the £100bn on offer will pay off only the
interest on the country’s debts — meaning it will be broke again
within two years.
Meanwhile, there are doom-laden warnings that the collapse of the Greek
economy could be the catalyst for another global recession.
Perhaps if the Greeks themselves had shown more willingness to tighten
their belts and pay taxes due to the state, voters across Europe might
not now be feeling such anger towards them.
But having strolled the streets of Kifissia, and watched the Greek hordes
stream past the honesty boxes on the underground, it does not take a
degree in European economics to know when somebody is taking advantage
— at our expense.
http://www.dailymail.co.uk/news/art...ture-greed-tax-evasion-scandalous-waste.html#
Andrew Malone
25th June 2011
Even on a stiflingly hot summer's day, the Athens underground is
a pleasure. It is air-conditioned, with plasma screens to entertain
passengers relaxing in cool, cavernous departure halls - and the trains
even run on time.
There is another bonus for users of this state-of-the-art rapid transport
system: it is, in effect, free for the five million people of the Greek
capital.
With no barriers to prevent free entry or exit to this impressive tube
network, the good citizens of Athens are instead asked to 'validate'
their tickets at honesty machines before boarding. Few bother.
This is not surprising: fiddling on a Herculean scale — from the owner
of the smallest shop to the most powerful figures in business and politics
— has become as much a part of Greek life as ouzo and olives.
Indeed, as well as not paying for their metro tickets, the people of
Greece barely paid a penny of the underground’s £1.5 billion cost
— a ‘sweetener’ from Brussels (and, therefore, the UK taxpayer)
to help the country put on an impressive 2004 Olympics free of the
city’s notorious traffic jams.
The transport perks are not confined to the customers. Incredibly,
the average salary on Greece’s railways is £60,000, which includes
cleaners and track workers - treble the earnings of the average private
sector employee here.
The overground rail network is as big a racket as the EU-funded
underground. While its annual income is only £80 million from ticket
sales, the wage bill is more than £500m a year — prompting one Greek
politician to famously remark that it would be cheaper to put all the
commuters into private taxis.
‘We have a railroad company which is bankrupt beyond comprehension,’
says Stefans Manos, a former Greek finance minister. ‘And yet, there
isn’t a single private company in Greece with that kind of average
pay.’
Significantly, since entering Europe as part of an ill-fated dream by
politicians of creating a European super-state, the wage bill of the Greek
public sector has doubled in a decade. At the same time, perks and fiddles
reminiscent of Britain in the union-controlled 1970s have flourished.
Ridiculously, Greek pastry chefs, radio announcers, hairdressers and
masseurs in steam baths are among more than 600 professions allowed to
retire at 50 (with a state pension of 95 per cent of their last working
year’s earnings) — on account of the ‘arduous and perilous’
nature of their work.
This week, it was reported that every family in Britain could face a
£14,000 bill to pay for Greece’s self-inflicted financial crisis. Such
fears were denied yesterday after Brussels voted a massive new £100bn
rescue package which, it insisted, would not need a contribution from
Britain.
Even if this is true — and many British MPs have their doubts —
we will still have to stump up £1billion to the bailout through the
International Monetary Fund.
In return for this loan, European leaders want the Greeks’ free-spending
ways to end immediately if the country is to be prevented from
‘infecting’ the world’s financial system. Naturally, the Greek
people are not happy about this.
In Constitution Square this week, opposite the parliament, I witnessed
thousands gathering to campaign against government cuts designed to save
the country from bankruptcy.
After running battles with riot police, who used tear gas to disperse
protesters, thousands are still camped out in the square ahead of a
vote by Greek politicians next week on whether to accept Europe-imposed
austerity measures.
Yet these protesters should direct their anger closer to home — to
those Greeks who have for many years done their damndest to deny their
country the dues they owe it.
Take a short trip on the metro to the city’s cooler northern suburbs,
and you will find an enclave of staggering opulence.
Here, in the suburb of Kifissia, amid clean, tree-lined streets full
of designer boutiques and car showrooms selling luxury marques such as
Porsche and Ferrari, live some of the richest men and women in the world.
With its streets paved with marble, and dotted with charming parks and
cafes, this suburb is home to shipping tycoons such as Spiros Latsis,
a billionaire and friend of Prince Charles, as well as countless other
wealthy industrialists and politicians.
One of the reasons they are so rich is that rather than paying millions
in tax to the Greek state, as they rightfully should, many of these
residents are living entirely tax-free.
Along street after street of opulent mansions and villas, surrounded
by high walls and with their own pools, most of the millionaires living
here are, officially, virtually paupers.
How so? Simple: they are allowed to state their own earnings for tax
purposes, figures which are rarely challenged. And rich Greeks take
full advantage.
Astonishingly, only 5,000 people in a country of 12 million admit to
earning more than £90,000 a year — a salary that would not be enough
to buy a garden shed in Kifissia.
Yet studies have shown that more than 60,000 Greek homes each have
investments worth more than £1m, let alone unknown quantities in overseas
banks, prompting one economist to describe Greece as a ‘poor country
full of rich people’.
Manipulating a corrupt tax system, many of the residents simply say
that they earn below the basic tax threshold of around £10,000 a year,
even though they own boats, second homes on Greek islands and properties
overseas.
And, should the taxman rumble this common ruse, it can be dealt with
using a ‘fakelaki’ — an envelope stuffed with cash. There is even
a semi-official rate for bribes: passing a false tax return requires a
payment of up to 10,000 euros (the average Greek family is reckoned to
pay out £2,000 a year in fakelaki.)
Even more incredibly, Greek shipping magnates — the king of kings
among the wealthy of Kifissia — are automatically exempt from tax,
supposedly on account of the great benefits they bring the country.
Yet the shipyards are empty; once employing 15,000, they now have less
than 500 to service the once-mighty Greek shipping lines which, like
the rest of the country, are in terminal decline.
With Greek President George Papandreou calling for a crackdown on
these tax dodgers — who are believed to cost the economy as much as
£40bn a year — he is now resorting to bizarre means to identify the
cheats. After issuing warnings last year, government officials say he is
set to deploy helicopter snoopers, along with scrutiny of Google Earth
satellite pictures, to show who has a swimming pool in the northern
suburbs — an indicator, officials say, of the owner’s wealth.
Officially, just over 300 Kifissia residents admitted to having a
pool. The true figure is believed to be 20,000. There is even a boom in
sales of tarpaulins to cover pools and make them invisible to the aerial
tax inspectors.
‘The most popular and effective measure used by owners is to camouflage
their pool with a khaki military mesh to make it look like natural
undergrowth,’ says Vasilis Logothetis, director of a major swimming
pool construction company. ‘That way, neither helicopters nor Google
Earth can spot them.’
But faced with the threat of a crackdown, money is now pouring out of
the country into overseas tax havens such as Liechtenstein, the Bahamas
and Cyprus.
‘Other popular alternatives include setting up offshore companies in
Cyprus or the British Virgin Islands, or the purchase of real estate
abroad,’ says one doctor, who declares an income of less than £90,000
yet earns five times that amount.
There has also been a boom in London property purchases by Athens-based
Greeks in an attempt to hide their true worth from their domestic tax
authorities.
‘These anti-tax evasion measures by the government force us to resort
to even more detailed tax evasion ploys,’ admits Petros Iliopoulos,
a civil engineer.
Hotlines have been set up offering rewards for people who inform on tax
dodgers. Last month, to show the government is serious, it named and
shamed 68 high-earning doctors found guilty of tax evasion.
‘We will spare no effort to collect what is due to the state,’ said
Evangelos Venizelos, the new Greek finance minister of the socialist
ruling party. ‘We promise to draft and apply a new and honest tax
system, one that has been needed for decades, so that taxes are duly
paid by those who should pay.’
Yet, already, it is too late. Greece is effectively bust — relying on
EU cash from richer northern European countries, but this has been the
case ever since the country finally joined the euro in 2001.
Two years earlier, the country was barred from entering because it did
not meet the financial criteria.
No matter: the Greeks simply cooked the books. Two years later, having
falsely claimed to have met standards relating to manufacturing and
industrial production and low inflation, the Greeks were allowed in.
Funds poured into the country from across Europe and the Greeks started
spending like there was no tomorrow.
Money flowed into all areas of public life. As a result, for example, the
Greek school system is now an over-staffed shambles, employing four times
more teachers per pupil than Finland, the country with the highest-rated
education system in Europe. ‘But we still have to pay for tutors for
our two children,’ says Helena, an Athens mother. ‘The teachers are
hopeless — they seem to spend their time off sick.’
Although Brussels has now agreed to provide the next stage of its debt
payment programme to safeguard the count ry’s immediate economic
future, the Greek media still carries ominous warnings that the military
may be forced to step in should the country’s foray into Europe end
in ignominy, bankruptcy and rising violence.
For now, the crisis has simply been delayed. With European taxpayers
facing the prospect of saving Greece from bankruptcy for the second
year in a row, some say even the £100bn on offer will pay off only the
interest on the country’s debts — meaning it will be broke again
within two years.
Meanwhile, there are doom-laden warnings that the collapse of the Greek
economy could be the catalyst for another global recession.
Perhaps if the Greeks themselves had shown more willingness to tighten
their belts and pay taxes due to the state, voters across Europe might
not now be feeling such anger towards them.
But having strolled the streets of Kifissia, and watched the Greek hordes
stream past the honesty boxes on the underground, it does not take a
degree in European economics to know when somebody is taking advantage
— at our expense.
The Greek language, not German holds an important place in the histories of Europe, the more loosely defined "Western" world and Christianity.
Did you know that Alexandria in Greek is Αλεξάνδρεια Alexándria, and Alexander the Great was Greek and not Macedonuts?
Did you know that Alexandria in Greek is Αλεξάνδρεια Alexándria, and Alexander the Great was Greek and not Macedonuts?
German tax-fraud raids trigger E.U. debate on tax havens Stories You Might Like
http://www.marketwatch.com/story/german-tax-fraud-raids-trigger-eu-debate-on-tax-havens
Of DOW JONES NEWSWIRES
BERLIN (Dow Jones)--German police Tuesday continued to search the homes and offices of suspected tax offenders with off-shore accounts in Liechtenstein, which has angrily accused the German government of purchasing stolen bank secrets.
The controversy has triggered a major debate over the legality of Germany's means of obtaining off-shore tax records and Liechtenstein's continued status as a known tax haven. Luxembourg Prime Minister Jean-Claude Juncker said in Berlin Tuesday that Germany's controversial tax dragnet is likely to put tax evasion on the agenda of the next meeting of the European Union finance ministers.
Juncker, head of the Eurogroup of 15 countries sharing the euro currency, called on Liechtenstein to "plug its existing tax loop holes." But he also said Germany's principal problem is its tax offenders, and that Liechtenstein shouldn't be at the center of the discussions.
Liechtenstein meanwhile lodged a heated protests against the Germany government, which has confirmed that its BND secret service paid an informant for stolen Liechtenstein bank records to help German tax authorities to hunt down tax offenders. Liechtenstein on Tuesday accused Germany of violating the principality's sovereignty. "We strongly oppose the action taken by the German cabinet and its authorities," Liechstenstein Justice Minister Klaus Tschuetscher said. "If the information we have is accurate, Germany's finance minister and a range of state employees gave a convicted criminal several million (euros) for stolen data," Tschuetscher said.
German Finance Minister Peer Steinbrueck says Germany will now push for a pan-European solution to tax evasion. The ministry defended Germany's action in Liechtenstein, claiming that the government carefully studied their legal standing in obtaining and using the tax records.
German officials said they are targeting "hundreds" of high-wage earners, some well known and others less well known. The German Finance Ministry confirmed that it paid an informant for the account records in a deal brokered through Germany's BND foreign intelligence agency.
The amount of the payment by the BND was has been estimated at between EUR4 million and EUR5 million. The government said it stands to win back several hundred million euros in unpaid taxes.
The Wall Street Journal on Tuesday reported that the investigation was the result of customer data that a former employee of LGT Group offered to Germany's Federal Security Service. The paper reported the employee had offered private customer records to tax officials in several countries.
Liechtenstein's LGT Group said it believes some bank records of clients were stolen from its LGT Treuhand AG subsidiary in 2002 and "unlawfully disclosed."
Among suspects, investigators have identified only Deutsche Post AG (DPW.XE) Chief Executive Klaus Zumwinkel, who resigned Friday after questioning. He has yet to comment publicly on his case.
Prosecutors Tuesday said police and tax investigators again pored over bank accounts and searched the homes and offices of suspected tax offenders. The searches will continue all this week, they said.
The German tax probe is expected to feature highly in talks between German Chancellor Angela Merkel and Liechtenstein Prime Minister Otmar Hasler in Berlin on Wednesday, who is likely to be pressed for details on the regulation of Liechtenstein banks and trusts.
The Organization of Economic Cooperation and Development, a policy forum for industrialized countries, weighed in to identify European tax havens Leichtenstein, Andorra and Monaco as effectively providing a basis for illegal tax evasion.
"Disclosures concerning alleged widespread tax evasion by German citizens through Liechtenstein highlight a much broader challenge in today's globalized economy: how to respond to countries and territories that seek to profit from tax dodging by residents of other jurisdictions," OECD secretary-general Angel Gurria said in a statement. The three states count as uncooperative to OECD calls for transparency and information exchanges on tax matters.
"As long as there are financial centers that refuse to cooperate in bilateral tax information exchange and that fail to meet international transparency standards, residents in other countries will continue...to evade their tax obligations," Gurria said.
Excessive bank secrecy rules and a lack of cooperation in tax matters are relics of a different time and have no role to play in the relations between democratic societies today, Gurria said.
http://www.marketwatch.com/story/german-tax-fraud-raids-trigger-eu-debate-on-tax-havens
Of DOW JONES NEWSWIRES
BERLIN (Dow Jones)--German police Tuesday continued to search the homes and offices of suspected tax offenders with off-shore accounts in Liechtenstein, which has angrily accused the German government of purchasing stolen bank secrets.
The controversy has triggered a major debate over the legality of Germany's means of obtaining off-shore tax records and Liechtenstein's continued status as a known tax haven. Luxembourg Prime Minister Jean-Claude Juncker said in Berlin Tuesday that Germany's controversial tax dragnet is likely to put tax evasion on the agenda of the next meeting of the European Union finance ministers.
Juncker, head of the Eurogroup of 15 countries sharing the euro currency, called on Liechtenstein to "plug its existing tax loop holes." But he also said Germany's principal problem is its tax offenders, and that Liechtenstein shouldn't be at the center of the discussions.
Liechtenstein meanwhile lodged a heated protests against the Germany government, which has confirmed that its BND secret service paid an informant for stolen Liechtenstein bank records to help German tax authorities to hunt down tax offenders. Liechtenstein on Tuesday accused Germany of violating the principality's sovereignty. "We strongly oppose the action taken by the German cabinet and its authorities," Liechstenstein Justice Minister Klaus Tschuetscher said. "If the information we have is accurate, Germany's finance minister and a range of state employees gave a convicted criminal several million (euros) for stolen data," Tschuetscher said.
German Finance Minister Peer Steinbrueck says Germany will now push for a pan-European solution to tax evasion. The ministry defended Germany's action in Liechtenstein, claiming that the government carefully studied their legal standing in obtaining and using the tax records.
German officials said they are targeting "hundreds" of high-wage earners, some well known and others less well known. The German Finance Ministry confirmed that it paid an informant for the account records in a deal brokered through Germany's BND foreign intelligence agency.
The amount of the payment by the BND was has been estimated at between EUR4 million and EUR5 million. The government said it stands to win back several hundred million euros in unpaid taxes.
The Wall Street Journal on Tuesday reported that the investigation was the result of customer data that a former employee of LGT Group offered to Germany's Federal Security Service. The paper reported the employee had offered private customer records to tax officials in several countries.
Liechtenstein's LGT Group said it believes some bank records of clients were stolen from its LGT Treuhand AG subsidiary in 2002 and "unlawfully disclosed."
Among suspects, investigators have identified only Deutsche Post AG (DPW.XE) Chief Executive Klaus Zumwinkel, who resigned Friday after questioning. He has yet to comment publicly on his case.
Prosecutors Tuesday said police and tax investigators again pored over bank accounts and searched the homes and offices of suspected tax offenders. The searches will continue all this week, they said.
The German tax probe is expected to feature highly in talks between German Chancellor Angela Merkel and Liechtenstein Prime Minister Otmar Hasler in Berlin on Wednesday, who is likely to be pressed for details on the regulation of Liechtenstein banks and trusts.
The Organization of Economic Cooperation and Development, a policy forum for industrialized countries, weighed in to identify European tax havens Leichtenstein, Andorra and Monaco as effectively providing a basis for illegal tax evasion.
"Disclosures concerning alleged widespread tax evasion by German citizens through Liechtenstein highlight a much broader challenge in today's globalized economy: how to respond to countries and territories that seek to profit from tax dodging by residents of other jurisdictions," OECD secretary-general Angel Gurria said in a statement. The three states count as uncooperative to OECD calls for transparency and information exchanges on tax matters.
"As long as there are financial centers that refuse to cooperate in bilateral tax information exchange and that fail to meet international transparency standards, residents in other countries will continue...to evade their tax obligations," Gurria said.
Excessive bank secrecy rules and a lack of cooperation in tax matters are relics of a different time and have no role to play in the relations between democratic societies today, Gurria said.
Canada can also have a big fat gravy train if we elect the NDP to power. Imagine retiring at age 50 on a 95% pension, pay no taxes, free subway rides, work for the government and make triple what stupid private sector employees make, never have to repay your loans or credit cards, etc.
