Saturday, September 29, 2012

Greece: Class warfare, banksters and money laundering

Instead of an analysis of what kind of "austerity measures" and for whom the troika and its vassals in the Greek government have been preparing, I'll just show you a table of taxes before and after the the new tax system, that is part of the latest austerity package, is implemented, by income category. This is income tax only, it does not include social security taxes... The really fun part is at the bottom of the table [from, I took the liberty of translating the labels]

A fair tax system
This comes on top of a new tax system for freelancers / professionals, which imposes a flat tax (somewhere at the 25-35% range as government sources are leaking) from the first Euro earned, on all such non-wage earners, on top of a 500 Euro per annum fee. Now it is true that a mass of tax-evaders are such "free professionals" as they are called here (doctors, lawyers, engineers, but also designers, translators etc), included though in this category are precarious and part-time workers, young people with under minimum wage employment, second jobs etc.The number of the underpaid young, and not only, professionals that are in this category is perhaps over 250.000. So these people will be asked to be some obscene amount of their income in taxes (include another 500 - 5000 Euro on social security tax, depending on seniority - again not depending income) and ~300.000 professionals have zero or negative income this year after taxes. On the other hand if you are making over 100k per year, you have just moved the part over 100k, from a 45%, and everything between 60k and 100k from a 40% income bracket to the 25-35% rate.  Bizarrely this is sold as "taxing the tax-evading professionals", because the government has stopped even trying to make some sort of mathematical sense and hopes that soundbites substitute for arithmetic for enough people....

A cash injection for corruption

This new series of destructive measures estimated to be upwards of 14 billion Euros (that's like 7% of GDP and rising) would be enough to kill the economy if it weren't dead already. That this is demanded by the troika despite the fact that unemployment is climbing toward 30%, about a million and a half Greeks are living in households with no income at all, and that, if things go as planned, by the end of next year we will be well beyond a Great Depression scale slump, at a projected GDP decline of 30% over 5 years, does not seem to bother anyone that "matters". The new coalition government, elected on a platform of renegotiating the terms of the memorandum or at least lightening up the burden of austerity, is sending its electoral program to the dust-bin, proceeding with measures such as a reduction of farmers' pensions (from 330 Euros to 300 euros per month). Greek society is near unanimous in condemning this policy as unfair , but Samaras is adamant that he will honor none of his pre-election pledges and has been running around Europe playing the role of the good and obedient vassal.

What's at stake is the loan installment of 40 billion euros that will be used among other things to recapitalize already bankrupt and bailed-out private banks. This recapitalization was supposed to have occurred in the first half of 2012, following the successful completion of the PSI deal, yet the troika has unilaterally and against all signed agreements, held the loan back... Preparations are being made: the publicly owned banks, although arguably in better shape than the private ones, were exempt from the PSI recapitalization deal, (as were the pension funds with truly murderous consequences) are being given to bankrupt private banks, surviving only due to loans shouldered by the Greek taxpayer. ATE, owner of mortgages of half the farming land in the country was given away to Piraeus bank recently, but only the healthy parts: the bad parts will still be shouldered by the taxpayers. Piraeus bank incidentally, apart from being the recipient of successive bailout funds, was involved in a scandal recently, something exceptional as news, only because banks are almost fully protected from media scrutiny in Greece... Since the Greek banking system is the at the heart of clientilism and cronyism and since there are media magnates and other oligarchs in dire need of a liquidity transfusion, the whole corrupt banker - oligarch - political complex, is in urgent need of this loan. Public contractors and state suppliers will acquire liquidity, political parties in the verge of bankruptcy (ND and PASOK, especially PASOK) might avoid it, and the cientilist system can be set in motion again, albeit at a much lower rate of return for the troikan parties' bought voters.

10 billion euros laundered

Meanwhile, one of the few remaining relatively independent, if right-leaning newspapers in Greece published an amazing story, that if confirmed might offer a view of the scale of plunder that the country has been subjected to by the elites. Real News published last Sunday details of an investigation on money laundering involving over 10 billion Euros, the current Speaker of parliament, Vangelis Meimarakis, and at least two more conservative former ministers:

...Meimarakis is one of more than 30 politicians and public figures who have come under the microscope following a probe by the Financial Crimes Squad (SDOE) into corruption in public life.
Prosecutor Popi Papandreou, who has taken over the probe from SDOE, is expected to focus on claims against Meimarakis, former Transport Minister Michalis Liapis and former Public Order Minister Giorgos Voulgarakis.
All three were implicated in a multi-billion-euro money-laundering network in a Real News report last Sunday. Before summoning the three politicians, Papandreou is expected to call two contractors -- Iosif Livanos and Giorgos Zografakis -- who allegedly accused the three ex-ministers of involvement in money laundering with rival contractor Yiannis Carouzos.
This investigation was under wraps and going nowhere for at least a year and a half. The Speaker of the House maintains his innocence and has definitely lost his cool, although this sort of macho - hoodlum behavior is par for the course in today's New Democracy...

This is BTW why the Greek elites and their media are in complete terror that a party like SYRIZA, with no ties to this pyramid of corruption, might eventually win an election. In point of fact SYRIZA's immediate economic program is not much to the left of Paul Krugman. What is destabilizing however is the threat of local elites losing control of the web of graft that they cling on to since their grandfathers emerged after the war, as nazi-friendly black-marketeers who bought a suit and became businessmen. That EU elites chose to support the parties that nurtured this system, is probably telling as to where their interests lie...

Postscript: Athens. Social Meltdown

Finally, this is a very good brief recap of Greece's turmoil and destruction these past two years, from the ground:

Athens: Social Meltdown from Ross Domoney on Vimeo.

Cross-posted at Eurotrib

1 comment:

k2 said...

On the term "free professionals": I think that normally - or maybe I should say "historically", for this is the term I've come across when studying 19th century history - you call "liberal professions" the professions of medical doctor, lawyer, engineer etc. (of course today, all over the world, many of these professionals are employed by big firms or hospitals). Maybe it's useful to clarify that in Greece you don't only put freelancers (like the ones you mention, translators, designers etc.) in this category (and freelancers do not usually make a lot of many), but you also put a great number of people who should actually be counted as employees: employers prefer to work with them as freelancers instead of actually hiring them, because it's cheaper for them. I think that this is a Greek "originality"; at least I haven't heard of anything like it in France.

Keep up the good work! :)