- Jun 6, 2007
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World leaders and Greece's leaders have done a great job on the Greece debt problem so far! But they have to create a system where "Euro" countries including Greece can default on their debt and the economic damage is largely contained in the defaulting country, that is, there isn't a significant negative economic effect in any non-defaulting country! This is important because Governments and peoples throughout the world need to know that there will be consequences on their country from the world credit markets if their government acts irresponsibly and runs up large deficits over a long term and creates an overly high national debt; governments need to know that if they do these things they won't be able to borrow money in the world credit markets and their economy and their people will be penalized as a result - the world needs this fiscal discipline tool for countries. For the U.S. many experts including the current Fed Chairman and the current Treasury Secretary have both described this "credit raising problem" scenario as a real possibity for America and it has been a valuable impetus to move the American people to let Washington politicians know America's deficit spending will stop and Washington Office holders will be losing their jobs over this issue and in future elections this same accountablity effect will apply!
Many people aren't buying this argument that even in the long-term the European Union can't let Greece default on their debt because it will collapse the value of the Euro. It is baloney world leaders can arrange things that if Greece defaults on their debt the only country that will be really hurt is Greece. To accomplish this needed task, World leaders need to pass laws banning their country's banks, financial institutions, pension funds and the like from buying a country's debt that has a credit rating like Greece's where default on debt is a real possibility and this law needs to specify a timely time frame on these entities for which to divest themselve of this financially unsound country's debt. Also, on this $140 billion credit line offered to Greece, the IMF, EU and EU countries need to say to Greece we will help you rollover your debt whatever you need in the real short-term but within months you need to pass laws giving Greece's government the authority to take control of a large percentage of Greece's individual citizens and businesses savings and use those assets to buy Greece's debt and we will give Greece two years to get this program operational because in the mid to long term the IMF, EU and EU countries aren't rolling over more than twenty-five percent of your debt because when you default we will not be left holding the bag, that is, incurring big economic losses.
It is not hoped that Greece defaults on their debt but so many experts say they can't see Greece paying it off they can't see Greece running the needed budget surpluses in future years to accomplish the task! Nevertheless, it is hoped Greece succeeds in this task! The government of Greece has done a great job on the initiation of austerity moves so far. The world has seen significant protests from ordinary Greece citizens over these moves! To be straight forward, I don't think a lot of people throughout the world have much sympathy for the people of Greece, these moves by the Greece goverment have been fair. The wage freeze is fair - the average salary of public service workers in Greece has increased by 30% since 2006 (In the U.S. such wages haven't increased by half that over that time frame). Eliminating pay bonuses of one and two months pay for public workers is fair - American taxpayers wouldn't stand for such bonus arrangements for a second! Around fifty percent of working people are on the Government payroll - Is Greece a capitalist country! Etc..
If one might offer the people of Greece some friendly advice! Cut the hell out of the value added tax (VAT) [which is at 21% and the Greek government intends to increase to 23%] and make up for the revenue loss by taxing dividends at a higher rate like 25% and tax interest income also at a rate of like 25%! The VAT tax is a regressive tax scheme by that it is meant that it is a bigger burden on non-wealthy citizens as opposed to wealthy citizens; in addition, if the government lowers the VAT it gives more spending powe to people in the middled to lower economic range who will actually spend the VAT savings and by doing so create jobs and increase income! The people of Greece aren't being wise in not taxing dividend income higher than ten percent and apparently not taxing interest income at all - that is a great revenue source for a government! Another area where the government of Greece is really dropping the ball for their people is an area that was referenced in an article in the Wall Street Jorurnal on 5/20/10. It documented that the country of Greece is unfriendly to foreign investment and business investment with all its red tape and all the financial gouging that goes on by authorities in Greece toward businesses and other unwise taxation and fee charging that goes on in Greece. Greece is a beautiful country with a lot of assets, it is clear the government of Greece isn't fully capitalizing on them and people throughout the world hope this changes!
Many people aren't buying this argument that even in the long-term the European Union can't let Greece default on their debt because it will collapse the value of the Euro. It is baloney world leaders can arrange things that if Greece defaults on their debt the only country that will be really hurt is Greece. To accomplish this needed task, World leaders need to pass laws banning their country's banks, financial institutions, pension funds and the like from buying a country's debt that has a credit rating like Greece's where default on debt is a real possibility and this law needs to specify a timely time frame on these entities for which to divest themselve of this financially unsound country's debt. Also, on this $140 billion credit line offered to Greece, the IMF, EU and EU countries need to say to Greece we will help you rollover your debt whatever you need in the real short-term but within months you need to pass laws giving Greece's government the authority to take control of a large percentage of Greece's individual citizens and businesses savings and use those assets to buy Greece's debt and we will give Greece two years to get this program operational because in the mid to long term the IMF, EU and EU countries aren't rolling over more than twenty-five percent of your debt because when you default we will not be left holding the bag, that is, incurring big economic losses.
It is not hoped that Greece defaults on their debt but so many experts say they can't see Greece paying it off they can't see Greece running the needed budget surpluses in future years to accomplish the task! Nevertheless, it is hoped Greece succeeds in this task! The government of Greece has done a great job on the initiation of austerity moves so far. The world has seen significant protests from ordinary Greece citizens over these moves! To be straight forward, I don't think a lot of people throughout the world have much sympathy for the people of Greece, these moves by the Greece goverment have been fair. The wage freeze is fair - the average salary of public service workers in Greece has increased by 30% since 2006 (In the U.S. such wages haven't increased by half that over that time frame). Eliminating pay bonuses of one and two months pay for public workers is fair - American taxpayers wouldn't stand for such bonus arrangements for a second! Around fifty percent of working people are on the Government payroll - Is Greece a capitalist country! Etc..
If one might offer the people of Greece some friendly advice! Cut the hell out of the value added tax (VAT) [which is at 21% and the Greek government intends to increase to 23%] and make up for the revenue loss by taxing dividends at a higher rate like 25% and tax interest income also at a rate of like 25%! The VAT tax is a regressive tax scheme by that it is meant that it is a bigger burden on non-wealthy citizens as opposed to wealthy citizens; in addition, if the government lowers the VAT it gives more spending powe to people in the middled to lower economic range who will actually spend the VAT savings and by doing so create jobs and increase income! The people of Greece aren't being wise in not taxing dividend income higher than ten percent and apparently not taxing interest income at all - that is a great revenue source for a government! Another area where the government of Greece is really dropping the ball for their people is an area that was referenced in an article in the Wall Street Jorurnal on 5/20/10. It documented that the country of Greece is unfriendly to foreign investment and business investment with all its red tape and all the financial gouging that goes on by authorities in Greece toward businesses and other unwise taxation and fee charging that goes on in Greece. Greece is a beautiful country with a lot of assets, it is clear the government of Greece isn't fully capitalizing on them and people throughout the world hope this changes!
