Due to an ongoing health crisis in the family, blogging will be 'on and off' as time and circumstances permit for the foreseeable future. I also beg your indulgence if I am slow in responding to emails. New posts will appear below this notice.

Wednesday, June 29, 2011

For Many Greeks, Here's What Austerity Will Look Like

A top ten list of austerity measures adopted. This is the sort of thing that imposed all at once can destabilize a country.
  1. Taxes will increase by 2.32 billion euros this year and 3.38 billion, 152 million and 699 million in the three subsequent years. There will be higher property taxes and an increase in the value-added tax (VAT) from 19 percent to 23 percent.
  2. Luxury levies will be introduced on yachts, pools and cars and there will be special levies on profitable firms, high-value properties and people with high incomes.
  3. Excise taxes on fuel, cigarettes and alcohol will rise by one-third.
  4. Public sector wages will be cut by 15 percent.
  5. Defense spending will be cut by 200 million euros in 2012 and 333 million each year from 2013 to 2015.
  6. Education spending will be cut by closing or merging 1,976 schools.
  7. Social Security will be cut by 1.09 billion euros this year, 1.28 billion in 2012, 1.03 billion in 2013, 1.01 billion in 2014 and 700 million in 2015. There also will be means testing, and the statutory retirement age will be raised to 65 from 61.
  8. The government will privatize a number of its enterprises, including the OPAP gambling monopoly, the Hellenic Postbank, several port operations, Hellenic Telecom and will sell its stake in Athens Water, Hellenic Petroleum, PPC electric utility and lender ATEank, as well as ports, airports, motorway concessions, state land and mining rights.
  9. Only one in 10 civil servants retiring this year will be replaced and one in five in coming years.
  10. Health spending will be cut by 310 million euros this year and 1.81 billion euros from 2012 to 2015. 
From here.

7 comments:

sjgmore said...

I agree that when "imposed all at once" it has a destabilizing effect, but as we've seen in America, the political classes of a nation typically refuse to implement any of these types of things incrementally.

It's a hard lesson, and let us hope that other nations actually learn from it. (Not likely.)

The Anti-Gnostic said...

Taxes: they won't pay them.

Fr Theodore said...

Austerity is called for. But pushing this much all at once does not bode well when one remembers that all those millions and billions of euros really represent human lives. It calls to mind the crushing reparations forced on Germany by the Allies after WWI; remember what that led to? Let us hope this does not backfire on those who are imposing it.

Greece may need to clean up its act, but what about those who loaned it more than it could repay? I am not an economist, so I could be way off-base, but didn't the creditors do as much to create this mess as the borrowers did? Who is calling them to account? It seems to me there is as much international greed in play as there is Greek entitlement.

sjgmore said...

Oh, Fr. Theodore, I think it's infinitely more a case of international greed than Greek entitlement. The Greeks only feel entitled in the first place because they were promised more than the creditors could actually deliver, and they voted and raised their expectations accordingly.

Daniel Hannan, a British MEP, wrote on his blog that as of right now, 26% of the Greek government's debt is held by other European governments, while 42% is owned by financial institutions outside of Greece. After the bailout that these austerity measures are paving the way for, those numbers will change drastically: by 2014, 12% will be owned by the foreign banks, and 64% will be owned by European governments.

In other words, the bankers lose practically none of the money they should lose and the citizens of Europe will be out billions of dollars of what they've paid in taxes. And since the Greeks will still likely default in the long term, the taxpayers are never going to recoup the money they've paid, and the Greeks will be living in dire austerity with nothing to show for it except higher debt than they already have.

While everybody argues over free markets vs. socialism, supporters of both are getting fleeced by a Chimaera-like blend of the two: Privatized profits, socialized losses.

Anonymous said...

"We get the austerity program we deserve", attributed to a financial reporter covering the Athens riots.
The Greex have absolutely no other choice, and the parliament knows their scams are finished.
The decades old corrupt government banquet is over, and now the common citizens must wash the dishes.
The same fate awaits many countries, a nightmare which will consume generations.

Anastasia Theodoridis said...

De-stabilizing the country is, of coruse, the whole idea. It's the new form of imperialism.

David said...

Poor Greeks, they's victims!