- Posted May 17, 2012 by
This iReport is part of an assignment:
What does it mean to be Greek?
Greek Debt Crisis
Consider the cost and time required for producing new Euro Currency Notes and coins that will no longer include Greece.
It will be cheaper for the ECB to donate 100 billion Euro to Greece, than to withdraw and reprint and mint new Euros for the remaining 16, with all the practical problems this would create.
Not only that, but what would happen if Portugal, Ireland or Spain were to successively leave the Euro? The ECB and the Central and Regional Mints and Currency printing presses would never have a dull day, without considering the turmoil this would create in world markets.
A simplistic argument maybe, but a realistic reason why the Euro is here to stay - FOREVER!
As to the present crisis, it has been greatly exacerbated by the type of Austerity Policies mandated by the Northern Europeans.
In a Consumer Oriented Economy that is heavily dependent on Indirect Taxation, the horizontal reduction in Salaries and Pensions is counterproductive. The Greek Treasury derives 63% of its receipts from VAT and excise taxes, compared to 32% for Germany.
Curtailing spending, only reduces the tax collection potential, with the consequent business closures and horrendous increase in unemployment
Furthermore the role of the European Central Bank is tantamount to Economic immorality, when it provides funds to Banks at 1.5% and they turn around and lend the same funds to Sovereign States at 4, 5 and 6%.
Worse still the blinkered monetary policy of the ECB, strangles Economic growth when it does not increase the Money Supply annually at least by the same amount as the annual inflation. These additional funds alone would help solve most of the ills created by the ill conceived austerity measures.
Greece is not a Manufacturing Oriented Economy. Our workplace is the under the sun, by the sea, within our Museums and myriad sites of Antiquities that the rest of the world is hungry to visit.
Such an Economy cannot afford to be stingy with the fair rewards deserved by the minders of the Greek ‘Workplace’.
As for the ways out of the present financial crises, there are two ways of resolving them.
1. Make VAT, contributions and excise taxes, collectible at the point of the financial transaction, through an Electronic Cash Register which remits all these tax payments automatically to the Nation's Treasury. This way there is no delay in Revenue Receipts, so that the prevailing rates can be instantaneously amended to maintain at all times a Balanced Budget. This will also reduce endemic tax evasion substantially.
2. Convert the Taxation Regime to a fully indirect one for Countries like Greece that have a very insignificant manufacturing oriented Economy.
The Greek mentality favours an Indirect Taxation Regime that can be so graded so that the wealthy will contribute more, to the extent of their disposable wealth, by varying the rates of VAT and excise taxes. This will allow the reduction, or even elimination of the tax burden on basic survival goods and commodities, such as bread, milk, olive oil, eggs and the like.
If Greece, Portugal and Spain could adopt these two principals, that would ensure a Balanced Budget at all times, the only remaining problem would be the present severe unemployment.
This can only be solved by a) Reviving the Housing Industry and b) A gigantic Public Works Program, comparable to building a number of Pyramids or a dozen Enormous Cathedrals!