European debt deal

[Mentat]

1) Tax the bloody church: biggest land-owner, major entrepreneur, big big business, largely exempt from taxes. Oh, and while we're at it, let's make the church/state separation happen at last, and stop paying the priests' salaries from the state coffers for fuck's sake.

How would you do this if you can't tax land-ownership because of lack of records? It's hard to tax the church as if it was a company because it doesn't really yield any profits. Not subsidizing it is a different matter, and definitely a good idea.

A payback based on GDP percentage is exactly what Iceland was negotiating for, a few months back. The basic legal argument is staggeringly simple: necessity. I don't pay as promised because I cannot. Yes, I have an obligation to you, but I also have an obligation to my citizens, to provide defense, infrastructure, education, whatever I tax them for. And since I'm a sovereign state, this obligation takes precedence.

How did this deal work out for Iceland? I would have thought such a measure would ensure nobody ever lent Greece any money any more (unless new debt was exempt from this GDP percentage and was negotiated on better terms for the banks, but it's easy to see where that leads...).

Can we actually survive on our own, without borrowing? Is the classic creditor threat "pay back, or I won't let you borrow again!" actually threatening in our case, or just a boogeyman?

Surely not? Other (more prosperous and with better tax systems) countries can't.

[The Iceman of the North]

How did this deal work out for Iceland?

Still no resolution in Iceland as far as I know. In June, the EFTA Surveillance Authority made a "reasoned opinion" in favour of the Dutch and the British, which the Icelandic government disputed, so I guess it'll end up in the EFTA Court. Of course the Iceland situation is different from Greece in that it's a contested claim on the Icelandic government, not failure to pay back national debt.

[mormont]

That's a fair point. Or maybe it's possible that he just reconsidered after seeing the reaction within Greece to the plan.

Could be. Could even be both, of course.

Although I don't quite see how a referendum would help him politically.

I think it takes some of the sting out of the deal as a potential election issue. Previously the opposition could have had the best of both worlds: kick Papandreou for doing the deal, maybe topple his government, get into office and then stick to the deal anyway, saying he had left them with no choice. Suggesting a referendum - even if he can't deliver it - makes that harder. The opposition now have to explain why they're against a referendum. Apart from the difficulty of appearing to be against democracy in principle, this means the opposition would have to share a lot of the weight in terms of justifying the deal as the best available.

But maybe I'm overanalysing. It could just be that Papandreou panicked. :P

[generic]

Yanis Varoufakis

What was the logic for such a referendum? The Greek PM said that turning to the people signals a fundamental respect for democracy and a determination for turning the people into active participants in the shaping of Greece’s future. Such lofty idealism would be wonderful in itself. Indeed, I too think that referenda ought to be part of every well-functioning democracy. Alas, this referendum is as far from such ideals as a political ploy can be. What really happened was that, upon his return from Brussels (where, I repeat, he co-singed the October Agreement), he realised that his MPs were unimpressed. Nursing a wafer thin majority in Parliament (a majority of 3, which he himself has conceded is insufficient during these turbulent times), he decided that some pro-active move was necessary to give his government a new lease of life. Back in June he tried to lure the opposition into government. It backfired then and it would backfire again. The obvious alternative would be to call for a snap election. However, Papandreou knows that the voters would punish his party brutally, given half a chance. So, with a grand coalition and an electoral victory out, what alternative did he have? At the very least, he wanted another vote of confidence, securing a majority of at least 4 or 5 MPs in Parliament. When his whips told him that he is more likely to lose, rather than gain, backbench support in any new vote of confidence showdown, the referendum idea emerged as a possible solution: By offering MPs the referendum, they would now feel freer to grant Papandreou his vote of confidence on the basis that the MPs would no longer need to express the wrath of the electorate in Parliament since the people themselves will have an opportunity to do so directly!

[Padraig]

Yanis Varoufakis

Very interesting. While a ploy, there is at least logic to it, in order to somehow get the people/his party on board. The problem is what happens if (and when) its rejected.

Surely not? Other (more prosperous and with better tax systems) countries can't.

Yes. Can't see how Greece could survive without borrowing (unless you throw in draconian cuts). Everything I have read agrees with that. That's why fixing the tax system is so crucial but that will presumably take years.

[ThinkerX]

Yes. Can't see how Greece could survive without borrowing (unless you throw in draconian cuts). Everything I have read agrees with that. That's why fixing the tax system is so crucial but that will presumably take years.

Maybe that tax on the ship biz?

[ThinkerX]

Greek referendum now slated for December 4th, according to the CBS evening news. German chancellor and French president extremely ticked off, muttering something about the 'future of the european union being at stake'.

I find this strange...that the leaders of the so called 'free world' would be so threatened by the exercise of freedom.

I am also wondering what the result will be when BOA or Citi or Morgan or some combination thereof announce they really desperately need another TARP style infusion because they had the really clever idea to invest tens of billions of dollars in the finances of one or another of the failing south european economies.

Again, it is WAY past time for a new version of the RTC.

[Daemrion]

Ah, another poor soul who thinks that we are a modern, civilized country.

Greece doesn't know who owns what. We've been hearing about a comprehensive file of land ownership supposedly being made, for at least ten years. It never seems to take off. The biggest problem is - again - the church, which claims land by producing dubious, conflicting documents dating to the Ottoman Empire (from which Greece gained independence in 1828, with a lot of blood, and thus has no reason to recognize its authority on such matters). But frankly, it's all a mess.

Yes, it should be done as soon as possible. No, it cannot be done in a timely fashion, no matter how you choose to define "timely".

That is easy to solve. Just put in a legal assumption that the person working/living the land is the one that owns it and tax accordingly unless they can prove otherwise (eg. by providing a rental contract or a lease agreement). Reverse the onus on proof onto the taxpayer but keep it at balance of probabilities. You could probably even make it a tax on land use rather than ownership.

[Antonius Pius]

Government is already evil to most Greeks (one of the fundamental problems behind this crisis: the culture of "it's not theft if you steal from the government"). What you suggest would lead to lynchmobs.

[Padraig]

Greek referendum now slated for December 4th, according to the CBS evening news. German chancellor and French president extremely ticked off, muttering something about the 'future of the european union being at stake'.

I find this strange...that the leaders of the so called 'free world' would be so threatened by the exercise of freedom.

Cheap shot. Its a bit more complicated than that.

Although, I do like the idea of a referendum even if it was suggested in a rather chaotic way.

[mormont]

I find this strange...that the leaders of the so called 'free world' would be so threatened by the exercise of freedom.

I think this is a slightly unfair characterisation. What the French and Germans object to is negotiating a deal with the Greek government in good faith that this was a full and final settlement that would be enacted without any further steps, and then having the Greek PM suddenly insert a condition that could make the whole deal moot - i.e., the referendum - unilaterally and with no warning. If Papandreou had made the referendum a condition all along, the French and the Germans would have had no problem with that - although the deal they'd have offered might well have been substantially different.

[Horza]

Everyone's a bit of a hypocrite when it comes to 'allowing the people to be heard' (except direct democracy folks).

Also, looks like Papandreou is about to get rolled by his finance minister, Venizelos.

I'm not sure if this is the right place to put this but here's a little context on Papandreou's early life:

Georgios Papandreou was arrested after a nightime raid at his villa in Kastri. Andreas Papandreou was arrested at around the same time after seven soldiers with fixed bayonets and one with a machine gun forcibly entered his home. Andreas Papandreou escaped to the roof of his house but surrendered after one of the soldiers held a gun to the head of his then 14-year old son George Papandreou.^[14]

[Antonius Pius]

So he's like William Marshal in reverse? Williams father told his captors to go bugger themselves, as he had "the hammer and anvil to make new and better sons", but Marshal subsequently made a stellar career whereas it seems Papandreou is heading for a melt-down.

I agree about hypocricy vs. allowing the people to be heard.

[Horza]

So that's where Martin got that scene from. I clearly needs to brush up on this 'twelth century' thing.

[Antonius Pius]

Apparently I need to brush up on my Song of Ice and Fire, because I have no Idea what scene you're talking about. :(

[Horza]

Well, there were some changes made. For one, King Stephen probably didn't threaten to send any Marshall progeny over the ramparts with a trebuchet.

[Antonius Pius]

Actually, which makes my failure that much more glaring, Stephen was daring John Marshal to come out of his castle with little William either a) standing at the gallows, or B) standing next to, indeed, a trebuchet.

I need a drink, or a break, or both, if I'm managing to forget the trebuchet-scene in AFFC.

[Inigima]

Everyone's a bit of a hypocrite when it comes to 'allowing the people to be heard' (except direct democracy folks).

I always like the idea of... referendums? Referenda? How do you pluralize that? Anyway, I like the idea until I see someone try it, at which point I recall that generally the people are ill-informed and pay little heed to concepts like "can we afford this?" and should probably not be allowed to vote directly on so much as a pair of shoes. SEE ALSO: California.

[Antonius Pius]

I always like the idea of... referendums? Referenda? How do you pluralize that?

Strictly speaking: referenda.

Anyway, I like the idea until I see someone try it, at which point I recall that generally the people are ill-informed and pay little heed to concepts like "can we afford this?" and should probably not be allowed to vote directly on so much as a pair of shoes.

QFT

[mormont]

I'm not sure how you can be certain of this. The French and Germans can't stand Greece anyway. Why would they have ever wanted a referendum when they could just make demands to someone?

That's kind of a broad statement, isn't it?

Anyway, if you're suggesting that the Germans and/or French might have tried to block a referendum had it been put to them as part of the original talks, I suppose they might. Then again, if you're lending someone a huge chunk of money, it's not unreasonable to put conditions on it (e.g. no referendum). Now the Greeks, as I understand things, don't necessarily have any alternatives so it's difficult for them to refuse those conditions, but that doesn't make it wrong for the lenders to insist on them if they believe they're necessary. It's their money, after all.

That's another aspect of this that gets underplayed by the 'referendum = democracy = Good Thing' simplification: accepting help on such a massive scale realistically means accepting conditions, or if you prefer to put it another way, a temporary loss of sovereignty. It's a bitter pill for anyone to swallow, but there it is, just the same.