Creditors Getting Ready to Pay Up Again …

As Bloomberg recently reported, the official lenders to Greece are getting close to reaching an agreement on the disbursement of fresh funds to Greece's insolvent government:


„Greece’s creditors, known collectively as the troika, said they expect a staff-level agreement in coming days that would pave the way for the next payment of aid funds to the debt-stricken country.

The European Commission, European Central Bank and International Monetary Fund said “most of the core issues” have been settled, according to a joint statement e-mailed today.

Prime Minister Antonis Samaras faced down a growing revolt among coalition partners over changes to labor rules demanded by the troika as he has tried to come up with an additional 13.5 billion euros ($17.7 billion) of austerity to appease Greece’s creditors. The endorsement may bolster Samaras as he attends his first European Union summit tomorrow where he will begin lobbying for a two-year extension of the country’s bailout target.

“The authorities and staff teams agreed on most of the core measures needed to restore the momentum of reform and pave the way for the completion of the review,” the statement said.

A final deal will help unlock a 31 billion-euro aid installment that the country needs to avoid a second default. Greece remains on life support with the country mired in its fifth year of a recession that has shrunk the economy by almost 20 percent.

Samaras faces growing dissent within his multi-party coalition over the troika’s demand to overhaul some labor market rules.“

 

(emphasis added)

How can there even be a debate over the urgent need to reform labor market rules in a country faced with unemployment of more than 25%? It simply boggles the mind. One of the main reasons why unemployment soared during the Great Depression in the US was precisely that Hoover insisted that wages must not be allowed to decline.

Greek prime minister Antonis Samaras himself has recently compared Greece's downturn to this long ago calamity. He should do everything in his power to avoid repeating the mistakes that were made at the time. However, as we know, while the need to 'learn from history' is often invoked, it is a course rarely followed.

 

 

 


 

Greek unemployment rate by age group: among Greece's youth it has now reached a jaw-dropping 54.2%. Overall, unemployment is at more than 25% – click for better resolution.

 


 

Anyway, it was always clear to us that  the 'troika' would eventually release further funds to Greece, in spite of all the threats and cajoling.  After all,  the euro's 'irreversibility' must be maintained at all cost.

 

Den of Corruption

This brings us to the main point: for a number of reasons, it simply makes no sense to pour more money down this black hole. One of these reasons is that Greece's political and bureaucratic elite always was and to this day remains hopelessly inefficient and corrupt.

As German magazine Der Spiegel reports in this context, „Corruption Continues Virtually Unchecked in Greece“:


„How can someone who has declared an annual income of €25,000 ($32,400) transfer €52 million abroad? What kind of supplementary income must an individual have who, according to his tax returns, earned €5,588 in 2010, yet still managed to move €19.8 million abroad? And how can it be that a Greek citizen sequesters €9.7 million abroad although he supposedly earned exactly zero euros?

These are the questions that tax fraud investigators will have to ask of a number of individuals whose identity has so far only been made public in the form of initials. For instance, a "G. D." stands at the top of a list with the names of 54,000 Greek citizens who relocated major assets abroad between 2009 and 2011. The list stems from the Greek central bank and is now in the hands of the Finance Ministry.

It is the longest of four lists that are currently circulating in Athens. Each contains the names of people whose financial circumstances — bank balances and real estate holdings — do not correspond at all with what they claimed on their tax returns. But hardly anything is being done about it. The Greek reality is sometimes paradoxical: While the governing coalition was busy squabbling with international creditors over how many hundreds of euros can still be trimmed from teachers' and nurses' paychecks, and Athens continued slashing employee pensions, wealthy Greeks moved billions abroad with relative impunity.

The odyssey of the "Lagarde list," as it's known, exemplifies the typically lax attitude toward tax criminals. For many months, it was thought to be lost, but then it resurfaced in early October. Now, the public prosecutor for financial crimes has a copy. It lists 1,991 Greek owners of Swiss bank accounts, and reportedly includes many prominent individuals from the realms of politics, business and culture.“

 

(emphasis added)

It turns out that among the various lists of offenders there is one that is  especially politically charged: a list that has only politicians on it. This list is the proverbial 'hot potato'. The 'untouchable' members of the country's political elite that grace this list in turn are shielding their proteges and benefactors elsewhere in the system. It seems corruption not only pays well in Greece, but it also represents absolutely no obstacle to one's political career when discovered. According to the Spiegel article:

 

 

There is yet another, shorter list, which despite its diminutive size is even more politically charged. Greek tax authorities are currently investigating the assets of some 60 politicians, and the probe apparently extends beyond suspicions of tax evasion alone. The speaker of the Greek Parliament, Evangelos Meimarakis — a member of the governing conservative Nea Dimokratia, or New Democracy party — recently stepped down due to corruption allegations, and he is not the only one implicated. A number of high-ranking former ministers are also suspected of involvement in sham transactions and money-laundering schemes.


Corruption allegations still don't necessarily interfere with a political career in Greece, as exemplified by the case of the former prefect of Thessaloniki, Panagiotis Psomiadis. He allegedly personally received nearly €1 million for public works projects that were never built. Psomiadis is also suspected of being connected with a mafia ring of loan sharks. None of this has apparently damaged him. In May, Prime Minister Samaras made him his election campaign organizer for northern Greece.”


 


(emphasis added)


 



 


Panagiotis Psomiadis: alleged to have skimmed off funds for public works projects that were never built – his political career continues without a hitch so far.

(Photo via facebook.com)

 



 


We are certainly no fans of the coalition of Marxists and various other leftist groupings that form SYRIZA, but we have to agree with Alexis Tsipras on one point: the current Greek coalition is without a doubt a case of 'meet the new boss, same as the old boss'.



“"We are very bad now as a society. We have become bad. We are greedy and asocial," says Costas Bakouris, 75, chairman of Transparency International Greece. Bakouris sounds very different than many European politicians who suddenly find that things are taking a turn for the better in Greece. Now that it's clear that the creditors will continue to pay, he says people are turning a blind eye to the inevitable.

In reality, says Bakouris, an incompetent political class continues to govern the country — the same people, the same story. For decades, they have created a sick system that permeates all segments of society.

Indeed, it's not just former ministers and parliamentarians who have squirreled away millions of euros of dubious origin in their bank accounts. Investigators even discovered €2.8 million — none of which had been declared — in an account belonging to the deputy mayor of a town of only 14,000 inhabitants in the Thessaly region. The man receives a monthly salary of approximately €1,500.

Greece's largest social security organization, IKA, has been used by many in the country as their personal piggy bank. The fact that IKA coffers are actually empty hasn't stopped department heads or low-level employees from continuing to transfer money to friends and relatives who are not entitled to receive any payments whatsoever. But even everyday citizens take advantage of the system: Of the supposedly 700 blind people on the island of Zakynthos, for instance, in reality there are only 60 who truly cannot see.

 

(emphasis added)

Corruption is so endemic and has for so long been an accepted fact of life in Greece, that it is very difficult to see how it can be rooted out. Giving more money to Greece's government probably only encourages the political elite to continue down the same path. Change will require pressure, but this pressure is removed whenever creditors ship over the next tranche of funds. Of course, they only do so out of their own interest: the great bulk of these funds is immediately sent back to creditors to pay off old debts. Still, this allows the political elite in Greece to continue with what it regards as business as usual. 

As to the long tradition political corruption has in Greece and the studied equanimity with which it is regarded by everyone, consider the conclusion of the 'Spiegel' article:


The legacy of corruption goes back generations. In the days when Papandreou the elder governed the country, after the story broke that the head of the state electricity provider had lined his own pockets with some 1.5 million drachmas, the prime minister reacted with the following quip: "We all agree, of course, that we are allowed to give ourselves a little present from time to time. But please don't make it too large."



 

Andreas, the elder Papandreou, arms spread wide so as to better receive gifts: “let us give ourselves a little present from time to time, but make it not too large”

(Photo via strategic-policy.net)

 


 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • How to Survive the Winter
      A Flawless Flock of Scoundrels One of the fringe benefits of living in a country that’s in dire need of a political, financial, and cultural reset, is the twisted amusement that comes with bearing witness to its unraveling.  Day by day we’re greeted with escalating madness.  Indeed, the great fiasco must be taken lightly, so as not to be demoralized by its enormity.   Symphony grotesque in Washington [PT]   Of particular note is the present cast of characters. ...
  • Credit Spreads: The Coming Resurrection of Polly
      Suspicion isn't Merely Asleep – It is in a Coma (or Dead) There is an old Monty Python skit about a parrot whose lack of movement and refusal to respond to prodding leads to an intense debate over what state it is in. Is it just sleeping, as the proprietor of the shop that sold it insists? A very tired parrot taking a really deep rest? Or is it actually dead, as the customer who bought it asserts, offering the fact that it was nailed to its perch as prima facie evidence that what...
  • The Strange Behavior of Gold Investors from Monday to Thursday
      Known and Unknown Anomalies Readers are undoubtedly aware of one or another stock market anomaly, such as e.g. the frequently observed weakness in stock markets in the summer months, which the well-known saying “sell in May and go away” refers to. Apart from such widely known anomalies, there are many others though, which most investors have never heard of. These anomalies can be particularly interesting and profitable for investors – and there are several in the precious metals...
  • Business Cycles and Inflation – Part I
      Incrementum Advisory Board Meeting Q4 2017 -  Special Guest Ben Hunt, Author and Editor of Epsilon Theory The quarterly meeting of the Incrementum Fund's Advisory Board took place on October 10 and we had the great pleasure to be joined by special guest Ben Hunt this time, who is probably known to many of our readers as the main author and editor of Epsilon Theory. He is also chief risk officer at investment management firm Salient Partners. As always, a transcript of the discussion is...
  • What President Trump and the West Can Learn from China
      Expensive Politics Instead of a demonstration of its overwhelming military might intended to intimidate tiny North Korea and pressure China to lean on its defiant communist neighbor, President Trump and the West should try to learn a few things from China.   President Trump meets President Xi. The POTUS reportedly had a very good time in China. [PT] Photo credit: AP   The President’s trip to the Far East came on the heels of the completion of China’s...
  • Business Cycles and Inflation, Part II
      Early Warning Signals in a Fragile System [ed note: here is Part 1; if you have missed it, best go there and start reading from the beginning] We recently received the following charts via email with a query whether they should worry stock market investors. They show two short term interest rates, namely the 2-year t-note yield and 3 month t-bill discount rate. Evidently the moves in short term rates over the past ~18 - 24 months were quite large, even if their absolute levels remain...
  • Is Fed Chair Nominee Jay Powell, Count Dracula?
      A Date with Dracula The gray hue of dawn quickly slipped to a bright clear sky as we set out last Saturday morning.  The season’s autumn tinge abounded around us as the distant mountain peaks, and their mighty rifts, grew closer.  The nighttime chill stubbornly lingered in the crisp air.   “Who lives in yonder castle?” Harker asked. “Pardon, Sire?” Up front in the driver's seat it was evidently hard to understand what was said over the racket made by the team of...
  • A Different Powelling - Precious Metals Supply and Demand Report
      New Chief Monetary Bureaucrat Goes from Good to Bad for Silver The prices of the metals ended all but unchanged last week, though they hit spike highs on Thursday. Particularly silver his $17.24 before falling back 43 cents, to close at $16.82.   Never drop silver carelessly, since it might land on your toes. If you are at loggerheads with gravity for some reason, only try to handle smaller-sized bars than the ones depicted above. The snapshot to the right shows the governor...
  • Heat Death of the Economic Universe
      Big Crunch or Big Chill Physicists say that the universe is expanding. However, they hotly debate (OK, pun intended as a foreshadowing device) if the rate of expansion is sufficient to overcome gravity—called escape velocity. It may seem like an arcane topic, but the consequences are dire either way.   OT – a little cosmology excursion from your editor: Observations so far suggest that the expansion of the universe is indeed accelerating – the “big crunch”, in...
  • Claudio Grass Interviews Mark Thornton
      Introduction Mark Thornton of the Mises Institute and our good friend Claudio Grass recently discussed a number of key issues, sharing their perspectives on important economic and geopolitical developments that are currently on the minds of many US and European citizens. A video of the interview can be found at the end of this post. Claudio provided us with a written summary of the interview which we present below – we have added a few remarks in brackets (we strongly recommend...
  • Inflation and Gold - Precious Metals Supply and Demand
      Reasons to Buy Gold The price of gold went up $19, and the price of silver 42 cents. The price action occurred on Monday, Wednesday and Friday though so far, only the first two price jumps reversed. We promise to take a look at the intraday action on Friday.   File under “reasons to buy gold”: A famous photograph by Henri Cartier-Bresson of a rather unruly queue in front of a bank in Shanghai in 1949 in the final days of Kuomintang rule. When it dawned on people that the...
  • Precious Metals Supply and Demand
      A Different Vantage Point The prices of the metals were up slightly this week. But in between, there was some exciting price action. Monday morning (as reckoned in Arizona), the prices of the metals spiked up, taking silver from under $16.90 to over $17.25. Then, in a series of waves, the price came back down to within pennies of last Friday’s close. The biggest occurred on Friday.   Silver ended slightly up on the week after a somewhat bigger rally was rudely interrupted...

Support Acting Man

Top10BestPro
j9TJzzN

Austrian Theory and Investment

Archive

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com