If they couldn’t pay the bonds in 2010, why on earth did anybody loan them MORE?
This is looking very much like the real estate bubble of 2000-2007 - people taking out loans that could not afford, based on inflated estimate of the value of their house.
At this point, Greece would have been foreclosed on back about 2013 (2nd bailout).
As it is, there seems to be trouble coming up with enough public assets to cover 50B out of an estimated 300B in debt (230 now + 86 to be determined on this go-round).
The Greeks have actually been a victim of the EU visa scheme here. The visa policy is generally) centrally set. Getting a Schengen Visa takes at a minimum two weeks. Turkish visa takes 15 minutes to fill out a form online. This means that Greece loses out on the recent massive increase in Gulf, S Asian and Far Eastern travellers, who might otherwise go to Greece, because of being deterred by visa requirements.
Does Greece really would want a more relaxed visa policy? I’m dubious because they already have a big issue with illegal immigration, being one of the main entry point for immigrants coming from Asia.
Basically repeating what a Greek hotelier told me a few years. Actually, your country has the highest rates of Chinese tourism; which is a second point, if people are willing to undergo the stress of the Schengen visa application, then they want to visit places like France, Italy, Spain etc, with Greece pretty far down the list.
The Greeks are aware of that, they have one of the highest rate of acceptance of all Schengen Countries
Short answer- it got pissed away. The money (or to be more precise, the credit) has been dissipated as the monetary equivalent of waste heat. Without effective taxation there’s no way to close the circle of expenditures, meaning that the injection of liquidity didn’t accomplish anything.
Greece has some natural resources like Magnesium, aluminium and nickel, but they are shipped abroad for processing. What they don’t have is any substantial manufacturing facility. Their biggest industry is shipping and Greek shipping pays no tax. Of course, if they had to pay, they would promptly re-flag.
So, when it comes to employment; tourism and the associated trades is pretty much all there is.
Greeks with skills, and many without, are desperately looking for work in the rest of the EU. Maybe they will learn about paying tax if they work here.
The tax evasion plays into that 50 percent more or less like this- the govt. pays out 50% to pensioners, who spend it on stuff. You’re right- it mostly stays in Greece and theoretically stimulates the economy.
Normal governments expect to collect some percentage of that 50% back, since it was income to the payees, as well as a percentage of any new wealth that the payees generated as part of their business activities. But if they’re not taking in the proper amount of taxes, they’re basically paying out and not getting their due cut back. So to make ends meet and continue paying out what people consider themselves entitled to, they have to borrow money.
Clearly this can’t go on forever; from what I could gather, the Greek government expected to just go on borrowing indefinitely, as things had been good, and credit had been loose until the 2008-2009 recession. After that, things tightened up, and their series of fiscal crises began.
The Greek shipping lines are huge-they must generate enormous profits-but much of their business is conducted outside of greece. How do the get away with paying nothing?
The bonds were sold when things were good. If the real state of government finances had been made public, the government in power then might have been made to clean up its act while cutting back in ways that would not harm a robust economy.
All the money lent to Greece by the IMF and the European Union went to German, French, Swiss, and British banks. You see, these banks had lent money to Greece in the early 2000s because they thought it was a good deal, then they found it was not and convinced Europe to bail out Greece (which they did). This money was used to pay off the banks and now the taxpayers are on the hook. Nobody will bail them out.
Not a deficit - a huge sinkhole of money. It is highly inefficient to have 97 pharmacists per 1000 people, and almost all of them with his own shop selling at prices set by government. If you wanted to operate an US style drugstore, you would have to hire a licensed pharmacist for every two non-pharmacists you hire.
This is about as efficient as hiring a lawyer to fight 10-20 years in court to establish that you own a piece of land (which they also do quite often).
Some of the hated rules are about eliminating hideous inefficiencies in the economy.
Yes, a country should be able to adjust its fiscal policies to favor/protect whatever it wants.
If your pensioners are entitled to only a pittance because they never paid much into the system, you should be able to decide to simply give tham gifts two or four times a year.
It’s called fiscal policy. When you screw up as badly as Greece has when left to its own policies, the lenders just might (after you default on 3 loans) decide they can make better fiscal policy than you.
When you can pay your own way, you can make your own rules.
