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Why Greece is Targeting Tax Evaders

The World — Tue, 24 Jan 2012 14:40:24 +0000

Greece is hurting financially and the new interim government think it has a solution: Go after tax evaders.

Tax evasion has been a big problem and the government is releasing the name of more than 4,000 tax evaders, many of them being celebrities.

Anchor Lisa Mullins talks with Helena Smith, a reporter with the Guardian newspaper in London.

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Lisa Mullins: I’m Lisa Mullins and this is The World. Mitt Romney finally did it. The embattled GOP presidential candidate has now released his tax records. Romney made more than $40 million in 2010 and 2011 and his taxes for both years combined will top $6 million once he files his return in April. Whatever that means for the U.S. presidential campaign one thing is clear – Greece could sure use a few extra tax players like Mike Romney. The Greek government which is still facing a possibility of default has a big problem with tax evasion. That’s why it’s just published a list of some of the worst tax cheats in the country this week. Guardian reporter Helena Smith says it’s part of a larger crackdown on tax evasion in Greece.

Helena Smith: The message is we are here. Tax evasion is going to be cracked down on. It’s not the national sport that it once was. Beware, you will be prosecuted if you go on pursuing this.

Mullins: They have already named and shamed some rather high profile Greek residents on the list. Who are they?

Smith: They include singers, legendary crooner Charlie [indiscernible], sports stars, a basketball star, and a number of high profile businessmen and entrepreneurs – some of whom have already been convicted of fraud.

Mullins: So how much money does the Greek government expect to yield by naming these in some cases high profile Greek residents and trying to get them to pay back taxes?

Smith: The 4,151 individuals that the government has named on this incredible list actually have been shown to owe the Greek state a whopping $22 billion almost in back taxes and the hope is that it will be able to recoup some of those back payments although it has been pointed out by some critics that they move to release this list is slightly symbolic because some of the people named on the list are already behind bars, including an accountant who was convicted of tax fraud now serving several life sentences and was showed to be in hoc to the Greek states to the tune of over $100 million. So it could just be a symbolic move but one that is very important because it shows for the first time ever that a Greek government has the guts to crackdown on a problem that they now see as one of the biggest drains of state revenues.

Mullins: So one of the biggest drains but I wonder and aside from this being a powerful yet symbolic statement, to what extent the money would actually help defray the Greek debt. I mean what kind of figures are we talking about?

Smith: Well Greece’s debt stands at a monumental $360 billion Euros. That’s over 5500 billion – a hell of a lot of money for such a small country. The taxes that are estimated to be owed by these more than 4,000 individuals who have been named and shamed amount to just over $20 billion. So it would make a very small dent in the total debt pile that Greece now faces.

Mullins: Helena, why has it been so easy for so many Greeks to avoid paying taxes?

Smith: That’s the $64 billion question and the answer is actually quite simple. The tax collection mechanism in Greece is outdated, very antiquated, and tax offices in Greece until very recently were uncomputerized. In the course of the past two years since Greece’s debt crisis erupted it has emerged that a lot of tax offices have been rather partial to bribes and corruption themselves so that there’s been a lot of inside jobs within tax offices in Greece and that has, of course, also made the truthful collection of tax a very difficult business.

Mullins: All right. Well, the government is hoping to put that at an end now. Helena Smith with the Guardian newspaper talking to us about the crackdown on tax evaders in Greece. She spoke to us from Athens. Thank you, Helena.

Smith: Thank you.

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Greek Parents Losing Children to Poverty

The World — Fri, 06 Jan 2012 13:40:20 +0000

Charities in Greece say parents are increasingly asking the groups to take in their children because they are too poor to raise them.

The BBC’s Chloe Hadjimatheou reports from Athens.

Europe’s Continuing Debt Crisis

The World — Wed, 28 Dec 2011 14:15:19 +0000

The European debt crisis has engulfed the 17 countries that use the euro and is already having an impact on this side of the Atlantic.

So, far the steps the European government have taken to resolve the situation have come up a little short.

Anchor Lisa Mullins talks to Rana Foroohar of Time magazine about the prospects for the upcoming year.

Lisa Mullins: I’m Lisa Mullins and this is The World, a coproduction of the BBC World Service, PRI and WGBH in Boston. America’s fragile economic recovery may depend less on the things being said in Washington and on those being made in Berlin, Athens and Rome. The European debt crisis has engulfed the 17 countries that use the euro and it’s already having an impact on this side of the Atlantic. So far the steps the steps the European governments have taken to resolve the situation have come up a little short. Rana Foroohar oversees business and economic coverage for Time magazine. She says the problem is that Europe is kinda like a dysfunctional family.

Rana Foroohar: Germany is the boring dad. He’s been working a desk job for 12 years. You know, he saved up a lot of money, and Greece and Italy, who are his teenage kids, have gone out and crashed the car. He nows has a choice to make. They’re his children, is he gonna pay for the damage or is he gonna say you’re on your own? And the Germans just have not made that fundamental choice yet, and it does come down to them because Germany and particularly Angela Merkel, is really the only, Germany is the only country and Angela Merkel is the only leader that can really bring this crisis to a close by unifying Europe by saying we’re gonna back the debt of the weaker countries if need be, and we’re gonna come together with a true political union.

Mullins: So then is Germany at least right now kind of you know, if it is that tough father, is it exerting tough love by resisting giving aid to the countries like Greece?

Foroohar: Well, that’s certainly one way to look at it and that’s the way the Germans would look at it. And you can see their point, you know, they’ve been very prudent. They’ve done a lot of hard work in the last 12 years. They’ve reformed their economy, their labor markets, they’ve become more flexible, they’ve saved, they’ve become incredibly competitive on the global stage. Their export machine can compete with China at much higher wage levels. So they’ve done all this hard work and you can understand why they look to the south and think well, why should we bailout these spendthrift countries? But here’s the rub: one of the reasons that the Germans have done so well is because they’ve been part of the union. They’ve been able to export a huge amount to the other Eurozone countries, the neighboring countries. Their weaknesses in some way have been Germany’s strengths. And they’ve benefitted during the boom days of the ’90s from this union and now they’re gonna have to pay the price, or not, decisions still have to be made.

Mullins: Well, we see Greece for instance, comparing the Germans today to occupiers in WWII. Is that fair?

Foroohar: Well, it’s absolutely not fair, but I think that the sort of political nature of that language really shows you how deep these divides go. The cultural divides. And you know, there is, I think what that touches on is this nervousness about Germany at the heart of Europe, Germany as a leader of Europe because you know, Europeans look at WWII. They think you know, what would a powerful Germany be like? But the truth is that Germany and France together were the countries that gave birth to the European Union. It was their steel and coal union in the 1950s that started the union. Germany is the only country strong enough economically to really lead right now and Europe desperately needs leadership.

Mullins: Is there reason to believe that in 2012 there will be solutions to this crisis? I don’t know if Germany or who you might say would provide them, but do you think they’ll be there?

Foroohar: Yeah, it’s an excellent question. I think it is going to come down to some really good brinksmanship on the part of Angela Merkel. If she can walk this incredibly difficult line and try to bring together France and possibly the UK, although you know, the UK looks like it’s slowly but surely sort of seceding from the union, which is another story altogether. But if she can do that, if she can sort of sit everyone down at the table and get some real cohesiveness and say okay, we’re gonna bail you out. We’re gonna back your debt, we’re gonna create some euro bonds, but in exchange for that you have to give up some political control and some fiscal control to the larger union, then I think that we will see solutions. But the problem is these issues go very deep for Europeans you know, they’ve been sort of a selfish union, a union that was born in boom times and was mainly economic. And now that things have gone bust they’re having problems with coming together as a real political union.

Mullins: Rana Foroohar, an assistant managing editor at Time magazine overseeing business and economic coverage, nice to have you on.

Foroohar: Thank you.

Greek Home Owners Get Hit With Emergency Property Tax

The World — Wed, 21 Dec 2011 14:40:18 +0000

The cash-strapped Greek government is hoping to raise 2 billion euros by the end of the year through an emergency property tax which has been added to homeowner’s electricity bills.

Energy costs are hard enough to pay in winter and some people are refusing to pay.

Anchor Marco Werman discusses the impact this is having with the BBC’s Chloe Hadjimatheou in Athens.

Marco Werman: Many people in Greece are strapped for cash and they’re now parting with even more of their hard earned money. As part of the deal with its creditors the Greek government is raising taxes on a whole range of things. For example, it’s hoping to raise two billion euros by the end of the year through an emergency property tax. That tax is being added to homeowners electricity bills in an attempt to reduce tax evasion. But some people are refusing to pay saying it’s just not fair, especially with winter coming on. I spoke with the BBC’s Chloe Hadjimatheou just back from Athens. She says the government is determined to force the issue.

Chloe Hadjimatheou: No one as far as we know has been cut off yet. The government has extended the deadline specifically so that people won’t go without electricity over Christmas. But they have said they will cut people off if they refuse to pay and we’re gonna start seeing people cut off in January, although now groups of activists have started forming. Specifically, electricians have started gathering together and calling themselves electrician activists, and they vowed to reconnect anyone who’s being cut off.

Werman: Right, and at least one neighborhood that you went to, those electricians are actually getting some surreptitious help from the mayor. What’s happening there?

Hadjimatheou: Well, the mayor of [inaudible 1:13], which is quite a poor district in northern Athens has created an office in the town hall for people who can’t afford to pay, and also people who are refusing to pay, to go and seek legal advice. And parallel to that he has gathered together a group of these activist electricians and he has vowed that anyone in his district that’s cut off will receive help from an activist electrician. I met one of these electricians who told me that he’s had advice from the national electricity company, from employees there on how to go about making these reconnections. So they’re prepared and they’re ready to go ahead and illegally reconnect anyone, and they’re prepared to take the consequences too.

Werman: And what are they doing, taking you know, automobile jumper cables from power lines and just hooking them up to the house?

Hadjimatheou: In fact, this electrician showed me how it’s done. It seems that their is a little spark plug inside the electricity box that the electricity company would come and remove. So they’re prepared with these little spark plugs to go and reinstate them in the electricity boxes. It’s that simple really.

Werman: Won’t the utility companies figure that out? Can’t they see you know, if juice is going to a disconnected home?

Hadjimatheou: They probably can and it may end up as a little war of spark plugs.

Werman: Well, for individuals it doesn’t sound like it’s going to be necessarily a dark Christmas, but certainly a bleak Christmas this year in Greece.

Hadjimatheou: Yes, may people feel very upset about this and although the government is saying that they have collected about 80 percent of the taxes they have sent out (so many people aren’t prepared to take the risk), there has been a very large backlash. And people are sitting and waiting to see if they will be disconnected next year. Many people say they feel they’re being blackmailed by the government and they just won’t play that game.

Werman: The BBC’s Chloe Hadjimatheou, thank you so much.

Hadjimatheou: Thank you.

Lucas Papademos: The New Man In Greece

The World — Thu, 10 Nov 2011 15:00:34 +0000

Former European Central Bank vice-president Lucas Papademos has been named as Greece’s new prime minister, following days of negotiations.

Papademos, 64, said he was taking over at a “critical point” for Greece.

Leaders of the three main parties making up a new government of national unity had been meeting the Greek president to try to reach a deal.

Papademos, who is not a member of parliament, will head an interim government until elections can take place in February.

The government’s main task will to ensure debt-laden Greece gets its latest bailout payment, by approving a new 130 billion euro ($177 billion) international rescue package from eurozone partners and the International Monetary Fund.

“The president, after recommendations by political leaders who attended the meeting, has instructed Lucas Papademos to form a new government,” the president’s office said in a statement.

The new government will be sworn in on Friday.

In the broadcast Thursday Marco Werman talks with Richard Parker, senior adviser to outgoing Greek Prime Minister George Papandreou and a professor at Harvard’s Kennedy School of Government, about Papademos.

Marco Werman: I’m Marco Werman, this is The World. Concerns about the euro debt crisis receded a bit today. In Italy, lawmakers moved closer to passing key financial reforms demanded by the European Union, and the country’s president appeared to be on the verge of appointing a new interim government lead by a respected economist. That’s good news for worried investors. Even better news came from Greece. That nation finally has its new government lead by you guess it, a respected economist. Richard Parker is a senior advisor to outgoing Greek Prime Minister George Papandreou. He’s also a professor at Harvard’s Kennedy School of Government, where Lucas Papademos has just been named as Greece’s new prime minister is currently a visiting professor.

Richard Parker: He’s part of a fairly thin stratum of Greek society that was educated internationally at the college level. He’s a graduate of MIT with a bachelor’s degree in physics, a master in electrical engineering, and a doctorate in economics. He’s taught for several years at Columbia. Taught in Athens. And then moved over into monetary economics as an operator. He became chief economist of the Bank of Greece in the mid 1980s. He moved up there and eventually became head of the National Bank of Greece, and in that position essentially, worked on the transition of Greece from the drachma to the euro. Once that transition was made he was then moved from the Bank of Greece to the European Central Bank, where he was the Vice Chairman until 2010 when he came here as a visiting professor and also began advising the Papandreou government.

Werman: Do you think that Lucas Papademos is a good choice for prime minister? I mean what was your reaction when you heard he was going to become the new prime minister?

Parker: Well, you have to remember, this is a temporary slot. I don’t want to call him interim prime minister, but he’s meant to serve in a coalition government, a temporary unity government between the two big parties, Papandreou’s PASOK party and Antonis Samaras’ New Democracy party, the democrats and the republicans if you will of Greece. And Lucas was chosen because he isn’t strongly identified with either. This would be a little bit like choosing Paul Volcker right now to head up the US government to get us past this gridlock in Washington. So he has a specific set of skills as a Central Banker and one should never think that Central Bankers are not politicians, but they’re a very specialized sub species.

Werman: And Papademos doesn’t seem to be a career politician. I’m just wondering in the middle of Greece’s acute financial troubles maybe that’s an advantage for an incoming prime minister.

Parker: Well, he’s become a career Central Banker. And a career Central Banker, whether you’re talking about Paul Volcker, or Alan Greenspan, or Mervyn King in the United Kingdom, they are politicians, but they’re very sophisticated light touch politicians always looking for two things — a place to unify parties when you’ve go sharp party disagreements, and second, a strong focus on the financial structure of the society, of fear of inflation, a fear of over spending and over indebtedness, they’re bankers.

Werman: How do you reckon Greeks are receiving this news? Was Papademos ever a controversial choice in Greece? Are people happy with the decision?

Parker: Well, he was a controversial choice all this week because the idea of this unity government is controversial. And the idea of this unity government is controversial because a substantial minority of the Greek population, both on the left and on the right, on the Occupy Wall Street and the Tea Party, if you will, are damn mad about the situation as it’s unfolded. Like Occupy Wall Street, most Greeks don’t have a clear idea of what it is they would do as an alternative, but they want you to know that they are very, very upset.

Werman: And, Richard Parker, explain something to me and our listeners, that Papademos hadn’t run for office, yet he is stepping into the prime minister’s job. How unusual is that in Greece?

Parker: Oh, it’s very unusual. I mean you know, not running for office and stepping into the job is reserved for the military, and they’re not doing that right now and there’s no likelihood that this military will do that again.

Werman: But it does seem to show that desperate times call for desperate measures.

Parker: Absolutely.

Werman: Is Lucas Papademos the person to bring European global confidence to Greece?

Parker: Well, I think that’s why he’s there. I think that’s the other big argument is that he is a figure well known in European finance and banking circles, and is considered a moderate, stable, sophisticated voice. And he is all those things. He’s the best choice under bad conditions for doing the technical things that need to be done to get Greece the money that it needs in order to survive and reform. He’s not the political charismatic leader who will guide the Greek people, lead the Greek people to this new land.

Werman: Richard Parker, senior advisor to outgoing Greek Prime Minister George Papandreou, and a colleague at Harvard’s Kennedy School of Government with Greece’s incoming Prime Minister Lucas Papademos, thanks very much for coming to the studio.

Parker: Glad to be here.

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The Oligarchs of Greece

The World — Tue, 08 Nov 2011 14:40:08 +0000

Greece’s powerful oligarchs exert influence over business, finance and media.

And the government sees the oligarchs as some of the biggest tax evaders in Greece.

Journalist and author Misha Glenny speaks with anchor Marco Werman about Greece’s ultra-wealthy.

Marco Werman: Italy is now trying to do what Greece has been attempting to, that is to reassure the rest of Europe and the world that despite political turmoil the country can get its economic house in order. Greece has some additional domestic demons to wrestle with, the very rich. These Oligarchs are Greece’s one percent if you will. They exert a lot of political influence and some accuse them of not paying their fair share of taxes. Journalist and author Misha Glenny wrote about Greece’s oligarchs in today’s financial times.

Misha Glenny: We’re talking about 20-30 families who control the commanding heights of the Greek economy. And one of the big problems about them is that their favorite sport is tax evasion, and so Greece faces a double whammy as it were of a bloated public sector and chronically insufficient tax revenues because the rich squirrel their money away outside of Greece, off shore, indeed in other parts of Europe. And the Greeks have never been capable of tracking that money down and getting a hold of it. But we’re talking about billions upon billions of euros every year.

Werman: Is tax evasion the main crime that these oligarchs are guilt of? Is it the only crime?

Glenny: No, it’s not the only thing. I mean they are so influential that they have for example, it was a liberalization of the Greek broadcast and print media in the 1980s. What you saw was essentially each clan as it were buying up its own television station, its own newspaper and exerting huge influence over politics. I mean most politicians have been in the pockets of these people for a very long time. And this is one of the reasons why George Papandreou who was trying as Prime Minister to break this pattern, why he came under such attack, not only from the opposition who are heavily influenced by some of these groups, but also by people in his own party who were also linked up with them.

Werman: What is George Papendreou doing to try and tame these oligarchs?

Glenny: Well, he was encouraging investigations into some of the criminal operations, but he also started by trying to increase tax revenues by going after some of the bigger tax evaders. That, he soon found to be a very self destructive policy to pursue and there was a huge outcry, particularly in the media, from the usual sources as it were claiming that he was trying to impoverish all Greeks by not only introducing austerity measures, but upping their taxes as well. And this simply wasn’t true. He was just trying to go after what was due to the country. You know, he made some headway in that, but has largely failed, not for the want of effort, but because of the fact that too many vested interests have got in his way….

Werman: Misha, give us a sense here. If these oligarchs were brought to heal by the government of Papandreou or any government, how much of Greece’s financial problems could be resolved do you think?

Glenny: Well, in the long term all its financial problems could be resolved, in the long term, because you would start to whittle away the chronic budget deficit. This of course would be done in conjunction with the sanitization of the public sector, which is undoubtedly bloated and undoubtedly needs reform and cutting down. But what it would do in the long run is place Greece on a rational economic path so that it could actually deal over the next 10-15 years with its spiraling budget deficit. I mean I think at the moment that this looks now very, very unlikely, particularly after the change of government. And what we’ve seen in Greece in the past 10 days and particularly the role that it plays in triggering, in augmenting the crisis in Italy, is we are steadily approaching an Armageddon in Europe, economically, a real meltdown, which is going to be a global economic crisis. Already there are signs that people may start investing away from the euro and into the dollar, and this would be catastrophic for the United States to see a strong dollar, just at this time when the United States is trying to reinvigorate itself economically through exports. So we’re about to move very quickly from a Greek to an Italian to a European crisis, which very, very swiftly will look like a global economic crisis. I mean this does look to me like 1929 to 1931.

Werman: Misha Glenny wrote about Greece’s oligarchs in today’s Financial Times. His latest book is Dark Market: Cyberthieves, Cybercops and You. Misha, thanks very much for your time.

Glenny: You’re welcome, Marco.

Greeks Fed Up With Austerity

Clark Boyd — Tue, 25 Oct 2011 13:40:26 +0000

Protests have been filling Athens’s Syntagma Square on and off for months now. But last Sunday night, they spilled over into a soccer match between two Greek teams.

During the match, some fans displayed a large banner that said, “Corrupt politicians, you will drown under the anger of the uprising.”

Officials stopped the game, and asked fans to take the banner down. The fans refused, though, and eventually the game resumed.

Afterward, the fans displayed the banner on their vehicle. They were reportedly stopped by riot police, and four people were arrested.

That incident has infuriated many Greeks.

“Public feeling right now is being banned. There is some kind of total censorship,” said Nina, who only wants to use her first name.

Nina used to be a member of the ruling socialist party, but she quit last year after the government agreed to austerity measures dictated by European officials. Greece is struggling to avoid default on its mounting debt, and it needs to make deep cuts in order to qualify for European bailouts.

But at no point, according to Nina, were the Greek people asked to approve these measures.

“We feel like we’re entitled to give our opinion on the policies,” she said. “People have to have an opinion on the matters that will impact their lives for the next 20 years.”

Another woman, who only wants to be identified as Sofia, said the message of the banner at the soccer game is resonating – people have had enough.

“Let me give you a joke that’s popular now, and you’ll see exactly what I mean,” Sofia said. “After the arrests, someone said that Greece is the only country that you go in jail for saying someone is corrupted, rather than being corrupted.”

Sofia, Nina and a few others have now started a non-partisan movement called “OXI,” which is Greek for “No.”

They’re using Facebook and Twitter to get Greeks to put out banners on their balconies this week with the simple message — NO.

It has historical overtones.

This Friday is “OXI” day, a national holiday that commemorates when the Greeks said “No” to Mussolini’s request to let Italian troops enter Greece at the beginning of World War II.

But this “NO” is directed inward, at a political system seen as flawed and, above all, corrupt.

“Probably we are focused on the wrong enemy. The enemy is not the crisis; it’s the corruption,” said Costas Bakouris, chairman of the group, Transparency International, in Greece.

He said bribery and tax evasion are endemic in Greece, and people have been turning a blind eye to it for decades.

“One of the problems in Greece is that we are a society that is the most tolerant of corruption,” he said. “I mean, we have a guy caught stealing and they say, oh, he’s got three kids, he’s not going to do it again. We tend to forgive and tolerate things other societies will not tolerate.”

The OXI campaign wants first and foremost to say “NO” to the decades of corruption. Sofia the OXI organizer said they see the “NO” banners as a kind of people’s referendum.

“‘No’ is just the first step,” Sofia said. “Then we have to find what else unites us besides saying no to the bad habits — what is the Yes we want for our future. So it’s a two-step process, and we’re working on it.”

OXI already has more than 1,200 followers on Facebook.

Not bad, the organizers say, for only being up and running for a day.

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Greece on Strike

Clark Boyd — Wed, 19 Oct 2011 14:00:48 +0000

The Greek parliament today gave initial approval to another round of budget cuts and tax hikes. That’s not what the protesters and rioters outside parliament’s doors wanted to hear.

Greece is in the middle of a 48-hour general strike against the government’s austerity measures. Those are measures are key to the government’s efforts to ensure Greece gets its EU bail-out money next month.

But many public sector employees in the country say that they are being unfairly targeted for wage and pension cuts.

Athens’ Syntagma Square, where the Greek Parliament building sits, is once again the focal point for Greek anger.

Protesters lobbed Molotov cocktails at police on Wednesday.

Recently, though, Greece’s civil servants have staged a different kind of protest.

A loudspeaker blares an old Greek protest song in front of an Interior Ministry building. The employees here are occupying their own building.

Under Greek law, if they leave the office to march, they won’t get paid. This way, they protest, and get their salary – what’s left of it.

Nikos Alexopolous heads the union of Interior Ministry workers.

“I’ve already experienced a 20 percent cut in pay,” Alexopolous says. “And The new measures would cut another 30 percent.”

“Gas, food, everything is more expensive,” he says. “And I’m married, with three children, so you understand.”

At a community center just outside Athens, I hear similar stories from some teachers. Their pay has been cut but that’s just the start of it, says Stella Mazioti.

“There are no supplies, and no computers,” says Mazioti. “We’re worried – winter is coming, and we’re not sure we can afford to heat the school.”

ADEDY is Greece’s confederation of civil service unions. For two years, ADEDY has been calling for strikes and other actions to protest public sector cuts.

ADEDY’S Vassilis Xenakis says the government is preying on public workers.

“Two years of austerity measures, two years of destroying our system, destroying our fundamental rules. And now – we don’t know what can be the future for civil servants anymore. All this made the Greek society very angry. We can’t stand anymore. It’s enough with austerity measures. We’re not numbers. We’re human beings,” says Xenakis.

Stefanos Manos is a former Greek finance minister: “Greece can stand a lot of cuts. The political system, in order to gain votes, has been hiring hundreds of thousands of people who actually do not work. For instance, we have roughly four times as many teachers per pupil compared to Finland,” says Manos. “Four times! And we have a lousy educational system. Whereas the Finns, with a quarter of the teachers, have a splendid system”.

Manos says that the government shouldn’t cut wages for everyone, just get rid of the dead weight.

He recommends trimming the work force and then paying the productive civil servants more but economist Yanis Varoufakis disagrees.

“Firing people during a recession is a very silly idea”. Greece’s public sector may be bloated, he says, but if you fire civil servants and cut their wages, they’ll have less money.

And that means, lower tax revenues for the state. So the vicious cycle of debt and deficits will continue.

“The Greek public sector, the Greek state, requires surgery. And yet, the surgeons are only equipped with meat cleavers,” says Varoutakis. “By which they’re cutting, cutting, cutting. And yes, of course, if you need to amputate a limb, a meat cleaver is the way to do it. But if you want to do micro-surgery, that’s not the way to do it. And this is, I’m afraid, how they’re doing it”.

So far, no civil servants have been laid off under the austerity measures. Back at the Interior Ministry, I ask labor leader Nikos Alexopolous about the government’s current proposal to axe 50,000 public sector workers.

“We hope the government changes its policies OR that we vote in a new government,” Alexopolous says. “I have no faith in the current one.”

That seems to be the one thing that civil servants and critics of Greece’s public sector can agree on.

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How Greece Connects to the 2008 Wall Street Meltdown

The World — Wed, 19 Oct 2011 13:50:00 +0000

Richard Parker has been advising Greek Prime Minister George Papandreou. He tells host Lisa Mullins that Greek’s fiscal crisis is not an isolated event, but the ongoing echo of the 2008 Wall Street meltdown.

Lisa Mullins: Richard Parker has just returned from Greece where he’s been advising Prime Minister George Papandreou. Parker is an economist at Harvard’s Kennedy School of Government. He says the Greek prime minister has no option but to keep cutting.

Richard Parker: It isn’t a question of the prime minister gleefully or willingly imposing these cuts on Greek workers, it’s quite the contrary. I mean he’s done everything he can in negotiations to save Greek workers from these kinds of cuts, but the IMF and the EU Partners, particularly the Germans, are absolutely adamant that they will not provide additional aid without significant cuts in costs.

Mullins: So what is he not able to convince the Greek people of that in terms of the pressure he’s under and his ability to be able to get some kind of relief from the international community? I mean it seems like he’s the focal point here, he’s the pivot point and somehow the message isn’t getting down.

Parker: I’ve been going to Greece for 40 years and I worked with this prime minister’s father in the 1980s when he was prime minister, so it’s not that I’m unfamiliar.

Mullins: You’ve basically watched this family from father to son in power…

Parker: Absolutely, I’ve been there since the early 1970s when he, this current prime minister, was a high school teenager. The issue right now is of a Greek culture that was in many ways profoundly disconnected from broader western European culture for over a thousand years. You have to remember democracy was invented in Greece 2,500 years ago, but the Greek people didn’t then re-experience democracy until the 1970s. And so democratic culture is new again in Greece. And this is a country that lived under Ottoman domination in an earlier form of domination for hundreds and hundreds of years. And so there’s an almost ferrel distrust of central government, ferrel distrust of power. Part of that is what’s leaching out right now into these politics.

Mullins: What do you say, and I know you’re reluctant to talk about kind of behind the scenes conversations with the prime minister, Papandreou, but I want you to tell us anyway. How do you guide him in terms of advice you have from, well, not just the international community, but also from your own knowledge of him, his family and the country where it stands economically right now and with all the risks that are involved?

Parker: One is, and this is not his policy, but I’ve said, look, this whole issue of deep haircuts of the bonds is something that should not be off the table although it has been up until recently. The Germans and the French have put these deep haircuts back on the table.

Mullins: Explain by the way what that means.

Parker: What that means is Greece owes about $350 billion Euros worth of debt, primarily in bonds. And the question is whether they will ever be able to repay the bonds in toto and not cause the Greek economy to plunge into an abyss in the process. The second as I’ve said to him, look, don’t let yourself get trapped into negotiating just one part of this problem. Beyond the problem of Greek bonds is the question of recapitalizing Greek banks and you need a deal that gets both of those done.

Mullins: One of the things I think, Richard Parker, that you are offering as well as a perspective here from the United States, and specifically, you’re able to make the link between the Greek crisis and the meltdown on Wall Street that began back in 2008. Tell us what the link is for you.

Parker: Look, I think that we misunderstand when we talk about the Greek crisis or even about the Euro crisis. What you’re going through is a crisis that is the aftershock of the original 2008 meltdown on Wall Street. What happened over the last 30 years was not just a question of some kind of change in the way that the Greeks finance their government or the creation of the Euro Zone. It was that American capital, which is the largest base of capital in the world, was systematically deregulated. And power to make decisions that should’ve been in the hands of regulators were left to the banks themselves. And so what’s happened is that you’ve got American banks being recapitalized by the treasury and by the federal reserve not going back into the business of making loans, but instead taking that recapitalization, turning it over to their trading floors, and for the last two years essentially doing some high volatility trading in commodities and European government bonds. And you cannot allow teenage boys to play with fast cars in an unsupervised environment and not expect crackups.

Mullins: Richard Parker is an economist at Harvard’s Kennedy School of Government. He has just returned from Greece where he’s been advising Prime Minister George Papandreou.

Greek Humor in Times of Crisis

Clark Boyd — Mon, 17 Oct 2011 13:40:01 +0000

Amid all the economic doom and gloom coming from Greece these days, you’d think the Greeks don’t have much to laugh about. But actually, humor is alive and well in Greece, and it’s helping many cope with some dark times. From Athens, The World’s Clark Boyd reports.

Each day seems to bring more bad news from Greece. Greeks are furious over wage cuts and tax hikes; many have lost their jobs. Amid all this economic doom and gloom, you would think the Greeks don’t have much to laugh about. But actually, humor is alive and well in Greece, and it is helping many cope with some dark times.

It’s one o’clock at the studios of Real FM in Athens, and one of Greece’s most popular radio shows, Ellinofreneia, or “Greek Madness,” is about to go on air. For ten years, the program, which does a bit of call in, and some gag calls to politicians and state officials, has been zeroing in on those in power.

Today’s target, as usual, is the Greek government, and in particular Prime Minister George Papandreou.

“In Greece, we’ve had a tradition of making fun of people in power since the time of Aristophanes,” says Ellinofreneia’s host Thymios Kalamoukis. “Humor is the most important thing Greeks have at this time. It’s the only thing we have left.”

“You can’t listen to Prime Minister George Papandreou and not start laughing,” Kalamoukis says.

I ask him about his favorite “economic crisis” joke.

Kalamoukis tells me that people have taken to saying, tongue firmly in cheek, “George will save the country.” Apparently, even members of Papandreou’s own party laugh at that one.

But, Kalamoukis says he also makes fun of himself, and his callers. After all, he notes, we’re the fools who elected the fools. He says that there is an appropriate word for this in Greek — “harmolipi.” It might best be translated as “joyful sadness” or “bittersweetness.”

“If you go bankrupt yourself,” says Kalamoukis, “you’ll have a better idea of what Greek humor is. Even during the darkest years of our history, the civil war, the military dictatorship, we approached the situation with humor.

“I don’t know,” he laughs, “maybe it’s the sun.”

Burger and Fries

And speaking of the sun, I am quickly introduced to a song here called “It’s Never Cold in Greece,” by the Athens-based reggae and ska outfit Locomondo.

The song’s upbeat sound masks lyrics dripping with sarcasm.

“Do you want to go on a trip to a magical country, where everybody has fun as if they were experts?” the song asks.

“I studied and lived and worked in Germany for nine years, and the reason I came back to Greece was the humor,” says guitar player and vocalist Markos Koumaris. “I couldn’t live without it, and the combination of humor and this wonderful weather is very important for me. I’ve never regretted coming back to Greece, even during this crisis period.”

Koumaris’ bandmate, Yiannis Varnavas, notes that Greek humor is quick, cynical and direct.

Here’s his favorite “economic crisis” joke, which has to do with the kind of job you can get in Greece these says, even with a good education.

“There are two PhD graduates, one with a job and one without a job,” Varnavas starts. “They meet, and here is how the discussion goes: The one without the job tells the one with the job, ‘I’d like a burger and fries, please.’”

Locomondo’s “Magic Carpet”

Corrosive and Poisonous

If you like your Greek humor with a slightly harder edge, then the band Lost Bodies may be more your speed.

For more than 25 years, the groups has been plying its own brand of punk rock. One song, Yelaste, sarcastically invites you to sit back and enjoy it, while those in power take everything from you.

“Laugh, laugh a lot,” the song goes, in a rhythm reminiscent of a German beer hall drinking song. “Even though wages are low and life is too expensive.”

“Forget your worries, laugh…laugh a lot.”

That quickly gives way to a fearsome punk attack inciting “the armies of the unemployed” to “break into parliament and burn it down.”

“Our songs, our music — they’re tragicomic,” says Thanos, the singer and main songwriter for Lost Bodies. “Our jokes are a way of surviving this crisis.”

“Of course, our band’s sense of humor is corrosive and poisonous.”

Well, it is punk rock after all.

I ask Thanos for his favorite joke.

It goes like this.

The Greek Finance Minister managed to turn the Euro into s—. He was awarded the Nobel Prize for Chemistry.

Lost Bodies “Gelaste”

General Strike in Greece Protesting Austerity Measures

The World — Wed, 05 Oct 2011 13:40:11 +0000

A 24-hour general strike is under way in Greece in protest at the nation’s austerity measures. Flights and ferry services have been canceled, schools, government offices and tourist sites closed, and hospitals are working with reduced staff.

At least 16,000 people have joined protests organized by the main unions in central Athens. The European Commission is discussing ways of propping up banks in Europe to protect them from the Greek crisis.

Thousands of people gathered in central Athens to stage a demonstration outside parliament. Police fired tear gas at small groups of protesters who were throwing stones.

Marco Werman speaks to reporter Menelaos Tzafalias who observed Wednesday’s protests in Athens.

Marco Werman: A world away from Pakistan there were huge street protests again today in Greece. The demonstrations were part of a nationwide strike that halted planes and trains, closed schools and hospitals and generally paralyzed the country. The crowds were protesting yet another round of wage cuts and tax hikes that the Greek government says are needed to save the nation from bankruptcy. Reporter Menelaos Tzafalias is a freelance journalist in Athens. He says the protests today were led by thousands of government workers who are facing layoffs and growing increasingly frustrated.

Menelaos Tzafalias: They have passed their boiling point. They are desperate. They feel they need to demonstrate, to protest not to change anything but, hopefully, to prevent things getting even worse.

Werman: From a distance, Menelaos, when we hear the news from Greece, the situation does sound desperate. Maybe, you can give us a sense of how these wage cuts and tax hikes are affecting the average Greeks.

Tzafalias: Many families have seen their income drop from 10 to 30 percent these past two years. In some cases, this means they have reached a level where they don’t have enough money to make it through the month.

Werman: So, how do they make ends meet? I mean, how do they even eat?

Tzafalias: The one good thing about Greece is that the family safety net is still there, but many people have seen their way of life change. They don’t go out anymore. They’ve even changed what they eat, and what is moving is to hear families saying that they will have to buy lower quality food for their children.

Werman: And how have the wage cuts and tax hikes affected your own life, Menelaos?

Tzafalias: These past two years I have moved back with my parents and for many people in Greece that’s a situation. Families are living all together again like it was in the ’50s.

Werman: So when you are young and striving to be independent that’s got to be a real blow. How does that make you feel?

Tzafalias: It makes me feel like I did something wrong and I wish I could do something to improve it, but I can’t.

Werman: Who is blaming who here? I mean, do Greeks look at the Euro Zone and say it’s all their fault? I mean, at the same time the Euro Zone is blaming Greece for Europe’s financial mess.

Tzafalias: Greeks did not blame the Euro Zone, but they are starting to blame it now because they are seeing that they are doing all these sacrifices and European leaders are not acting fast enough. At the same time, Greeks demand more of the government. They demand more justice and more accountability. Most Greeks would like the government to become much more efficient and root out corruption in a much better way than up to now. And also collect taxes from tax dodgers; people who keep paying their taxes are at their limits.

Werman: Freelance reporter Menelaos Tzafalias is based in Athens. Thanks very much for speaking with us.

Tzafalias: Thank you Marco.

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Greece Aid Package boosts markets

The World — Fri, 22 Jul 2011 13:40:29 +0000

European Union leaders agreed on a second bailout for the heavily indebted Greek government late on Thursday. Athens gets about $150 billion — on top of a similar package from last year. The new bailout takes some pressure off the Euro and calmed bond markets.

“We improved the Greek debt sustainability,” said Jose Manuel Barroso, the European Commission President. “We took measures to stop the risk of contagion and finally we took measures to improve the Eurozone’s crisis management.”

How did Eurozone leaders do all this? First, they agreed to lower the interest rate on Greece’s emergency loans to 3.5 percent, and extended the loans from 7.5 to 15 years. Portugal and Ireland get the same breaks too. It means, in theory at least, that these governments will now be able to go on paying their monthly bills.

For Greek Prime Minister George Papandreou, the eleventh-hour deal was a last-minute lifesaver.

“We now have a program and a package of decisions which create a sustainable path for Greece, a sustainable debt management for Greece, and this, of course, in the end will mean not only the funding of a program but also the lightening of the burden on the Greek people,” Papandreou said.

But as Commission President Barroso suggested, the new so-called European Marshall Plan is as much about saving Greece’s neighbors as Greece itself. Italy and Spain have seen the interest they pay on borrowing soar in recent days, as Europe seemed unable to cope with the crisis.

And the more those interest rates go up, the more governments have to cut spending. In Spain, such cuts are already being felt by doctors and their patients.

On a recent afternoon, hundreds of healthcare workers at Barcelona’s Dos de Maig Hospital held an emergency meeting to save the hospital itself. The government wants to close it to save money. That would create big problems, according to Sandra Marin, a doctor at the hospital. She said 450 people would lose their jobs.

“On top of that, last year we took in more than 1,000 patients from a hospital up the road because it was so full people who were spending days on cots in the hallways,” she said.

For non-emergency care, recent cuts mean that Spaniards must now wait on average six months for treatment. Given that, the Spanish government is celebrating the Greek deal Friday, since it’s caused its own interest rates on bonds to drop significantly.

Big questions remain about how the new Greek bailout will be implemented. For the first time, private banks are being asked to voluntarily accept lower interest rates on their Greek bonds. That could save Greece $75 billion over three years.

But the ratings agency Fitch has already declared that this “haircut” amounts to a temporary Greek default. That could trigger a new rise in interest rates.

Europe Berates Raters

Gerry Hadden — Mon, 18 Jul 2011 13:30:48 +0000

The three big credit agencies are facing a chorus of complaints from Europe. European leaders say the agencies undermined their attempts to stop the sovereign debt crisis from spreading deeper throughout the so-called euro-zone. That is because in recent days the agencies have downgraded Greek, Portuguese and Irish debt to junk status. Each downgrade makes it more costly for those countries to borrow money.

For Europe, it has been a bit like being stuck on a carrousel: The agencies downgrade a member state’s debt, driving up interest rates. That country goes deeper in the hole. The agencies downgrade again. Round and round it goes, with the country getting sicker and sicker. Speaking last week, European Union’s Commissioner for Internal Markets, Michel Barnier, said enough is enough.

“I personally don’t think you can give a rating to a country,” he said, “like you can give a rating to a product or a company.”

Yet that’s exactly what Standard & Poors, Moodys and Fitch do. They rate companies’ and governments’ ability to pay back borrowed money. And they are not going away. On national TV Sunday in Berlin, German Chancellor Angela Merkel suggested a possible end-around: give the U.S. based agencies a little competition.

“I think in the medium term it’s important for Europe to have its own rating agency,” Merkel said. “Of course we, as the state, cannot simply create a ratings agency because that would look like we’re creating our own ratings.”

So how would a European ratings agency work? Markus Krall is with the consulting firm Roland Berger. He told Al-Jazeera that unlike the U.S. agencies, Europe would create an institution free from conflicts of interest.

“For one, it will be a non-profit private foundation,” he said. “So the ‘incentivisation’ of the rating agency will not be profit.”

Traditional agency profits, critics point out, come from fees paid by the same banks and multi-nationals that the agencies are supposed to rate. They cite the case of Lehmann Brothers to show how the agencies have appeared reluctant to bite the hand that feeds them. In 2008 Lehmann received a favorable rating – the day the bank collapsed, sparking the global financial crisis.

But Barcelona economist Eduardo Martinez of the IESE Business School said that before adding any new agencies to the mix, the existing ones must be forced to change. He said he worried about their lack of transparency. He said there is currently no way for governments to predict whether an agency is going to upgrade or downgrade its debt, because the agencies don’t make their grading criteria public.

“If I go to take an exam, I know the grade that I will get if I get all the questions right,” he said. “Not the case with S&P, Moodys, Fitch. You don’t know. At the end of the day, there is a subjective judgment.”

A subjective judgment that can send a nation’s finances into a tailspin. The EU’s proposed new agency would be structured to avoid such tailspins. Instead of rating individual governments, goes one idea, it would evaluate the 17 member euro-zone as a whole. But Martinez, like many investors, rejected that idea.

“I’m lending money to the Greek government,” he said. “I want to be sure the Greek government is going to pay me back.”

Martinez said he thinks Moodys, Fitch and Standard & Poors will resist any attempts to change how they work. But unless something changes, CEOs and government officials will be at their mercy.

Eurozone crisis continues

Gerry Hadden — Wed, 13 Jul 2011 13:40:47 +0000

Europe is in a panic. Concerns over the future of its main currency, the Euro, have been battering the continent’s markets since Monday.

European Union finance ministers are trying to keep the Greek debt crisis from spreading from Greece to other heavily indebted members. But the obstacles only seem to mount, as confidence in the currency weakens.

To get a sense of how desperate European leaders are to contain the sovereign debt crisis, consider what happened at a recent meeting of finance ministers. In the middle of the crisis session, Italy’s finance minister Guilio Tremonti ducked out. As he made for the door, Tremonti told reporters he had to get back to Rome to help save his economy.

Italy is the latest Euro-zone country to come under pressure from financial markets, as concerns about its huge deficit pushed interest rates on its bonds to record highs. Italy is Europe’s third largest economy. Any hint of serious trouble there would spell real trouble for the Euro.

While ratings agencies Moody’s and Standard and Poor’s have threatened to downgrade Italy’s debt, they’ve already reduced Portuguese and Irish debt to junk status.

Like Greece, Portugal and Ireland have already turned to Brussels for a bailout. Now their odds of recovering are tougher.

Why this latest panic? Investors point to European dithering over how to save Greece. Europe’s latest proposals to keep Greece solvent: having private investors to take voluntary losses on Greek bond. In theory, that would give Athens some breathing room. But the ratings agencies say that would trigger a default.

So Europe seems to be at a loss as to what to do.

“Proposals for spreading the contagion around Europe are urgently needed,” said European Union President Von Rompoy in a vague call for help.

There are a couple of ideas out there now. One is to create a Euro-bond, guaranteed by member states and the European Central Bank.

Anabel Cavaco Silva, a Portuguese economist, likes the idea. She told Euronews that these bonds would also guarantee low interest rates to countries, so that they can invest and grow.

“This is a fundamental condition for survival in the Euro zone,” she said. “Today, in the face of financial markets which apply a great deal of pressure, the only way to apply rates so that all countries can invest, is through Euro-bonds.”

Another more radical idea is for Europe to create its own ratings agency, with its own presumably more favorable criteria. Then the continent could simply ignore the Moody’s and Standard and Poor’s of the world. The problem, many economists say, is that investors wouldn’t follow suit. And they’re the ones with the money.

In the meantime, some French legislators are floating yet another idea to avoid future debt crises. They’re proposing writing a balanced budget provision into the French constitution.

Greece Adopts Key Austerity Package

The World — Wed, 29 Jun 2011 14:00:11 +0000

The Greek parliament has voted in favor of a drastic package of austerity measures intended to save the country from defaulting on its debts. The proposed tax hikes and spending cuts have been deeply unpopular with the Greek public. A nationwide 48-hour strike is under way and violent clashes are continuing in the streets of the capital, Athens. Lisa Mullins gets the latest from the Canadian Broadcasting Corporation’s Tom Parry who was at the Greek Parliament. (Audio available after 5PM Eastern)

Lisa Mullins: I’m Lisa Mullins and this is the World. The Greek parliament voted yes but the Greek people say no.

[Gunshots]

Mullins: Today protesters in Athens threw firebombs. Riot police responded with tear gas. This, after Greek law makers voted by a narrow margin today to push through drastic austerity measures to stop the country from defaulting on its debt. The Canadian Broadcasting Corporation’s Tom Parry was at the Greek parliament earlier today. It was a pretty narrow vote in parliament there but what did the lawmakers finally sign off on?

Tom Parry: Well what they’ve signed off on now is the latest package of austerity measures that Greece says is required if it’s going to get its economy back in shape and also get the bailout that it needs or the latest installment of the bailout that it needs from the European Union and the International Monetary Fund. The package involves cuts to public sector wages, cuts in social benefits, and also an increase in taxes for just about everybody in Greece. There’s also a measures to fight tax evasion but I guess the thing that has a lot of people talking about here is the move privatize a lot of government owned assets. Things like airports, seaports, electricity companies. Things like that have people saying that Greece is really selling anything it can get its hands on to foreign investors and worrying that that’s a loss of sovereignty and just really selling out the nations soul.

Mullins: So is that what has set off the protests? And maybe you can tell us more about the protestors and who they are because it seems the protests has, as we just heard, has turned violent and I wonder if there’s a statement that’s being made that’s more than just a response to this vote.

Parry: Well it’s an interesting dynamic here in that when you speak to really anybody here they are angry. And it’s because they say they’re taxes are higher it’s harder for them to get by. Certainly in the crowd today you saw not just, there was unionized workers there were people taking part in the 48-hour general strike. You had a hard-core group of troublemakers there. You can see them; I mean these are people who came equipped for a riot. They came wearing gas masks some of them had hammers they were smashing away at the marble steps of some luxury hotels to make chunks of rock to throw at the police. This is what they do every time a protest breaks out in Greece is that there is that hard core group of radicals that come out just to battle the police. But you did see a lot more people today. I saw not just young people but middle-aged people, older people, taunting the police calling them names and just pointing at the Greek parliament with utter contempt. Just making rude gestures and shouting rude slogans at the politicians inside just for what they say is that the politicians are ignoring the voices on the street. People who are saying enough is enough and we can’t cut anymore and no matter how loudly they say it the politicians, as with today, just go ahead and keep on cutting.

Mullins: What is the alternative though? What do the protestors want given the fact that if these cuts are not being made then basically Greece is going to go bankrupt?

Parry: One thing you keep hearing is â€œit’s not our faultâ€, it’s the banks that have done this, they blame the IMF, they blame outside forces. But, honestly I’ve not heard a coherent alternative plan for many of the protestors that I have spoken to out on the street. Generally there’s anger, there’s rage but it just seems almost unfocused, almost a disbelief, that this problem can’t be real. When you talk to politicians, we had the opportunity to speak to one of the ministers in Prime minister’s Papandreou cabinet today and you obviously get a very different sense from them. They say this is actually a real problem this is something that has to be addressed with all do speed and there are even other people, we spoke to a former finance minister who said that if anything the Greek government is not going fast enough, what they should be doing is laying off hundreds of thousands of public sector employees because, well there is a general consensus here that the Greek public sector is bloated that public sector workers are over paid. So that there are protestors saying you’re going too quickly, there are other people saying you’re not going fast enough.

Mullins: Speaking from Athens Greece this is CBC’s Tom Parry. Thank you

Parry: Thank you

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