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Two years ago I wrote this diary detailing how Greece got itself into trouble.

The NY Times a couple days ago had this article which serves as a follow-up:

The emphasis is this article is important since the story of Greece that has been perpetuated by people like Michael Lewis is that the Greeks spend too much on social welfare (untrue), that the Greeks have too many gov't workers (untrue), that they don't pay taxes (85% receive paychecks with deductions and they have a 70% tax rate, the country also collects 40% of GDP in revenue).

These articles highlight the real reason Greece is in trouble. A vendor-finance scam with arms manufacturers and European banks sends money from Euro taxpayer pockets to the wealthy bankers and manufacturers and corrupt Greek politicians. With little to no risk. Because any losses are sopped up by taxpayers.

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Comment Preferences

  •  Tip Jar (13+ / 0-)

    There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

    by upstate NY on Sun Feb 09, 2014 at 07:27:43 AM PST

  •  That sounds a lot (3+ / 0-)
    Recommended by:
    Egalitare, allenjo, The grouch

    like the banks in the US.

  •  The overspending on social welfare part... (1+ / 0-)
    Recommended by:
    thestructureguy still true, it's just not the entire story.  Even there, it's more a government overemployment issue than the government being overly generous.

    •  Libertarian crap! n/t (1+ / 0-)
      Recommended by:
    •  like everything, there's many sides to the story (3+ / 0-)
      Recommended by:
      virginislandsguy, erush1345, MGross

      another is the level of corruption across the entire government as well as rampant tax evasion and a severely broken tax collection system. One estimate says €30 Billion goes uncollected per year:

      Just a microcosm of the problem - Athens has a subway system. Having spent a few days there, I often felt like I was the only one actually paying the fare required. Everyone else simply didn't pay while fare collectors looked on, uncaringly.

      They have big problems.

      KOS: "Mocking partisans focusing on elections? Even less reason to be on Daily Kos."

      by fcvaguy on Sun Feb 09, 2014 at 08:23:58 AM PST

      [ Parent ]

      •  Tax evasion story is overblown as well (0+ / 0-)

        To say they miss $30 billion is tax revenues each year is to imply that this is what got them in trouble. You need to compare their very high rate of tax evasion to others.

        The EU average is 18%, USA is at 15%. But the USA has very low levels of taxation (under 20% of GDP collected in taxes). This means that you practically have legalized tax evasion (ask Mitt Romney). With high rates, you have more evasion. Especially in a small service (i.e. tourist based) economy.

        The fact is, Greece collects 2x more tax per person as a % of its GDP than the USA does. You have to put these numbers in context.

        There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

        by upstate NY on Sun Feb 09, 2014 at 12:40:05 PM PST

        [ Parent ]

    •  you have citations from unbiased sources (0+ / 0-)

      to support that "concern", right?

      “Vote for the party closest to you, but work for the movement you love.” ~ Thom Hartmann 6/12/13

      by ozsea1 on Sun Feb 09, 2014 at 09:30:27 AM PST

      [ Parent ]

    •  600,000 workers for 11 million people (0+ / 0-)

      Less than the USA and much less than the rest of Europe.

      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

      by upstate NY on Sun Feb 09, 2014 at 12:37:17 PM PST

      [ Parent ]

      •  Government spending is not limited to (0+ / 0-)

        government employees.  Transfer payments frequently dominate government spending around the world.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Sun Feb 09, 2014 at 01:46:05 PM PST

        [ Parent ]

        •  All numbers indicate that Greece spends very (0+ / 0-)

          little in almost every single category other than military weaponry. We are talking about a country of 11 million with $150+ billion of military weapons purchases in the last decade. Whereas the European average for weaponry spending is .5% of GDP, Greece is over 10x that amount with 5.5% of GDP.

          They have a current primary surplus.

          Take away 5.5% from their annual budget deficit, and they are not only in the black with a primary budget surplus (currently at $1 billion + for 2013) but also in the black for their total budget.

          There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

          by upstate NY on Mon Feb 10, 2014 at 07:32:10 PM PST

          [ Parent ]

  •  so like we have here with congress and the MIC (4+ / 0-)
    The €600,000, for instance, bought Mr. Kantas’s silence on the tanks, which were deemed of little value in any wars Greece might fight, according to Constantinos P. Fraggos, an expert on the Greek military who has written several books on the subject. Greece went ahead and bought 170 of the tanks for about $2.3 billion.
    Adding to the absurdity of the purchase (almost all of it on credit), the ministry bought virtually no ammunition for them, Mr. Fraggos said.

    It also bought fighter planes without electronic guidance systems and paid more than $4 billion for troubled, noisy submarines that are not yet finished and sit today virtually abandoned in a shipyard outside Athens.
  •  If the Greek government was that corrupt, (3+ / 0-)

    do you really think it was limited to arms purchases and deals with the banks? It surely extended to everything else including taxes, benefits etc.

    •  ??? (0+ / 0-)

      We're talking about vendor finance scams here.

      What incentive would a vendor have to mess with taxes and benefits?

      Greece collects 40% of its GDP in taxes

      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

      by upstate NY on Sun Feb 09, 2014 at 12:41:56 PM PST

      [ Parent ]

  •  I'm not an economist (1+ / 0-)
    Recommended by:

      When attempting to learn about Greece -I read lots from lots of sites.   Even Libertarian-econ sites recognized that Greece was over-run by corporations, aka Goldman Sachs.  

       When you have a country run by folks who can be bought  then they were!    The Country was then abused by the EU Troika when they were given "bail-out" money - that never arrived in Greece - but ended up in the pockets of banks.  

    •  The Goldman Sachs story was a canard (0+ / 0-)

      Carefully erected. It's designed to allow the banks that loaned to Greece the ability to say, "We didn't know, the people should pay."

      It was a Eurozone problem from the start.

      Greece was under the debt line.

      Read here:


           1. Greece should never have joined the euro -- it used false statistics.

              People often make the mistake of lumping these two issues together when there is clear distinction between the two. There is a valid economic argument that Greece, and several other countries, should not have joined the euro when they did. In Greece’s cases, it had achieved only a superficial convergence based on public debt and deficit figures but the negative underlying economic factors should have meant that the Greek organ was rejected in this currency transplant. The structural problems that Greece never addressed, such as its decrepit public administration and weak production base, meant that it was at a disadvantage from the start and would have had to undergo a remarkable transformation -- one which was never attempted by the country’s timid politicians -- to achieve a sound footing within the eurozone.

              Instead, Greece ended up producing only one euro of its own wealth for every three that it imported over the last decade. However, this issue is totally removed from that of forged statistics. It has become a throwaway line for commentators and journalists to write that Greece fibbed its way into the euro. This misconception is largely driven by the decision of the New Democracy government that came to power in March 2004 to conduct an audit of public finances that led to Greece’s budget deficit figure being revised upward, above the 3 percent of gross domestic product limit for euro-area members. However, the deficit increase was largely down to the conservative administration changing the way military expenditure was recorded. Rather than record the spending when the procurements were delivered, it attributed them to the date when the orders were made. This exposed a weakness in the way that the eurozone treated statistics. By failing to agree on a uniform system for all, it allowed statistics to be open to political manipulation in several member states, not just Greece. It is an issue that the European Commission has only addressed over the last few months. As Dimitris Kontogiannis revealed in Kathimerini English Edition recently, the EU now uses the delivery method to record procurements, which means Greece’s deficit when it joined the European Monetary Union in 1999 met the 3 percent target.

              According to the Commission’s database, several other countries’ deficits, including France and Spain, were over 3 percent. Some will argue that this is irrelevant now and in a sense it is. But the regular rehashing of this myth has contributed to the impression among commentators, as well as average Europeans, that Greece has to answer for an original sin even though this offense was never committed. Establishing the truth has to be the first step to rebuilding trust.

      The Goldman Sachs deal was well known to Eurostat, and everyone was doing it. Why? It was a currency conversion trade, back when the euro was par with the dollar. When the EU was told about such deals, the FMs insisted that such deals were legal and should continue in the same fashion. It wasn't secret at all, as the article in Risk shows.

      I think I know why these myths are perpetuated. It's so that the banks who lent to Greece can claim "We didn't know!!" when they did. It serves as a distraction.

      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

      by upstate NY on Sun Feb 09, 2014 at 12:44:15 PM PST

      [ Parent ]

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