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This post will be based on a reddit thread which is based on a Russian article which explains the Greek crisis as totally internal rather than caused by others, as some members like to say.
https://www.reddit.com/r/europe/comm..._carelessness/
http://kommersant.ru/doc/2674128
If Greece did not exist, it would be necessary to invent one. As an example of destructive force of populism and living beyond one's means and of how inflow of money doesn't gurantee economic growth and prosperity.
Latin America in Eurozone
"Since the declaration of independence in 1830s, Greece have been in a state of deafult 50% of the time. Does it tell you something? If it was somewhere in Latin America or Asia, you would bet on Argentina's default scenario. But Greece is part of Europe" - that's how US economist Carmen Reinhart described the Greek situation. Economic history of Greece is an example of years of careless waste and its consequences.
"For decades, Greece hasn't had a very good financial reputation. Since 1940s, it has been a foreign aid recipient. First it was the Marshall Plan, then the US subsidies for the purchase of arms, and, finally, EU mass cash infusion. All this has created a culture of political and economic dependency in Greece." - echoes Oxford Analytica's report "Greece: Austerity package fails to convince". Leaving aside political correctness, it is rather a culture of parasitism. Last time Greece had a balanced budget, it was a year of 1972 - still under the regime of the Colonels. Since then, its budget deficit has averaged around 6% of GDP.
In the 2000s the country was lucky. Before the introduction of the euro, Greece had everything: high inflation, high interest rates and high public debt. De facto, the economy did not meet Maastricht criteria for for joining the Eurozone (public debt < 60%, budget deficit < 3% of GDP). However, the decision was dictated by political rather than economic considerations. And by manipulation: deficit and debt figures were deliberately understated, but it became clear later. But the deed was done, Athens joined the eurozone.
Previously, Greece had to borrow money at high interest rates. European banks had to deal with high currency risks: drachma had been devalued against more stable European currencies (especially against Deutschmark) regularly. It kept banks from excessive lending. The euro has eliminated the risk. As a result, there was a sharp increase in demand for Greek bonds and, accordingly, a same sharp decline in interest rates on them. Of course, banks lined up with the money for Athens: on 1 January 2001, immediately after the country's accession to the Euro area, Greek 10-year bonds had a yield of 5.36% per annum, while German 10-year bonds had only 4.85%. The stability was maintained for eight years.
Greekommunism.
Greek government happily found out that financing budget deficit in a single currency area became much easier. The motivation to reduce the deficit and public debt has disappeared - why would you do anything, while your government bonds fly away like hot cakes? Latin American problem of chronic budget deficits, debt and devaluation had been solved by the euro partners. And it was possible to focus on the enjoyable - economic populism (in the Latin America it is always limited by the lack of finance). Until 2010, Greece had even more socialism than USSR. The government provided free higher education, scholarships and free meals for students (some of them were 40 years old). Until 2010, civil servants received 14 salaries a year. Keep in mind all sorts of bonuses, social allowances and additional payments for a variety of things: coming to work on time (despite the fact that most state-owned companies closed at 14:00), knowledge a foreign languages, ability to work with PC or even for working outdoors. In the pivate sector, employer could not fire more than 2% of workers each year, and it was almost impossible to fire a state employee.
Public sector took 40% of the economy: railways, air traffic, forestry, numerous state committees (for example, there was a committee of lake Kopais, which dried up in 1930s) - they all were state-owned. The power of trade unions, including public servants, was monstrous. The discontent of workers always caused massive protests (the position of anarchists and communists in a country is traditionally strong). Striking Greeks in the 2010s were a reaction to the crisis, but from 1980 to 2008 there was a record number of nationwide strikes (38 of 85 cases in all countries of Western Europe).
At the same time, all state-owned companies remain unprofitable. Greek Railways (OSE) accumulated € 10 billion debt and bring € 2,3 million loss daily. Annual revenues of the OSE is about € 100 million, and the annual cost of the payment of debts and wages to 7000 employees on two tiny branch lines (the average salary - € 60 thousand per year) - more than € 950 million. Mountain trains in Greece usually go empty, but their drivers recieve € 100 thousands per year. Trade union protests do not allow privatisation of OSE.
Another example - the former state airline Olympic Airlines. Trade unions have been blocking the privatisation of loss-making company, but have managed to get themselves and their families free tickets to anywhere in the world. In 2009, the company was sold for € 177 million with the proviso that Greek government will cover the billion-dollar debt. 4500 fired workers recieved about € 1 billion for compensation, providing new employment, pensions and insurance.
Pensioners didn't have any troubles as well. In 2009, 250 thousands people (~10%) recieved more than € 1,400 per month. In the public sector, 8% of employees were leaving for retirement in the age of 50 years (some of them - in 26 years), 24% - in 51-55 years and 44% - in 56-61 years. Some exotic groups of citizen, such as unmarried or divorced daughters of deceased civil cervants, also had a right to recieve pensions - 40 thousands women spent € 550 million per year.
Communism in debt pushed Greeks to live a beautiful life. In the mid-2000s, according to a Greek newspaper Kathemerini, the country became the largest purchaser of cars Porsche Cayenne per capita in the world, Athens Marina competed in a number of yachts with Monaco, more than 50% of Greek babies were born in private hospitals, where the cost of labor is often exceeded € 10 thousands. € 9 billion was spent on the summer Olympics in 2004 and the accompanying infrastructure megaprojects, which were left to rot after.
Tax heaven.
The Greek economy is also very similar to the Latin American countries in a habit of not paying any taxes. Nordic welfare states are financed by higher taxes on social obligations, while Greece have been relying on external borrowing.
Tax evasion techniques are simple. Small entrepreneurs, doctors and lawyers declared only € 12 thousand every year. "Poor" households have been living a luxury lifestyle. In 2010, only 324 residents of wealthy northern suburbs of Athens have indicated that they had a pool in the tax declaration. Tax authorities, after recieving the satellite images, found at least 16,794 pools. And didn't seem to care before the crisis.
Greek oligarchs weren't very interested in paying taxes as well. Almost all of the country's billionaires (Forbes counted three 2015, Bloomberg adds four more) earned or inherited fortune made on shipping. Greece Commercial Fleet is the largest in the world, its magnates own 16% of the commercial fleet in the world. However, according to the Constitution (1967), they didn't have to pay receipts taxes. Only in October 2013, the Union of Greek Shipowners agreed on a voluntary "crisis" increase in payments to the budget. However, in the case of increased tax burden, they threaten to switch jurisdiction to British or Maltese.
German authorities were astonished by Greek slackness and sent 170 trained tax collectors to Greece for assistance. They had to abandon the idea of sending a special European tax comissar: the Greeks rebelled and reminded the Germans about their war crimes in 1940s.
Business hell
Tax disorder is accompanied with horrible business conditions. A recent study by the OECD (with about 400 pages) lists dozens of barriers to competition and absurd examples of overregulation. Transportation industry is monopolized by small amount of truck owners with 33 thousands licenses. There haven't been any new licenses since 1970, so a newcomer has to buy a license from its owner or his heirs for € 50-300 thousands. As a result, the cost of transportation in Greece is the highest in the world. Greek research team IOBE stated that shipping from Athens to Thebes (60 km) is more expensive than shipping goods from Athens to Rome (900 km). Until 2011, the Teamsters union had been defending their privileges by blocking major highways and picketing parliament. This example is not unique: before the reforms of 2011 in Greece, there were 343 "closed" professions (from the taxi driver to a lawyer), protected by expensive licenses. This created a major distortion of the market. For example, the pharmaceutical business regulation has led to the fact that of all the OECD countries in Greece turned out to have the biggest amount of pharmacists and and least amount of pharmacies per capita.
List of absurd regulation is very long. Any business, until recently, was obliged to publish reports in two national and one regional newspapers. Supermarkets had to write up to 9 prices on their goods (A combination of: with/without discount, with/without certain taxes, for 1 kg, etc). Farmers were told where they can use olive oil and where they couldn't.
All this (plus the frequent protests) made Greece a very bad place to do business. In the Doing Business ranking, even after reforms, the economy occupies 61th place out of 189 - right between Russia and Tunis. In the rating of of "Execution of court contracts" the country is somewhere "in Africa" - 155th place (in average, it will take 1500 days for court to consider the case). Competitiveness of the economy isn't in a good shape as well: according to the Global Competitiveness Report made by the WEF in 2015, the country is on the 81th place out of 144 (predictably difficult situation with the subindex "business overregulation", 136th out of 144). Still, it's a big improvement from 108th place in the pre-crisis 2010 (between Paraguay and Bangladesh).
Blame each other and Europe
Strange state of economy "with a Latin American way " was supported by political system that lasted until the January of 2015. Two approximately equally strong political clans: left Panhellenic Socialist Movement (PASOK) and the center-right party "New Democracy" have been changing each other for decades. They were led by the two most influential political dynasties - out of half-century of democratic rule, country was led by either Karamanlis or Papandreou families for 32 years.
Both clans did not like each other, and each newly formed government usually started from accusing the previous one in sins of all sorts, including the distortion of economic indicators. Same thing happened at the beginning of the European crisis. After winning in June 2009, Giorgos Papandreou's PASOK, the 2009 budget deficit was revised from 6% to 12.7%. The same was made in 2004 by "New Democracy". Before joining the Eurozone, budget deficit was hidden by swaps in Goldman Sachs.
Neither one nor the other party did not seek to change the economy. A large number of inefficient civil servants - much to their credit. To reinforce electoral base, they were generously handing out sinecures and supported friendly trade unions. Some major reforms were made by goverment of Antonis Samaras (hereditary politician of "New Democracy") - when there wasn't a choice. European Troika of creditors (ECB, IMF, EU) demanded deregulation of the economy, privatization and cutting budget expenses in exchange for partial debt relief and aid packages.
Living within your means and paying off the debts was not easy. Cost-saving measures included freezing wages and the elimination of the 13th and 14th salaries, raising retirement age to 65 years, progressive taxation of high (> € 1,400 per month) pensions, increased VAT (from 21% to 23%) and other taxes, the elimination of a variety of subsidies and benefits.
In 2008, the country entered into recession, which seven years later turned into a depression: GDP fell by 25%. A new source of growth wasn't found. From 2008 to 2014, GDP per capita fell from $ 30.7 thousands to $ 22.3 thousands, unemployment rose from 7.6% to 25.8%, the population has become poorer. In 2014, the budget still was unbalanced (2.7% of GDP), while public debt increased from 113% of GDP in 2008 to 169% in 2014, despite the debt restructuring (€ 58 billions, 27% of GDP was written off) and seven budget austerity programs.
With Marx, Mao and Trotsky on the crisis
The political system has not sustained depression. In 2015 a new coalition took the parliament: "Syriza" (it includes Marxist, Maoist, Trotskyist, feminist and green parties). The leader of "Syriza", the new Greek prime minister and a fan of Che Guevara, Alexis Tsipras, announced plans to obtain an additional debt relief and soften austerity measures. "Greece will leave behind five years of a catastrophic economy, the humiliation and suffering" - he said at the meeting after the election.
Tsipras rhetoric has spawned rumors about the possibility of default and leaving the eurozone. The head of the Eurogroup (EU finance ministers) Jeroen Deysselblum after a meeting with the new Greek Finance Minister Yanis Varoufakis stated that the country must continue to reform. And the sooner - the better, given that the latest agreement on the financing of Greece will end in June. But the left-wing government is trying to give up one third of the previously agreed austerity measures, referring to the promises made to the voters. "We spent two weeks discussing who and where and in what format will anybody meet, and it's a complete waste of time", - said Deysselblum 9th March. And added, that if the Greeks will fulfill the agreed austerity program, they won't recieve any more money.
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