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The Next Greek Crisis
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  • Ellen

    Thank you Prof. Mead for your use of the appropos term, which is “dead-end.” Every plan to bail out Greece will eventually hit that very same dead end because of the structural, and insolvable, problem of the Greek tax system. Greeks with money don’t pay enough taxes, and in some cases don’t pay taxes at all. Meanwhile, the government doesn’t really even try to collect taxes to any degree due to sloth and incompetence, but tax collectors are also routinely bribed not to report the violations.

    No Greek government of any stripe – right or left – is willing to address this problem honestly, so Greece will proceed on the path that it has been on for years, now toward impending bankruptcy. All the negotiations are designed to distract people from this predetermined and unchangeable outcome – the demographic and economic bankruptcy of Greece. What will finally make all of this moot, is the physical collapse of governing institutions. When that will happen is anyone’s guess. It might be another 5-10 years, but it is well on its way.

    Please note the similarities between the negotiations with Greece and the Troika, and between Obama and Iran. The same dynamic is at play here and the same result will occur. Iranian nuclear and imperial aspirations will finally be stopped, but not by any diplomatic charade by Obama. It will be stopped by warfare and regime collapse. The ineloquent Yitzhak Shamir once famously responded to a question on how Israel would survive its enemies in the MidEast with the terse answer, “Something will happen!” Nothing truer has ever been said.

  • ToursLepantoVienna

    The Greek situation represents in microcosm a malaise afflicting much of contemporary western society. Too many of us simply refuse to accept economic reality, whether in our personal finances or those of our governments and affiliated organizations.

    We occupy a fantasy land where a mountain of personal credit card debt, government deficits in the hundreds of billions, and government debt and unfunded liabilities orders of magnitude greater than that can be blithely ignored, even as the sums increase.

    Unfortunately, that “thinking” is indeed sheer fantasy. The time and nature of the reckoning cannot be predicted, but surely its consequences will be dire.

  • rheddles

    Greece has clearly had it with Catholic/Protestant EUrope. They just don’t want to play their way. So they should go to their Orthodox brother in the third Rome and get the assistance they need. I am sure they will be much happier there.

    • Curious Mayhem

      Perhaps they’ll do worse, but feel better.

  • Dustoff

    Put a fork into Greece, they are doomed and it’s all self-inflicted.

  • Ulysses4033

    Greece’s doom, unfortunately for the utopians of Europe, dooms the Eurozone and seriously threatens the already-fragile international financial system. And this, too, is self-inflicted. Europe continues to ignore the lessons so violently taught by its first generation of social engineers: we cannot change human nature by fiat, we can only violently suppress its expression. The sad irony is the significant number of Americans who think this is a good idea.

  • Curious Mayhem

    How about a “post-euro” strategy? Because that’s what’s needed. Syriza is not “anti-euro.” It’s about having it both ways — all the conveniences and niceties of the Eurozone, with someone else paying the bills.

    The can-kicking used to be a few years long. Now it’s a few months.

  • FriendlyGoat

    When we hear some people lamenting their prediction that the USA may someday become “like Greece”, are they clamoring for more comprehensive taxation and tax collection in the United States?

    • Josephbleau

      This article was only about Greek inability to collect taxes, with the exception of Geitner and Summers the U.S. IRS is quite willing to put non payers in debtors prison.

      • FriendlyGoat

        And yet we hear about hundreds of billions which go uncollected here every year—-mostly from businesses, since wages with W-2 forms are hard to hide.

        Taxes on income are the hardest to define and collect, but taxing net income is a more proper approach than taxing mere transactions. Why is it not obviously MORE moral to tax the part of the profit (only if profit is made) from a sale than to tax the sale itself. We have people in this country who would move everything to a sales tax (the so-called Fair Tax) and others who think we would simplify by having a flat-rate income tax—-IMAGINING that there is no necessary complexity to calculating taxable income. Just have a one-page tax return they say, as though a flat rate would permit that.

  • Angel Martin

    a functioning personal income tax system required that the overwhelming majority of taxpayers comply voluntarily

    if that is infeasible in greece, their options are limited.

    in theory, VAT is harder to evade but if there is corruption it is actually easier

    greece could radically cut government spending…

    the only tax that can really not be evaded is inflation – especially in an economy like greece where people deal in cash to evade income tax and VAT

    but that requires exit from the eurozone

    • Curious Mayhem

      Inflation can’t be ignited in Greece, because the population is aging or leaving (money velocity within Greece falling). Greece will go bankrupt, probably soon. It will need to leave the eurozone in any case.

  • Fat_Man

    Greece is just first. The rest of the EU is next. The US will follow them shortly thereafter.

    Clearly the problem is not tax collections, if the Greek government had collected more taxes they would have squandered more money, borrowed more and be in an even deeper hole.

    All of this was predictable, all of it was predicted. Sauve qui peut.

    • Curious Mayhem

      Mais oui, monsieur 🙂

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