Greece braces for further austerity measures

[Lars77]

Let's take a look at what further austerity measures will actually mean for Greeks.

[anon-y-moose]

1. what a wonderful concept !

To restore to a vibrant economy.........
1) make the poor poorer!
2) make the sick sicker!
3) make the uneducated dumber!
4) steal the money that you put away for old age!

To be polite,"bankers should be beat with rusty hammers".

[Flatulo]

2. Greece is screwed. They have no good options.

Their public sector has taken quite a few hits but the burden is still exceeding their ability to pay, given their non-existent tax collection system. They're trying to sell bonds to raise money, but there aren't any takers, even at 6 - 7% interest. The Fed may end up buying their shitty bonds with the ECB just to avoid a derivatives calamity in the US banking system (you didn't think Wall Street would actually stop fucking around with credit default swaps, did you?)

This should be interesting.

[Flatulo]

3. I'm doing my share to help - I buy lots of Greek yogurt.

It really is first rate stuff.

[Flatulo]

4. Their public sector is overpaid compared to the private sector.

http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1406.pdf

I know it's blasphemy to say such things, but here's a study of public vs private compensation done by the ECB for 10 Euro countries. See the graph on page 10. The public sector earns between 1.2 and 1.3 times what the private sectors does, albeit their public sector is better educated and perform a higher level of duties. Spain is over 1.6x difference.

[Lars77]

5. Should'nt people who are better educated and perform a higher level of duties be paid better?

[Flatulo]

6. Oh, I agree - but that doesn't help their situation.

The Greeks simply can't pay their bills.

I wish them the very best of luck out of this crisis.

[Lars77]

7. Sure, but this notion that the public sector is a drag on the economy is a very american idea

There's plenty of countries out there with a large public sector who are doing fine. Like Sweden for example.

[Flatulo]

8. Yes, but Sweden is an industrial powerhouse for their size/population,

plus they tend to pay their taxes.

The Greeks, rich and poor, have a very spotty record of voluntary compliance with their tax laws. ( I don't know this for a fact, but it has been heavily reported lately from various sources).

[Lars77]

9. Yup, but i was referring to your first post :)

[Flatulo]

10. Well, there has to be some optimum size of the

government for the population and revenue and clearly Greece isn't there.

They've been chronically broke for decades and it's not like just the US with its rather meager welfare state are lecturing. Other EU countries are telling them that they have to scale down their government.

Now one might argue that it's no one's business how Greece structures their society, but since they are dependent on other states for their survival, those other states have a say in how the bailouts are spent.

[Lars77]

11. Yep, i just don't agree that shrinking the public sector i.e. laying off people is the only fix.

This notion that only the private sector can create wealth is bogus. Putting more people out of work will shrink buying power and make it even worse, it is a short sighted fix.

Still, Greece is in deep trouble, no doubt about that.

[Flatulo]

12. Ironically, they probably wouldn't have to layoff public

employees if they could just collect the taxes that are owed. Same goes for Italy, Spain and Portugal. There must be some kind of cultural aspect to this for so many Mediterranean countries to be so lax in this regard.