Privatizing Money

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12. It would seem that you are cherry picking statistics.

1) You make it seem that banks are being bailed out of their debts to Greece.

In fact the banks have agreed to write off 50% of their Greek bond obligations.

http://www.telegraph.co.uk/finance/financialcrisis/8857242/Bank-participation-in-Greek-haircut-will-be-very-high.html

2) Greek debt is equal to 160% of GDP

3) Avoidance by the rich of taxes in Greece is the highest of Europe and central to the debacle, are you advocating that taxes from middle class Germans be used to help Greek billionaires avoid paying their taxes?

http://www.telegraph.co.uk/finance/comment/tracycorrigan/7370544/Its-a-taxing-problem-for-the-wealthy-Greeks.html

At last, the government is taking on the ludicrous excesses in the public sector and the flagrant abuse by many who are self-employed. It has been accused of "soaking the rich" but it would be more accurate to say that it is soaking the honest. Most truly wealthy Greeks are bone dry. Those who will suffer are the honest doctors and entrepreneurs who now face a marginal tax rate of 45pc. There don't seem to be that many of them. Prior to recent changes, the top marginal tax rate of 40pc kicked in at €75,000 in income; according to Mr Massourakis, this was paid by only 40,000 Greek households, out of a population of 11m.

Even after all of the measures at reform Greek shipping companies are exempt from income taxes:

Yet there a lot of rich Greeks. And here's a thing: Greek shipping companies do not pay corporation tax. Lobbying efforts have secured favourable treatment, whoever is in power, even though Greek ships are no longer crewed by Greeks (it's a pretty horrible job). These days, crews are recruited from the Philippines for ships built in Taiwan. There may be a head office in Athens.

4) When you write, "Which the ECB printed out of thin air, like Monopoly money!" it seems to me that you are raising a question of monetary policy separate from the rest of your main argument. Are you advocating that money not be 'printed out of thin air' (something Ron Paul would say) and that currency be tied to a gold standard?

5) I don't know who owns those banks and whether or not the shareholders include pensions from union workers or not but I don't think that anyone, would conclude that the bankers are in charge when they are forced to write off 50% of the loan in Greece which establishes a precedent for likely similar action in Spain, Portugal, Italy and Ireland.

6) The difference between the German public sector pensions (where most of the money is coming from) and Greek public sector pensions are rather significant:

Years to earn a full pension: Greece 45 and Germany 35.
Proportion of salary: Greece 80% and Germany 46%.
Maximum ceiling of payments: Germany E 2100 and Greece E 2538, also Germany has 12 payments a year and Greece 14.

Some general conclusions;

Is their fiscal pain that will hurt the honest Greek middle class?

Yes but Greek billionaires and dishonest self employed in Greece will still be tax free.

Is their also pain inflicted on Greek bond holders?

Yes they lose 50% of the value of their loans.

Is it a bailout?

Depends on your definition. Are the banks getting a gift? No they are getting loans that are required to increase liquidity.


Not all bank interventions are the same. I am willing to be persuaded that this falls into the evil category but your omission of the 50% reduction in the value of the bonds paints a one sided picture. You also ignore the fact that the problem is fundamentally tied to the Greek rich cheating on their income tax. You omit to point out that Greek pensions are far more generous than their German counterparts. Finally your polemical asides on monetary policy seem to mirror right wing attacks on levels of currency and are not related to the main subject.

I don't find the argument here meet the normally persuasive, fact driven, on point, logical type of argument that is more typical of your other public statements that inspire us, but if the problem is with my understanding of it I welcome your clarification, sir.