The Budget deficit keeps growing because e x p e n d i t u r e s are not receding. Why? Maybe the so called Greek government is waiting for the Fall, when the days get shorter?
Instead of doing what Ireland and Portugal are doing, reducing public payrolls mainly through reduction of the size of the public sector, the Greek government is taxing the strength out of the private sector - the only part of the economy that can create wealth and jobs - and withholds payments due to the private sector, thus accentuating the sector’s problem of liquidity, to the detriment of the entire economy. Why? Maybe because Papandreou needs to know for sure that Greece is dying a slow death before he moves to action?
The government is committed to restructuring the Greek economy to thus enable it to charge forward. It honors its commitment in ways that delineate its devotion to its old fashioned ways, the very ways that brought Greece down, eventually. Why? Maybe because PASOK needs a rude awakening?
To restructure the Greek economy the government should do some soul searching.
It should decide on what is the role it should play in a restructured economy. Should it have its own defense industry? Its own hospitals? Should it own ports and airports?
Should it introduce to the public sector the practices of the – successful – private sectors in the assessment and remuneration of employees?
No. Soul searching is not for the government. It sticks to its musty perceptions. Why? Maybe because it knows there is nothing in its soul?
Public property is valuable. Has the government prepared a plan to exploit its value in various ways to alleviate the pressure from the debt load? No. Why? Maybe because, unlike the citizens of Greece, it feels no pressure from the debt load?
Greece can offer attractive Investment opportunities. Ports, airports, new expressways, yacht harbors (marinas), sun and wind farms to produce exportable electricity, luxury tourist facilities, to mention but a few. A plan with specifics is not available. The German desire to invest in Greece could not be directed to specific projects in the recent visit of the German Minister of Economy. Why? Maybe because governing and planning are incompatible?
To attract foreign investment and to help activate Greek funded investments the tax system must be simplified and be transformed from a deterring to an encouraging factor for investments in Greece. There seems to be a consensus on that but still no action. Why? Maybe because the government feels it has done so much for the economy that nothing more is needed?
Local governments, from village to city level spend money not always responsibly because they get financial help from the government. To make them responsible for their spending the government should stop funding them, but it is not, despite the dire state of the National finances. Why? Maybe because funding the excesses of local governments is a National Duty?
Free Health and Free Education is indeed good and should continue so for all the citizens, but do all the citizens need it? To help reduce the National Budget Deficit the government could charge those who can afford to pay for at least part of the cost of their health and education, but it does not even dare to consider it as an option. Why? Maybe because socialism means no discrimination?
Intelligent Economic thinking. A former minister of the economy in previous socialist governments, in which the present prime minister was a member, offers fresh thinking on the use of public assets to improve government revenues in the light of the current downward spiral of Greek asset values. He proposes that the sale of government assets be made with payments in Greek Bonds. The buyers to buy the bonds in the international markets where they can be bought at forty to fifty percent discounts and pay the Greek government with them at the prices they paid for them. The purchase of, say a six hundred million asset, to be paid with bonds bought for six hundred million. The government would, thus, receive bonds whose face value is 1.000.000.000 to 1,200.000.000 Euros and retire them. This arrangement does not adversely affect the buyers, as their money outlay remains the same, but it benefits Greece because it, in effect, buys back its bonds without imposing a forty to fifty per cent “haircut” which triggers a credit “event” with severe repercussions to the Eurozone.
If Greece takes cash then it receives 600.000.000 Euros and, compelled as it is to buy its bonds at their face value, for the above reasons, it retires bonds of that face value instead of a value of 1.000.000.000 to 1.200.000.000 . Clever, but does the government consider it? So far no such indication. Why? Maybe because this government has not need for bright ideas, until it has no option but to think?
The “troika” is pressing the government to sell assets. The government rightly complains that with the “demolition” of values in the Athens Stock Exchange it will have to sell valuable assets for a fraction of their fair value. Intelligent Economic thinking could have it otherwise. The Government could sell a public corporation quoted in the Athens Stock Exchange in an arrangement whereby it receives cash representing the quoted value and, in addition, a pre-agreed fair value payment representing the difference between what the buyer paid and what the buyer should have paid. This latter payment to be made every year, over a period of ten years and to be equal to the value which the asset has gained by the end of each year. In such an arrangement Greece receives a fair price for its assets, as their value is expected to gradually return to levels representing their fair value and if it does not the buyer pays nothing more.
Can the government consider this beneficial idea, especially since it comes from one of its brethren who has also proposed payment in Greek bonds, as outlined in the previous paragraph? So far no such indication. Why? Maybe because this government needs a kick on the butt to see the light of day?
The Parliamentary Budget Monitor office issued a report, a few days ago, stating that the Greek Debt is UNMANAGEABLE. This office, run by a committee of EXPERTS, was set up last year at the insistence of the deputy minister of Finance. The committee incurred the wrath of Mr. Venizelos, the minister of Finance, for this report. He took to the airwaves to tout his disagreement with the report and his disdain for the committee which, he claims is totally wrong in its projections and should not had made such an assessment known, on the grounds that it will scare our lenders and the markets. He never once substantiated his disagreement with facts. He was obviously peeved by the fact that the report presents the naked truth. The Government’s antics are getting the country nowhere near its salvation, because it dares not do what it has to, curtail the money-eating public sector, its electoral base and so the deficit is IN-instead of DE-creasing It therefore comes as no surprise that the Greek debt will shoot up to 170% of GDP. !
Everybody monitors the Greek finances for their own reasons and they know that the Greek government is not honoring its commitments, so they are preparing for the Greek default and the expulsion of Greece from the Eurozone.
But the charade continues. The Troika was in Athens the week of Aug.29 and left Friday Sep.2nd after an almost all night session with the Finance minister, Mr.Venizelos. It appears the Troika was very displeased with the lack of progress and the increasing Budget deficit, as are the friends of Greece in Brussels, in addition to the fact that the ministry is in no position to do what it should because it lacks the competence, according to the media (Greece a third world country?). The Troika will return in ten days to ensure that Mr.Venizelos and his peers will have completed what they should already had, so they are now racing against the clock. Why? Maybe because they come to see reality eye to eye only when faced with the inevitable?
What is for laughs is what the Government presents as the reasons for the Troika’s departure and return in ten days. Ok. Serious they are not. Ridiculous they are.
Question. Do they believe the Greeks have the intellect of infants?
Why oh Why? Maybe because the Greeks love to hear bed time stories?