Sunday, June 28, 2015

Greece and Europe

Having been reading the reports about Grexit (as well as possible Brexit) in the newspapers the current position  as regards Greece appears to be that their recently elected left wing government wishes to continue to have that country financially supported by the rest of the Euro members of the EU but without applying the financial curbs and checks that the others seek to impose.

I can understand huge reluctance to accept financial stringency which applies as much to individuals as to nations. However so far as the latter are concerned Portugal and Ireland whose economies were also in dire straits not that long ago essentially accepted the financial conditions  imposed by other Euro members for the latters continued financial support  and are now if not thriving at least doing very much better economically than they were albeit at heavy though temporary, price to their citizens.

Greece has a left wing government and it has to be said a social conscience for the poor. The problem as I see it is that paying for social needs requires a fund of cash which not unreasonably governments around the Western World at least seek to raise by taxing those who can afford it. The exceptionally wealthy are apt targets for such fund raising taxes but sadly despite media articles about outrageously wealthy individuals, bankers footballers and computer whizz kidds etc, there are in many countries sadly  insufficient  of the really rich to fund the poorest 25% in the way that the Greeks are currently seeking.

Notwithstanding the increase in the wealth gap between the rich and the poor which needs urgently to be tackled, taxing the richest in Greece by higher and higher amounts seems unlikely to provide the funds required to stave off that nation's bankruptcy. Of course the Greek shipping companies and similar groups may have taken their assets out of the country and/or pay an unfairly small share of the total tax bill but that is a problem which has been allowed by the Greeks to fester for years.

Essentially  if the nation relies on others for its funding then sadly it has to comply with the lenders' requirements in much the same way as I have to comply with the bank's requirements when negotiating a loan. If I say no then so will the bank.

I cannot see why the Greek government should be treated any differently. If the government says no then so will the lenders as no one owes the government a living.

Almost as an aside although I gather that this is really a part of the problem it is truly amazing to learn that Greek people qualify for state pensions at age 55. I cannot see any justification for a government, left right or centre complaining that international lenders are failing to support such young pensioners. Retirement age in the UK is generally far higher and is set to increase  not only in view of the unaffordable cost but also as we are all living longer.

The same factors should surely be applicable to Greece.

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