Cyprus-Forum.com

[Paphitis]

I don't understand why every other country which has undergone a similar monetary catastrophe has gotten away with blaming it on the worldwide banking crisis; but when Greece finally succumbed it's suddenly all of their own making!

Double standards!

Anyway, the UK has finally admitted they may need to go via IMF soon ...

I think a lot of it has to do with the fact that these countries are still solvent enough to pay their bills and not rely on handouts!

So you are saying; every other country can pay its bills except Greece?:roll:

This is from today's Guardian ...

The next blast from the past was Ken Clarke, finally unleashed yesterday morning to claim a hung parliament could trigger a sterling crisis and 70s-style IMF bailout.

The British are the masters of the cover-up. They have just been pulling the wool over every-one's eyes for the longest time and at least until the election is over. The next admission will be that whoever is elected is going to have to reveal the full extent of the debt that the UK has accrued ..

All you need to do is look at US debt, which I'm certain will shock you. But it is serviceable, but confidence does slide and markets can tumble, temporarily. You are comparing Greece to countries that have heavy industry, and have resources. Even they have their ups and downs, but their economies always rebound. For Greece it is far harder. And neither the US or the UK are in danger of default at present.

You see, if countries like the UK, or US crumbled, it would effect much more than the Euro. Greece is insignificant in comparison, but devastating for the Euro zone all the same.

This, is the best thing that has happened in Greece. The country is in heavy need of a complete overhaul and reform. They need to seize this opportunity, otherwise Greece will never get its act together. And now, the Greek Government has the perfect pretext.

You know very well, that Greece is very ill, and I'm not referring to the economy or the debt. It is the sad state of affairs within Greece which drag it down, that need to be addressed. You see, the debt will be paid over time, but if Greece does not reform its tax system, VAT, public sector plus more, then the country is in real danger.

Like you, I hope they can work it out, as quickly as possible. I also hope they can find a way to prevent such things from happening again. This should be a turning point for Greece, and not a disaster. Sometimes you need things like this to happen in order to facilitate change. If Greece achieves this, then this crisis is a blessing!

I have no problem accepting that Greece has to reform a number of areas. I am familiar with the taxation systems of both the UK and Greece and their major difference has only ever been one of the UK imposing punishing levels of taxation on those honest enough to declare whereas Greece has been more lenient to all. In Greece, every resident or homeowner has to file an annual tax return, but not so in the UK. I have a number of friends who have huge rental incomes here in the UK and because they are not chased up to file a return by law, they do not bother declaring their income. So whereas in the UK the honest small fry are punished, the big guys get away with murder -- But in Greece, I don't think they randomly punish the honest declarers just because they are the easy prey who pay up. So no system is perfect.

My only worry is that they won't allow Greece to reform because they do not want another efficient EU state competing against the US and UK, like Germany and France do for example. So instead of leaving Greece alone to clean her linen, they are descending like vultures -- vultures which have been encircling Greece ever since it was wounded, torn apart and exposed as vulnerable by the bloody Otto-Turks!

Edit:

What was I thinking! You only have to look at the way the parliamentarians were willfully milking the system to know how the average Brit traipses along in a pretext cloud, feigning ignorance of their duties!

What you are saying is that UK tax rates are high, whereas Greek tax rates are substantially lower. This is not really an issue because low tax systems also attract high investment. Greece has the second largest Merchant Marine in the world because of low tax rates. This creates many jobs, and these Shipping companies pay their taxes to Greece.

One of the fundamental key issues is tax evasion, which should not occur since Greek tax levels are far lower than what they are in the UK and are therefore more fair. Regardless, tax evasion is a massive problem, and there are far too many wealthy Greeks getting away with blue murder, whereas the poor sod earning wages pays his obligatory 10%. There are many business owners, lawyers and doctors who lead very extravagant lives, yet pay less tax than a production worker. Then there is rampant nepotism in Greece. Now this exists in all countries up to a point, but Greeks have gone way over the top.

Then you have normal mums and dads in mainstream Greece with "high" dreams of seeing their children become public servants. In the end, the system just creates positions to employ people who have the connections, and then Greece ends up with a highly inefficient public sector. Then we have the unions, who are more than willing to bring the country to a standstill the minute the government tries to rationalise and streamline. In other countries that face such crisis, this does not happen. The Government introduces a Budget, and the people accept the fact that it is going to hurt. But they cop it on the chin, because they know, that an insolvent Government may not be able to pay their wages or provide services and infrastructure.

I don't believe it is very constructive to compare Greece to the UK. You and I both know that Greece's economy was not sustainable and it was only a matter of time.

Now, the only vulture that descended upon Greece was the EU, which included the UK, France and let's not forget the feisty yet correct Germans who are the EU's greatest net contributor. They did this because they know that this crisis was self inflicted and because there were many scandals within Government. They did this to warn Greece and to force Greece to reform. They are not obligated to bail Greece out all the time. They need to see Greece introduce measures which will improve the situation.

The US, as a country, certainly did not have much to do with anything, and I am positive that they would most certainly hope that Greece fixes its economy. You will remember that the Greek crisis even gave Wall Street the jitters since it has the potential to bring the Euro down and many American institutional Investors are heavily involved within Europe's Markets.

So I believe this is the last thing the Americans need, since they are facing economic issues of their own. If more countries like Greece actually collapse, then this will have a negative impact on US trade and investment within those countries. Basically, all economies are connected in some way. they refer to this as the Global Economy.

What I believe you are referring to is Goldman Sach (I think). Goldman Sach is a Jewish American multinational financial institution which lends massive amounts of money to many countries including Greece. They also lend money to the US, UK, Australia as well as other EU countries such as Germany and France. Greece owes Goldman many billions which are set to mature this year. This means Greece needs to pay up now. It it does not pay, then Greece will be blacklisted, and they will not be able to obtain credit anywhere else. Goldman is only concerned about one thing, getting its money from Greece. They don't give a stuff about anything else, and they would do the same to the US and the EU.

Greece will try to reform, but will the people buckle down and accept this? The US and the EU are the least of Greece's worries. The 'enemy' is within!

[Gasman]

From STRATFOR in Dec 09

Roots of the Crisis

Greece is considered one of Europe’s most notorious overspenders. Even prior to the current crisis, it was fighting high budget deficits, primarily caused by high social spending, a symptom of the country’s ever-present social tensions. The government’s liabilities on the pension system and through ownership of unprofitable enterprises, such as Olympia Airways, have been difficult to jettison due to the threat of unrest, which flares up whenever Athens tries to rein in spending. Total government spending on social programs represented almost 20 percent of gross domestic product (GDP) in 2008, the highest percentage in Europe and one that has risen almost every year since 1997, when it was 13.9 percent of GDP. This is higher than even Italy (17.7 percent of GDP) and France (17.5 percent of GDP), the two traditional big spenders in Europe. Because of the large public debt and the increasing deficit, the government has often turned to methods such as fudging statistical reporting to the EU in order to avoid disciplinary measures from Brussels.

The ouster of center-right Prime Minister Costas Karamanlis by his leftist rivals, the Panhellenic Socialist Movement (PASOK) in early October continues the cycle of wild swings in Greek politics. PASOK has pledged to not cut any social spending for the poor and instead increase taxes on the rich, as well as crack down on tax evasion (a notorious problem in Greece) to reduce the budget deficit. Despite an expected decline in GDP for 2010, PASOK is forecasting an extremely unlikely 9 percent gain in revenues — which means that in all likelihood the current budget imbroglio is only the beginning.

[Gasman]

Greek Banking Troubles

In the background of the country’s perennial spending problems are the troubled Greek banks. STRATFOR cautioned about the Greek banking system at the onset of the current global financial crisis. As the Baltic states and ex-communist Central European states entered the European Union, Austrian, Italian and Swedish banks looked for new markets where they would have an advantage over their larger German, French, British and Swiss counterparts. They found that advantage in their former geopolitical spheres of influence, with the Austrians and Italians entering the Balkans and Central Europe, and the Swedes entering the Baltics.

European banks offered foreign-denominated currency loans — mainly in euros and Swiss francs — that carried with them lower interest rates than domestic currency loans. Because they were the latecomers to this game, Greek banks had to be particularly aggressive, using ever-lower interest rates to attract clients and undercut the more resource-rich Italian and Austrian lenders. Greek banks also had to rely much more heavily on foreign-denominated currency loans because their domestic deposits were much smaller than those of Austrian and Italian banks (a strategy similar to the disastrous banking methodology employed by Icelandic banks.

Greek exposure, particularly to the Balkans, is therefore troubling for the overall economy. The fear is that, unlike the larger Italian and Austrian banks, Greek banks will not be able to refinance loans or absorb losses of affiliates abroad. Greek banks have thus far drawn around 40 billion euros of cheap credit from the ECB, out of a total of around 665 billion euros extended to all eurozone banks. This represents between 6 and 7 percent of total ECB outstanding liquidity, much higher than the Greek share of EU economy (2.5 percent), and puts Greek banks second only to the Irish in terms of dependence on ECB emergency liquidity.

Due to the overall effects of the crisis, the yield spreads between Greek and German bonds (considered the safest government debt in the eurozone) have widened to 246 basis points on Dec. 9 (from 75 basis points in September 2008 before the current economic crisis struck).

[Gasman]

The Road Ahead

The road ahead is not going to be easy for Greece. There are a number of options, but all are bad.

First, the Greeks could “simply” balance their budget. To do this they would need to slash their government spending by over half. That sort of cut would easily send unemployment above 20 percent for a sustained period of time. At a minimum this would set the country afire in a storm of protests and result in a series of revolving-door governments. This may sound normal for Greece, but the political and social chaos of the past is the country’s baseline. Just imagine what it would look like under austerity measures.

Second, Greece could leave the eurozone. Membership in the eurozone requires surrendering control over one’s currency. Leaving it would allow Greece to print currency to pay off the debt, triggering inflation which would eat away at the remaining debt’s value. Such a move would also devalue the Greek currency, giving Greece a trade advantage globally. Such measures were commonplace in European countries more powerful than Greece in the time before the euro.

The downsides, however, make this a startlingly unattractive option. Greece would suddenly find it next to impossible to raise funds. Many are willing to invest in Greece’s euro-denominated debt, but very few would be willing to invest in the drachma-denominated debt of a loan-dodger. Greece could well find itself broke, cut off from capital markets, and spiraling into hyperinflation. And even that is assuming that the rest of its former euro colleagues don’t take its decision to jump ship personally.

Third, while STRATFOR doesn’t see this option as viable, Greece could simply walk away from the debt and default. Such an action would sever Greece from capital markets — including simple things like trade financing even within the European Union. It would lay a very sturdy foundation for the utter destruction of Greece as a modern economy.

STRATFOR only sees discussion of this option as a means of pressuring other European states to bail Greece out. After all, a Greek default would instantly translate into much higher borrowing costs for other eurozone states — most notably Ireland, Portugal, Spain, Italy, and France, roughly in that order. The only way these states could then recover financially would be to face the same gamut of choices Greece is currently facing. As all are more socially stable than Greece, most would likely raise taxes, and the result would be lower growth, higher interest rates and lower inter-European trade. If the EU can do something to avoid a Greek default, they’ll do it.

Which leaves this final option — some sort of external assistance. Unlike many other states that have sought assistance, the International Monetary Fund (IMF) is not a likely source of significant help. In addition to the austerity measures it would demand being extremely unpopular, the non-European members on the IMF’s board are unlikely to look kindly on bailing out a member of the eurozone.

That leaves an internal European bailout. Here the obstacle is Germany. The Germans feel that they have already bailed out all of Europe — twice (once by absorbing East Germany without a cent of assistance from the rest of the Continent, a second time in absorbing so many small and weak economies into the eurozone which Germany underwrites). If Germany is to sign off on a Greek bailout, therefore, it will only be under terms which give EU institutions an unprecedented ability to regulate Greek finances. Since Athens has already signed away monetary policy in order to accede to the eurozone, all that is left is budgetary control.

The question is how the left-wing government of new Prime Minister George Papandreou will handle the inevitable social pressures that will accompany any attempts at budgetary cuts, especially ones being dictated by Berlin. His predecessor, Karamanlis, faced these same pressures during the December 2008 rioting, and ultimately buckled under the pressure. The one year anniversary of the December 2008 rioting was marked by unrest in Athens, foreshadowing the potential for more social angst in Greece in 2010.

[Paphitis]

From STRATFOR in Dec 09

Roots of the Crisis

Greece is considered one of Europe’s most notorious overspenders. Even prior to the current crisis, it was fighting high budget deficits, primarily caused by high social spending, a symptom of the country’s ever-present social tensions. The government’s liabilities on the pension system and through ownership of unprofitable enterprises, such as Olympia Airways, have been difficult to jettison due to the threat of unrest, which flares up whenever Athens tries to rein in spending. Total government spending on social programs represented almost 20 percent of gross domestic product (GDP) in 2008, the highest percentage in Europe and one that has risen almost every year since 1997, when it was 13.9 percent of GDP. This is higher than even Italy (17.7 percent of GDP) and France (17.5 percent of GDP), the two traditional big spenders in Europe. Because of the large public debt and the increasing deficit, the government has often turned to methods such as fudging statistical reporting to the EU in order to avoid disciplinary measures from Brussels.

The ouster of center-right Prime Minister Costas Karamanlis by his leftist rivals, the Panhellenic Socialist Movement (PASOK) in early October continues the cycle of wild swings in Greek politics. PASOK has pledged to not cut any social spending for the poor and instead increase taxes on the rich, as well as crack down on tax evasion (a notorious problem in Greece) to reduce the budget deficit. Despite an expected decline in GDP for 2010, PASOK is forecasting an extremely unlikely 9 percent gain in revenues — which means that in all likelihood the current budget imbroglio is only the beginning.

This to me only indicates that Greek governments have a near impossible task. They are forced to spend unsustainable amounts of money on social initiatives to maintain order and cohesion.

So all in all, I think the government can now use this crisis to make many changes, such as slash spending, raise VAT, increase taxation, reform the tax system, slash the public sector, and not only....

But I fail to see what this has to do with you! It is as if you enjoy this. Why are you gloating?

The UK ain't too far behind, so go and bash on them and leave Greece alone!

[Nikitas]

Lower tax rates than the UK???? Where did that one come from?

There is no surtax, but the next highest tax rate is 42 per cent. And there is one detail you guys to not know:

Once your tax is figured out then you pay 55 per cent of the tax bill as a deposit for the following year. So if you are taxed at ie 10 000 Euro, then you must pay 15500. Calling this a deposit does not change the fact that it comes out of your pocket and goes to government coffers.

Additionally, every 5 years there is the so called tax adjustment palaver. An arbitrary formula is applied to your income and you have the choice, to pay the sum which is ADDITIONAL to the tax you have already paid every year, or go for an audit. In an audit a simple mistake on an invoice, like leaving out the dashes in a date is fined with up to 300 Euro plus interest at 36 per cent for each faulty invoice.

THe problem with Greece is that there is zero trust of the private businessman, zero practical approach to the way the Civil Service works. Greeks love complication and hate simplicity. If they allow business people the same freedom that they have in CYprus, the UK or Germany, Greece will become a very rich country. It takes one day to set up a company in Cyprus, it takes at least two months to do the same in Greece, and all buraucratic procedures are along those lines. All because there are inadequate people manning the civil service

Greek shipping has escaped the clinch of the civil service because it functions under a totally different legal regime and ships are usually registered overseas and simply managed by the Greece based part of the business.

Papandreou knows all this, and perhaps that is why he let the situation get to where it has, so he can invoke a national emergency of sorts and get rid of the surplus civil servants and reform the system.

[Nikitas]

High social spending, higher than France!!! Who writes this shit!!

The dole is limited to six months, at a maximum payment of 300 Euro or somewhere near that. The health system is rudimentary, insurance payments for self employed people are hefty. Greece has the highest percentage of self employed people in the EU. IT looks like whoever wrote that piece confused the salaries of the civil servants with the social budget. His editor should fire him or her.

[Gasman]

But I fail to see what this has to do with you! It is as if you enjoy this. Why are you gloating?

Oh I am not gloating. If Greece drags the Euro down - I suffer.

The UK ain't too far behind, so go and bash on them and leave Greece alone!

Another one who just doesn't understand the National Debt/GDP etc stuff.

I posted it to try to educate Oracle a little about it. She seems to think that all that counts is the amount or percentage, taking nothing else into consideration.

And it is not an article by some Turkish biased magazine or newspaper hack. It is from STRATFOR. Subscribe and you can read all their articles!

About STRATFOR

STRATFOR’s global team of intelligence professionals provides an audience of decision-makers and sophisticated news consumers in the U.S. and around the world with unique insights into political, economic, and military developments. The company uses human intelligence and other sources combined with powerful analysis based on geopolitics to produce penetrating explanations of world events. This independent, non-ideological content enables users not only to better understand international events, but also to reduce risks and identify opportunities in every region of the globe.

The company delivers content daily on its Web site, in videos, e-mails and books, and an iPhone app.
STRATFOR delivers critical intelligence and perspective through:

* Situation Reports: Snapshots of global breaking news
* Analysis: Daily reports that assess key world events and their significance
* Quarterly & Annual Forecasts: Rigorous predictions of what will happen next
* Multimedia: Engaging videos and information-rich interactive maps
* Intelligence Guidance: Internal memos that guide STRATFOR staff in their intelligence-gathering operations in the immediate days ahead

STRATFOR’s chief executive officer, Dr. George Friedman, is a widely recognized international affairs expert and author of numerous books, including The Next 100 Years (Doubleday, 2009), America’s Secret War (Doubleday, 2005), and The Future of War (Crown, 1996).

STRATFOR members include individuals, FORTUNE 100 corporations, government agencies and other organizations around the world.

Actually, if you just bluddy google the Greece problem, you can find tons of info. Ditto googling how to understand how to interpret National Debt.

[Paphitis]

But I fail to see what this has to do with you! It is as if you enjoy this. Why are you gloating?

Oh I am not gloating. If Greece drags the Euro down - I suffer.

Then write something constructive and which is encouraging for Greece instead of trying to bash it all the time just because you have some personal issue with Oracle.

In case your wondering, the UK isn't in a flash state, and its currency is very low. I'm sure this will make you suffer as well. So bash on them you hypocrite. The UK is an easy target too you know!

The UK ain't too far behind, so go and bash on them and leave Greece alone!

Another one who just doesn't understand the National Debt/GDP etc stuff.

I posted it to try to educate Oracle a little about it. She seems to think that all that counts is the amount or percentage, taking nothing else into consideration.

And it is not an article by some Turkish biased magazine or newspaper hack. It is from STRATFOR. Subscribe and you can read all their articles!

I don't care who you wanted to "educate". We are not economists, but we do have basic understanding of economic principles. You were not trying to "educate" her. You are trolling her every post, and this is quite annoying.

About STRATFOR

STRATFOR’s global team of intelligence professionals provides an audience of decision-makers and sophisticated news consumers in the U.S. and around the world with unique insights into political, economic, and military developments. The company uses human intelligence and other sources combined with powerful analysis based on geopolitics to produce penetrating explanations of world events. This independent, non-ideological content enables users not only to better understand international events, but also to reduce risks and identify opportunities in every region of the globe.

The company delivers content daily on its Web site, in videos, e-mails and books, and an iPhone app.
STRATFOR delivers critical intelligence and perspective through:

* Situation Reports: Snapshots of global breaking news
* Analysis: Daily reports that assess key world events and their significance
* Quarterly & Annual Forecasts: Rigorous predictions of what will happen next
* Multimedia: Engaging videos and information-rich interactive maps
* Intelligence Guidance: Internal memos that guide STRATFOR staff in their intelligence-gathering operations in the immediate days ahead

STRATFOR’s chief executive officer, Dr. George Friedman, is a widely recognized international affairs expert and author of numerous books, including The Next 100 Years (Doubleday, 2009), America’s Secret War (Doubleday, 2005), and The Future of War (Crown, 1996).

STRATFOR members include individuals, FORTUNE 100 corporations, government agencies and other organizations around the world.

Actually, if you just bluddy google the Greece problem, you can find tons of info. Ditto googling how to understand how to interpret National Debt.

Your sources can't be very good, because Nikitas just blew them out of the water. In case you're wondering, he lives in Greece and should bloody well know!

If you had to pay a subscription, you should demand a refund!

[Gasman]

Mrs Orifice trolled ME when I joined this forum. Called me an idiot and a retard almost every time I posted anything. Accused me for ages of being a misogynistic 'bloke' who only liked women with big tits and all sorts. Made a right prat of herself with all the bloke insults against me - I'm not a bloke. Sneeringly calling me a newbie when I'd been here more than a year.

I even got PMs asking me not to leave on account of her (they said she was 'quite intelligent really but seems to be suffering some problems'?) Not that I'd let her or anyone else drive me off.

I guess she is not used to people 'fighting back' or just ignoring her? If she cannot take it - she shouldn't dish it out.

And why the hell should I post anything supportive of Greece? I am not Greek (nor is she), I don't live in Greece (nor does she - I at least live in CYPRUS!), I have no strong feelings one way or another about Greece. I do have an opinion about what their shameful and embarrassing current situation is doing for the EU and the Eurozone.

Mrs O is doing more than her bit to champion Greece and bring it into just about EVERY thread on the forum to the extent where it becomes laughable. And, same to you as I told O back then - I do not need your permission to post here.

Forget Greece - I believe I love Cyprus more than she does - I believe I know it as it is today better than she does and have visited and seen more of it than she ever will. I CHOSE to live here and want to remain here. More than she can say.