To an outsider it would seem virtually certain that the people will vote against the EU proposals, the more so because they are German inspired, I've never been to mainland Greece, but have visited the islands for a couple of holidays, and even there, where they rely on tourists, the anti-German sentiment still appeared quite strong, in spite of it now being some 65 years since the end of the war. Yesterday, posters, in German, parodying the Nazi slogan "Ein Reich, Ein Volk, Ein Fuhrer" were displayed in some towns. Meanwhile, top Military leaders in Greece have been replaced by the government, but we are assured that this is NOT because of a potential Military coup.
The Daily Mail lists what will be expected of the Greeks as a result of the deal
- Income tax threshold would be lowered from €12,000 (£10,300) to €5,000 (£4,300)
- Retirement age would be raised from 61 to 65
- VAT would rise from 19 to 23 per cent
- Higher property taxes
- Monthly pensions above €1,000 (£860) would be cut by 20 per cent
- Excise on fuel, cigarettes and alcohol would rise by a third
- To qualify for a full pension people would be required to complete 40 years work
- Retirees aged under 55 would lose 40 per cent of their pensions over €1,000 (£860)
- Public sector wages would be cut by 20 per cent
- Employees of state-owned enterprises would have their wages cut by 30 per cent
- A cap would be introduced on wages and bonuses
- 30,000 civil servants would be suspended on partial pay
- All temporary contracts for public sector workers would be terminated.
- Just one in 10 civil servants retiring this year would be replaced
- New levies on household incomes of between one and five per cent
The observant readers will note that there is nothing in the list about Greeks actually paying their income tax! Apparently there are few people who declare having an income of greater that 30,000 euros,and yet there are more Porches per capita in Greece than in Germany!
Meanwhile, back in Germany their Foreign Minister says "[What] we just agreed last week cannot be placed back on the table,", which in itself says a lot about the EU's concept of Democracy. I always believed that when heads of Government met and reached agreements, these were always, in a democracy, subject to Parliamentary approval in each country concerned. Apparently not in German style democracy, once your Fuhrer has decided, you will do what he says whether you like it or not !
I wouldn't pretend to understand international high finance, but it seems that the Eurozone governments have two choices
Firstly, to give Greece billions more money and write off their debts in order to fund their profligacy. What would be the likely costs? Germany suggests that the agreements reached last week will solve the problem albeit at a cost of billions to the Eurozone and to the IMF, an organisation to which the UK contributes.
Secondly, to allow Greece to default and drop out of the Euro. There are those who say that Greece could default and stay in the Euro, but I haven't seen anyone explain how this might be achieved. The cost here will be that the governments concerned will have to write of all the loans given so far, as will a large number of banks.
I favour the second solution; Greece is blackmailing the Eurozone. Of the Daily Mail list, only the increase in VAT will actually bring in more money in the short term, all the others are potential savings in expenditure if they actually take place. Anyway blackmailers always come back for more!
Allowing or forcing Greece to leave the Euro with Greece presumably bringing in the "New Drachma" will cause enormous losses to governments and banks, but at least it would be a one time event which will be quantifiable and not recurring, unless, of course one of the other southern European countries follows the same course.