If Greeks Did This, the Terrible Crisis Would Be Over

The Greeks – the poor, downtrodden, Troika-tortured Greeks – yanked €12 billion out of their own banks in January alone to send this moolah out of the country or hide it in their fridges, culminating waves of capital flight that started years ago. Greeks have been busy siphoning their wealth out of Greece in other ways too, buying homes in Berlin and London, and investing their money elsewhere in a myriad ways.

The Greeks trust their already bailed-out but still putrefying banks as far as they can throw them. To keep them from toppling, the ECB is propping them up via the Emergency Liquidity Assistance (ELA) program, providing many billions in cash so that Greeks can continue to yank their own money out and send it for safekeeping somewhere else.

Greeks at all levels are notorious for not paying their taxes. Successive governments tried to levy new taxes to make up for taxes that Greeks simply refused to pay. They tried to crack down on select groups of tax cheats, going variously after the small fry or a few trophy rich. But to no avail. Greeks simply don’t like to pay their taxes. In that respect, they’re the same as the rest of humanity. They’re just better at it.

And it wouldn’t even occur to Greeks to buy Greek government bonds, though the government needs to sell bonds desperately to exit the debt crisis, move the economy forward, and finance the government’s profligate ways, sandwiched between capital flight and tax evasion.

So for years, the theme has been to shanghai taxpayers in other countries to pick up the tap, mostly those in Germany (on the hook for the lion’s share), but also in France (second in line), as well as other Eurozone countries, along with taxpayers in all countries that participate in the IMF, including our underpaid and overtaxed Americans. None of them have been asked, but all of them have been roped into paying and guaranteeing what the Greeks themselves simply refuse to pay.

So Greece – the government, not the people – is still bankrupt even though it already gave the remaining private-sector bondholders a high-and-tight but “voluntary” haircut in 2012. About 77% of Greek government debt is now held by taxpayers of other countries through various institutions. But only a minuscule amount of Greek government debt is actually held in Greece.

Japan is in much, much worse fiscal shape. It has been borrowing nearly half of its entire budget, for years. Its gross national debt is headed for the ignominious level of 250% of GDP, far above Greece’s 150% or so. But there is no debt crisis in Japan. Japanese institutions and individuals have always bought Japanese government debt and own almost all of it. Only a sliver of about 5% is owned by foreigners.

It would never occur to the Japanese government to go begging to Germany or anywhere else for a bailout. Whatever fiscal fiasco the Japanese are facing, they will deal with it themselves. Abenomics is now defining who exactly gets to bear that cost. But it won’t be the Germans, the French, and the hapless Americans. It will be the Japanese.

Instead of stewing in their own misery, Greeks need to repatriate their money into Greek banks, all of their money. They need to clean out their bank accounts in Switzerland, Luxembourg, and London, and deposit this money into Greek banks. Hundreds of billions of euros. That would immediately solve the bank-run crisis.

They need to pay taxes on this money. And they need to pay their taxes for the last 20 years, all of their taxes, including penalties. They need to do so pronto, and with a smile. This is about Greece after all, the country they’re so proud of, and that needs them in this hour of duress. Knowing this, they’ll gladly stop cheating on their taxes from now on, at all levels, from the fruit seller on the street or the doctor that takes cash for her services or even the oligarch. Budget crisis solved!

Greeks need to sell their homes in Berlin and London and elsewhere, and they need to liquidate their investments in other countries and repatriate this wealth and build homes and factories and shopping malls and internet companies in Greece. They need to spend some of this money in Greece on consumer goods. They need to splurge on Greek food and booze. They need to invest this money in companies that design and build cool motorcycles in Greece, install solar panels on every roof, invent the next iPhone or rather a still-to-be-envisioned gadget…. And they need to pay their workers properly. Economic crisis solved.

And they need to stand in line and jostle for position to buy 100-year Greek government bonds that the new government would be all too happy to issue once there are enough buyers lined up to bring yields down to 2%. And these Greek buyers should do so with a patriotic, proud smile; they’re investing in their beloved Greece for the long run.

The proceeds from these massive bond sales should then be used to redeem all government debt that public institutions in other countries now hold, thus taking their taxpayers, including Americans, off the hook. The government then needs to pay its arrears to suppliers, healthcare providers, to every business it owes money, and it needs to pay its current bills with lightening speed. This would allow those businesses to pay their suppliers, and it would set in motion a tsunami of money getting handed from one business to the next. It would stop bankruptcies in their tracks.

Debt crisis solved!

It would be a proud moment in Greek history. The Greeks would know that they’d done it on their own! Greece would pull out of its funk in no time. And to heck with the Troika.

But if Greece still can’t pull out of its funk, or if some corrupt government or banking cabal or oligarchs siphoned the money back out of the country for their own purposes, or if it’s wasted on boondoggle projects in murky deals worked out between cronies, the government then needs to convert the euros remaining in Greece into drachmas over a holiday weekend and start printing more drachmas to fund its ways, like Japan prints yen. Debt crisis solved once again.

And if the Greek people see this as an unpalatable scheme and don’t fall for it?

Well, um, that begs the question: why should taxpayers in other countries then be stupid enough to fall for it? Something the new Syriza government should contemplate strenuously.

And the ECB? This would be hilarious if it weren’t so serious. Read…  What the ECB Has to Do to “Prevent a Market Meltdown”: French Megabank

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  24 comments for “If Greeks Did This, the Terrible Crisis Would Be Over

  1. matt says:

    Greece has several billion in IMF loans due in the next month euro wise they have said they can not pay due to no money and they may have to defer payment since people are refusing to pay taxes. The Trioka or whatever they are calling it now has refused to extend any more money or deadlines. Grab the popcorn as 4 deadlines for loan payments are due in March

    • Petunia says:

      If the Greeks default the crisis would be over for them and beginning for everybody else. The default will trigger all the credit default swaps to pay out, Lehman all over again. This is what will get them a deal.

    • robert h siddell jr says:

      Socialism always gets out of hand and destroys economies. Now that the Socialist have so bankrupted Greece that they can no longer live off others production, we will see if they can now work together to produce food & necessities themselves so everyone survives or will they continue to riot and rob others and escalate to rape and murder. Anyone want to bet?

  2. VegasBob says:

    Like most people, Greeks want to have their cake and eat it too.

    So they celebrate their independence from government by refusing to pay taxes, while they simultaneously celebrate their dependence on government by lining up to collect what used to be a generous array of social welfare benefits.

    So what’s not to like about that kind of system? Oh yeah – there was that silly old Maggie Thatcher quote: “The trouble with Socialism is that eventually you run out of other people’s money.”

  3. Ben says:

    Absolutely! Greeks need to grow up fast after 180 years of overloaned/ bad-spent hyperprotective/manipulative/ win-win breeding from world’s western leaders. Are the latter really up to it? Really?

  4. pete says:

    Excellent Wolf.

    I know the Germans get a bad rap… complaining about this stuff, you know, the profligate Greeks spending other peoples money…but they’re right and you are right. Excellent comparison v. The Japanese too!!!…PJS

  5. SteveK9 says:

    Even simpler … exit the Euro. Things were never this bad with the Drachma. It will be tough now, but sticking with the Euro means they will never recover. Once they leave, and start doing better, there will be a rush for the exit … Spain, Portugal, Italy, then Ireland and even France. That will leave a monetary union of Germany, Austria, Netherlands and whatever Eastern European countries choose to be vassals of Germany.

    • Christoph Weise says:

      Exactly! And this is why the EU administrators in Bruxelles are doing virtually everything to prevent the GREXIT. It would take a lot of courage to pull the GREXIT through and the future will tell if the courage is there or not.

  6. santcugat says:

    If you are wealthy enough that this would make a difference to Greece’s public debt, there’s a much easier solution: move out of Greece. EU freedom of movement and all that.

  7. Mary says:

    So wealthy Greeks love their money more than their country? That’s a shocker. We’re better than that, right? Of course, there was that story about Bain Capital hiding funds in offshore accounts…..

  8. NY Geezer says:

    “Greeks at all levels are notorious for not paying their taxes.”

    Yes indeed. Why should Greeks pay their taxes when there is no effective enforcement mechanism? Why should Greeks pay a tax levy if it can be thwarted in the notorious Greek tax court system where a hearing on the levy can be delayed for decades? Forget about the merits of the case. By virtue of the availability of delay the case is just a farce.

    I can’t think of any country whose citizens would pay taxes under those circumstances.

    that can be thwarted challenged successfullySuccessive governments tried to levy new taxes to make up for taxes that Greeks simply refused to pay. They tried to crack down on select groups of tax cheats, going variously after the small fry or a few trophy rich. But to no avail.

  9. NOTaREALmerican says:

    So, uh, basically the Greeks have figured-out that there are two kinds of people in the world: the scammed and the scammers. Or, put another way, the Greeks have figured-out that there are two kinds of people in the world: the smart-n-savvy and the dumb-n-clueless. Or, maybe, the Greeks have figured-out that there are two kinds of people in the world: the duplicitous adults and the confused children.

    Eventually, even the dumbests-and-most-clueless scammed children figure-out their government is dysfunctional and isn’t worth giving tax money to.

    Bonus question: What kinda people are the American, German, and French taxpayers?

    • bark says:

      This is an effective way to reign in the over spending of the Greek government. It works until third parties come along to enable the over spending to continue.

      There you have it…
      Eventually, even the dumbests-and-most-clueless scammed children figure-out their government is dysfunctional and isn’t worth giving tax money t

  10. GroundedMadness says:

    Nonsense. The creditors should stop robbing their people to send money to Greece.

  11. Jerry Bear says:

    And the tooth fairy is going to wave a magic wand and everything will be hunky dory! Yeah right. That is like waiting for the Second Coming. The current debt can never be repaid and the current government cannot nor should it survive. I think there should be a revolution in Greece and the government overthrown. The best replacement in the short run is socialism. Socialism is strong medicine but can be effective in emergencies. It worked very well during WWII for the U.S. At any rate, a dedicated and ruthless socialist regime in Greece could institute the mnecessary austeries and reprganization, then gradually shift to a more capitalist economy. The current upper classes in Greece, though, deserve to be dragged out into the streets and shot as traitors before a mob screaming for their blood. When an upper class becomes hopelessly corrupt and parasitical, extermination isnt a bad strategy. French culture in the 29th Century was immensely reinvigorated by the eradication of the old aristocracy in the revolution. I am not impressed by Thatcher. The problem with her brand of robber-baron capitalism is the rich eventually run out of other people’s money to steal when they have taken everything. The only thing that can happen next is revolution or the ruin and destruction of the nation. At any rate, her followers have ripped the productive heart out of the British economy in their desperate attempt to hand everything to the ultra-rich and have left destitution,misery and decay behind. It is an out and out falsehood that socialism cannot be productive as she is implying. During the Soviet heyday, say from 1920 to 1970, the Russian ecoonomy grew by 50 times. The economy of great Britain grrew by a factor of 2. The main reason I think is the leading powers of Great Britain decided to turn the country into an investment haven for the ultra rich rather than an industrial powerehouse producing floods of goods for the world market as had been the case in the 19th Century. Oh well, as the saying goes, the poor eventually will be left with nothing to eat but the rich.

    • robert h siddell jr says:

      Jerry Bear is a typical Marxist…The newest Greek Socialist government climbed their Olympic tower (paid for with borrowed money) waving their flag with expectations of a Thermopylae type victory (more debt forgiveness) and launched into a Swan Dive (even though their sugar daddy said he won’t refill the pool). Will North Europe refill their pool for free; will Greece do a bloody belly flop; are European banks next; will the BRICS come to the rescue; what will Spain, Italy, Portugal, Ireland, and France do? Stay tuned because the climax could be next week.

      • Jerry Bear says:

        “Jesus Christ was not a Christian, Buddha was not a Buddhist and I am not a Marxist!” Karl Marx

        I have to wonder what exactly a “typical” Marxist is supposed to be. There is huge diversity among self-styled Marxists, just as there is among Anarchists or Libertarians.
        I am a student of Karl Marx, at least in his mature thought, especially Das Kapital. He predicted a century and a half ago the world we live in in stunning detail. Nobody else comes close. That is to me adequate reason to take his ideas seriously. I have no sympathy with the old stye Soviet Union. Their society was basically fascist as was true of their many imitators and successors. The old American Communist Party were a bunch of quislings who acted as agents for Soviet foreign intelligence and hardly were treated anywhere near as bad as they deserved. I don’t call myself a Marxist because Marx is not the name of any deity I worship. but the genuine ideas of his mature though are extremely important to study if you want to have any real understanding of what is going on now and how it will eventually end up, Marx emphasized common sense in his ideas and I think that is the source of their power, why don’t you look into it instead of presuming you know all about it? Perhaps you are fearful of having an open mind?
        Maybe you think your brains will fall out? ^,..,^

  12. rjohnson says:

    Our host is offering a tongue and cheek solution to the Greek slow motion train wreck. The problem can be solved, it is merely beyond the scope of humanity to behave as rational actors on the economic stage.

    Can you imagine Californians lining up to sell their vacation homes and dump their Prius’s to balance the budget?

    You guys are way too serious.

  13. Ben says:

    I have also to point out that Greece RUNS a primary surplus (2014) through blood and tears. Whether the former government has acheived this by honest or dishonest tactics is an INTERNAL matter, major for its viability-I have to admitt. Now, the new government says that it IS concerned about this viability and asks for room to breath.
    That said, some of you may proceed with your happy finger-pointing.

  14. Julian the Apostate says:

    I see that Jerry Bear has drunk the Kool-aid. He doesn’t understand the difference between the looting rich(Soros and his ilk) and the productive rich, like John D. Rockefeller and the other 19th century Captains of Industry (robber baron is an anti-concept) who launched the modern age and laid the groundwork for whatever device he is using to spew his noxious philosophy. Socialism never becomes Capitalism. It is the gateway drug to Totaltarianism.

    • Jerry Bear says:

      Please do not bring up the utterly farcical notions of that crazed monster whose real name was Alitsiya Rosenbaum. I loved her books Anthem and The FountainHead for their romantic individualism, but by the time she got around to writing “Atlas Shrugged” she was a confirmed amphetamine addict and no longer truly sane, I can think of few misanthropes and rabid haters of humanity that are her equal. The “Fountainhead” was sick, sick sick. Objectivism is a silly yet monstrous philosophy (Ayn Rand only ever took a single one semester course in philosophy, guess why she basically stops with Aristotle?) that is suitable only for gullible teenagers who think they know a whole lot more about the world than they in fact do. Let us not be pathetically naive and keep our discuassion on an adult level.

  15. Paul Ashton says:

    Here is the problem with Greece.

    Before the Euro, nobody paid their taxes. This was not a problem because the government simply printed drachmas in order to fund itself. This, in itself, is a form of taxation because when the government prints money, all of the money currently in circulation gets devalued.

    For example, if there is 100 in circulation and the government prints another 100 then the currency in circulation is devalued by 50%. This is effectively a 50% tax on all citizens and companies that is very easily collected.

    When the Euro came along, the government could no longer print money and people continued to pay no tax so the government had to borrow until it could borrow no more. That ‘borrow no more’ moment is now here.

    The only way that Greece can remain in the Euro is to replace all of its uncollectable income taxes with a VAT and crack down hard on the inevitable smuggling trade that would emerge as a result. Because traders would simply either not collect or not report the VAT monies to the tax collector, the Greek government would need to copy the Brazilian model of issuing lottery numbers on each receipt; thus causing patrons to demand a receipt.

    The other option is to return to the Drachma, write-off all debts at home and abroad and then return to money printing as a form of tax.

  16. ROFLMAO says:

    Someone should have told the passengers on the Titanic to get their asses below and start bailing to save the ship. How dare they take to the lifeboats!

  17. Christina Kelaidi says:

    Your article makes people think that “the Greek people” as a whole have large amounts of money stashed away in banks overseas and have homes in London etc. That is very misleading!!!!!!!!!!!!!!!!!!!!!!!! I assure you it is those fortunate few who do!!! Let me also tell you that it is international insurance companies that helped and them take their money out of the country depositing it in Luxembourg and so on.

    As for the taxes everybody is talking about, Greek people have been taxed and are paying their taxes!!!!! They refuse to pay taxes for things they have already been taxed for over and over again!!!!!!!!!!!!!!!!

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