Saturday, June 30, 2012

Big-New-Tax Day!

[A]

Oh crap! Today's Big-New-Tax Day! We're, like, so fucked.

Don't believe me? Ask opposition leader Tony Abbott:
" 'From tomorrow [i.e. today!], every problem we face will get worse under the carbon tax,' he said." (See here)
A teeny weeny tiny exaggeration said (as opposed to "carefully prepared, scripted") in the "heat of the debate", as Tony said last year?

"But... but... but... but...", readers might object, "... again Kerry..., that wasn't necessarily Gospel Truth".


Or, for the whole, unedited, less funky and flattering, TV segment, see the YouTube video.

(Incidentally, you've gotta love Kerry O'Brien's facial expression in the video above, after the "Gospel Truth" quote).

Image Credits:
[A] Operation Upshot-Knothole nuclear test. Wikipedia

Friday, June 29, 2012

The Latest Euro Summit...

Cutting to the chase: will the measures adopted by the Eurogroup solve the European drama or not?

Frankly, I have my doubts. The BBC's Paul Mason doesn't seem to believe it will do the job, either; although (like me) he admits it contains some good things:
"The summer of crisis, collapse and political disorientation is cancelled.
"Last night the EU leaders took steps which, though not a complete solution to the crisis, averted its escalation. Crucially Angela Merkel did what she had insisted was impossible".
(See here)
From where I am standing, the best thing is that, against my suspicions, it appears that the recent Spanish bank bailout will not increase the Spanish public debt, and, therefore, will not imply an additional austerity package. If this is really so, I can say that I am relieved to be mistaken.

Another good thing is that, as the Irish case is similar to the Spanish one, the same treatment should be made extensible to Ireland, which had to apply austerity measures, even though the bailout money was destined to Irish banks.

Unfortunately, the same treatment does not benefit Portugal or Greece, as the object of their bailouts was the public sector.

It also appears that the European governments lending money to the Spanish banks will not claim seniority over the bailed out banks' assets. This should keep our dear-beloved "investors" happy, for a while.

From a political perspective, it looks like European summits without Monsieur Sarkosy won't be that much fun for Frau Merkel.

The bad thing is that the amount dedicated to fiscal stimulus is pathetically insufficient (see here). Without stimulus, I can't see how these economies will grow.


Saturday, June 23, 2012

Confused in Moderation.

Aristides Hatzis (professor of law and economics, University of Athens) published a piece at The Financial Times on the parallels between Greece and the Weimar Republic:
"Greece’s situation recalls the Weimar Republic. Violence (and its banalisation), hate, rage, polarisation, fear, despair and resignation. As for the police, it has already taken sides: neo-nazis won by a landslide in polling stations where officers were assigned to vote." (See here)
I agree with Hatzis' assessment: there are parallels between Greece and the Weimar Republic.

My previous post was precisely about this subject.

After sharing the same diagnostic, however, I have difficulty understanding Hatzis' prescription.

At one hand, the author states that New Democracy and PASOK are responsible for the "welfare populism, cronyism, statism and corruption [that] can describe the Greek political system for most of the period from 1981".

(I agree with this evaluation).

At the other hand, Hatzis says, "they [the Greek people] seem to be falling into the same trap again, by rewarding demagoguery, political opportunism and arrogant ignorance. Their knee-jerk reaction was to vote for parties such as Syriza, the rightwing nationalist and populist Independent Greeks and the Golden Dawn."

(Although my opinion here is besides the point, I find that to put Syriza and the Marxist left in general and Independent Greeks and Golden Dawn in the same bag is both unfair and misleading. The event Hatzis mentions symbolizes that difference: two left-wing women were victims of physical aggression by a neo-nazi swine, but the neo-nazi was not punished and was probably protected by the authorities).

So, if New Democracy/PASOK is unacceptable, and (in Hatzis' view) Syriza and the neo-nazis are both equally unacceptable, how on earth should the Greek people vote?

Or the denunciation of New Democracy/PASOK was made only for ritual purposes, and the intended but unspecified message is that the Greek people should keep voting for them, anyway?

Update:
If the readers haven't seen it yet, the incident Hatzis mentions is shown in the video below.

Dourou (from Syriza) is the blond woman at the top-right quarter of the screen, Kanelli (from KKE, Communist Party of Greece) is the dark-haired woman at the top-left and Kasidiaris (from Golden Dawn) is the young man, without tie, at the bottom-left.

The video includes an attempt at translation, plus a general description by the translator (to read it, you'll need to jump to its YouTube page):


Kasidiaris, who is allegedly "already facing earlier charges of theft and bodily harm from a separate incident" (see here), left the TV studios after the incident, to avoid arrest and went into hiding, to later sue Dourou and Kanelli, the two victims.

Contrary to expectations of a voters' backlash, Golden Dawn consolidated its gains in last week's elections. (See here)

If this incident tells me anything about Syriza, KKE and Golden Dawn it is that they are very different beasts. And that at the very least some Golden Dawn supporters appear to exhibit clearly criminal behaviour. I find it hard to believe that Hatzis doesn't seem to perceive the difference.

I guess what is evident to one, could be a complete surprise to another. You be the judge.

Monday, June 18, 2012

The Greek Elections: Aftermath.

As the popular TV series had it: "All of this happened before. All this will happen again".

"Shearing the Rams".
Tom Roberts (1890) [A]

BBC's Paul Mason reporting from Greece:
"If Syriza turns out to be a bubble that deflates, and the crisis is not solved, it is entirely possible that the 'despair vote' - both in the cities and the countryside - will switch to Golden Dawn. The party's activists have already created an urban myth around themselves: they lead old ladies safely to the ATM so that the muggers cannot get them. They evict 'troublesome' migrant tenants, repaint the flat for free and hand the keys to the owner". (See here)
Of course, the eventual rise of Golden Dawn is a price arrogant Greek plutocrats, reckless European bankers, incompetent Eurobureaucrats, Frau Merkel and a sundry fauna of political charlatans, economic experts and international journalists would be willing to pay: all sacrifices are acceptable, aren't they, in order to save a nation from the Red Menace.

Perhaps it's too early to tell, but this could be a bad time to be a migrant in Greece.

----------

Anyway, it's Merkel's turn to move. Will she persist on skinning the Greek sheep alive, or will she accept to only shear it?

Some fiscal respite could give her Greek puppets the opportunity to try and keep the "despair vote" to some hard-to-specify "acceptable" level.

How to tell when that acceptable level was reached? That's a good question. I guess it depends on how loud the Greeks can howl and how sadistically impervious Samaras proves to be to this howling.

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European Commission president José Manuel Barroso's attitude at the G20 meeting, however, leaves little room for hope:
"But European Commission president Jose Manuel Barroso has hit back at those critical of Europe's approach, telling reporters: 'We are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy'." (See here)
Now, I'm sure some readers would like to claim these words are proof of arrogance, stubbornness and stupidity. I'd say, no siree bob. You are mistaken.

These people have handled things extremely well: for over two years they have been solving the crisis, emergency after emergency, summit after summit, bailout after bailout, country after country, austerity package after austerity package. And they will be doing it for the foreseeable future.

They don't need lectures: they know what they are doing.

----------

Which leads me to the last comment.

Will Syriza deflate? Who knows! They seem to be doing what's morally right and politically smart: apparently they won't be taking part in a New Democracy-led coalition, and hopefully they won't be promoting a coalition of their own, in the unlikely event that New Democracy failed to form their own coalition.

Frau Merkel and the Troika want to run Greece? That's what New Democracy and PASOK are for. And they're doing that very well, as Barroso would probably agree.

These people can do that without Syriza. They don't need Syriza's help.

But if a "Syriza bubble" doesn't deflate of its own accord, to answer Mason's question, there will still be many people holding their needles at the ready. Mark my words.


Image Credits:
[A] "Shearing the Rams". Tom Roberts (1890). Wikipedia.

Fairfax Media in the News.

It's disconcerting when journalists, instead of witnesses reporting the news, become themselves protagonists of the news.

This has just happened in Australia and the news is not just disconcerting, it is frankly terrible:


Screen capture. Click for a larger image.

Fairfax Media is the publisher of the oldest and most reliable Australian newspaper, The Sydney Morning Herald (Sydney). Fairfax also publishes The Age (Melbourne) and other regional newspapers, following the same SMH model; the Australian Financial Review (AFR), a daily business-focused newspaper and has interests in other media.

Although Fairfax Media's financial problems aren't recent, things started looking dire last year, when subediting was outsourced to Pagemasters, an Australian Associated Press (AAP) subsidiary, in a measure designed to cut costs, to match falling advertising revenues. (See here)

AAP is Australia's national news agency and it's co-owned by Fairfax Media, News Ltd and other smaller partners.

The news comes the same day ultra-conservative local gazillionaire Gina Rinehart announced an increase in her Fairfax stake to 18.7%. (See here)

The two things together do not bode well for Australian journalism.

Regardless of how one evaluates the news (and I'm sure many are happy with this), things like this are inevitable under capitalism:
"The sad truth for journalists in a commercial construct is that their department is exclusively a cost. It produces no revenue. Yes, it makes content, but the expense of doing that just drags on the gun arm of the business. In the commercial mind, journalistic content is either the plaster between the ads or something tailored specifically at attracting them". (See here)
I've written about this recently.

It's always sad, however, when people need to learn the truth the hard way. My solidarity goes to Fairfax Media workers.

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This was a shitty day.

Sunday, June 17, 2012

The Greek Elections.

"You can fool some of the people all of the time,
and all of the people some of the time,
but you cannot fool all of the people all of the time".
Attributed, perhaps apocryphally, to Abraham Lincoln.
Sometimes, people just need to reach rock bottom. After five years of recession, it appears the Greek people still have some way to fall...

Good luck.

Friday, June 15, 2012

The Rise of Syriza.

That's the title of a BBC Assignment, by Chloe Hadjimatheou. You can hear the broadcast at the BBC website. If you are interested on an impartial view on Syriza (or if you are an Australian "journalist" desperately needing to learn how professional journalists work), you should hear it.

The written, somewhat abridged, version also by Hadjimatheou, is here.

Hadjimatheou openly admits she sympathizes with Syriza and its young leaders. For one, her candour is refreshing and most unusual. This, however, does not stop her from listening to Syriza critics and asking hard questions.

The 23-minute long radio show contains a very interesting passage. A "New Democracy loyal party voter" (whose name I intentionally omit here), harbours doubts on Syriza's sincerity and on the feasibility of their promises. This person asked Hadjimatheou to question Alexis Tsipras on the feasibility of Syriza's programme.

Hadjimatheou could not get an interview with Tsipras, but (18:36 minutes into the broadcast) asked Costas Isychos (a Syriza candidate):
Chloe Hadjimatheou: "I returned to the party headquarters but I wasn't able to put D's points to Mr. Tsipras because he's turned down my request for an interview. Instead I asked Syriza's candidate Costas Isychos [CY in what follows] whether his party is selling the Greek people a fantasy with the idea that they don't have to pay a price for their country's debts".
CY: "We are not promising the people that they are going to get everything back what they lost. They know that. They know that. But you have to promise dignity".
CH: "At the moment the EU and the IMF say if Greece doesn't carry out the austerity measures they're asking Greece to, they're gonna cut off your money. That's what they are saying".
CY: "The Europeans have been blackmailing us since the first day. This long... (unintelligible). They are playing with Russian roulette. They are going to kill themselves. They are going to destroy Europe".
CH: "Is Mrs. Merkel playing Russian roulette or is Alexis Tsipras? He's taking a big gamble with Greece. If it doesn't payoff, are you prepared to be the party that takes Greece out of the Eurozone?"
CY: "Alexis Tsipras is not gambling. He's being very truthful. He's telling the truth. He's talking about the human catastrophe, he's telling what's happening. That's why he is getting votes! This is not a question of deciding who has the correct figures in his own notebook. This is a question of answering to people's real problems, real life problems".
CH: "You are taking a gamble, basically, that Europe can't afford to let Greece go, aren't you?"
CY:  "We know the battle. It's not a gamble. It's a contest of ideologies, it's a contest of values, it's a contest of our truth and their truth. History shows that mostly David wins against Goliath."
Two questions/comments:
  1. Hadjimatheou asks what many have already speculated: is Syriza gambling? I've seen no evidence that they actually are; but I'll admit it, it's possible. However, a gamble always involves two parties. In an otherwise excellent work, Hadjimatheou for the briefest of moments contemplated that possibility (is Merkel gambling?) only to dismiss it later. Why?
  2. More to the point for common people, like me: should Syriza win, will they do a better job than the establishment parties? That's a hard question and it remains to be seen, of course. The other side of the coin is: can they be any worse than the charlatans who had ruined Greece? Here the answer appears much clearer: extremely doubtful.
But you be the judge. Good luck to Greek readers.

Further reading:
Helena Smith (21-05-2012). "Alexis Tsipras interview: 'Greece is in danger of a humanitarian crisis'". The Guardian.
Helena Smith (18-05-2012). "Greek leftist leader Alexis Tsipras: 'It's a war between people and capitalism'". The Guardian.
Andy Denwood (14-05-2012). "Profile: Alexis Tsipras, leader of Syriza". BBC/Radio 4.

Tuesday, June 12, 2012

Ettiene Balibar on Greece.

Ettienne Balibar on the Greek elections (h/t Occasional Links & Commentary):

"In these conditions, it is astonishing that the European leaders and the IMF, posing as paragons of virtue and severity, should busy themselves in trying to restore to office those same bankrupt and discredited parties by denouncing the 'red peril' as embodied by Syriza (the radical Left coalition) and threatening to cut off food supplies if the new 17 June elections confirm the rejection of the 'Memorandum' that was clearly shown on 6 May last". (See here)
Not to mention Australian journalists.

Monday, June 11, 2012

SBS on Greece: Disappointing.

Suppose you expected an informed, impartial view from an experienced and highly awarded journalist, with five Walkley awards in his belt, one who works for a media outlet with a reputation for objectivity.

Well, if those were your expectations, you, like me, must be very disappointed with last Tuesday's SBS Dateline Greece in Crisis Special Report (June 5), presented by Mark Davis.

For one, the SBS team clearly did not bother to do their homework. As a long-time viewer, at first I tried to make up excuses for them: it's a complex, emotional subject; mainstream economists don't help...

But there's a point when the excuses wear thin. One thing is to be wrong, another is to editorialize in favour of one side of the dispute against the other.

This Special Report is not just disappointing, is outrageously partisan, and obviously so.

----------

So, let's do just part of what the SBS team should have done: let's begin from the beginning.

The problem with Greece started when its public sector took too many loans from European bankers. This much is widely known and appears to be the extent of SBS' fact-finding.

To that they added a conclusion: therefore, come what may, you're morally bound to pay your debt. Case closed.

This and no other is what Davis personally said and I quote verbatim: "If you borrow money you pay it back, as the premise, as the basis."

Let's get off our high horse for a moment, and ask ourselves: Who's this generic "you" Davis keeps mentioning?

Since the end of the colonels' era in 1974, either PASOK or New Democracy (ND) ruled in Greece.

This is the 300-seat Greek parliament composition since 1996:

       ND   PASOK  Others
1996   108  162     30
2000   126  157     17
2004   165  117     18
2007   152  102     46
2009    91  160     49
2012   108   41    151
(source)

In the table above, "others" are the small parties, including Syriza and the Communist Party.

Maybe it's just me, but from the table, I conclude that (1) PASOK and ND took turns in government and (2) controlled parliament during their periods in office. To me, they seem good candidates to be Davis' "you".

For instance, Costas Simitis (PASOK) was Prime Minister in 2000, when Greece gained its Eurozone membership.

Kostas Karamanlis (ND), Simitis' successor, was elected PM in 2004. His government was forced to audit the notorious cooked-Eurostatistics: the statistics presented by the Simitis government and used to justify Greece's admission to the Eurozone were "unreliable".

(Incidentally, Davis' report fails to mention this fact).

I'll leave the reader decide if PASOK/ND is the "you" deserving the blame; but I sure know something: one can't possibly blame this fiasco on the "others".

But this precisely is what a representative of PASOK, George Papaconstantinou, claimed in a previous SBS TV show on the Greek crisis (May 22):
"So nobody is outside this, nobody is innocent to the crime. Of course politicians bear the biggest burden, and of course they will be punished for this, as they are being punished."
Leaving aside the punishment references (was any Greek politician actually punished?), isn't it a bit rich to trace responsibility back to some generic collective "everybody", considering that there are elements pointing to his own party?

The bogeyman Davis sets out to expose, the "extreme", "hard" left, had no power to stop the "moderate" ND/PASOK from fucking things up. Just like they couldn't stop them from imposing their "moderate" Troika-backed austerity.

In fairness, not even the psychopathic extreme right Golden Dawn can be blamed for this. And the slightly less psychopathic extreme right LAOS' involvement is limited to supporting Lucas Papademos, the PM imposed by the Troika and also supported by PASOK and ND.

(The fact of LAOS' involvement with ND and PASOK is also conspicuously absent in Davis' report. It's interesting how SBS leaves out these details.).

This is the one thing all the so-called "extremists" have in common: they may be guilty of all the crimes ND and PASOK may want to accuse them, except this one. Contrary to what Papaconstantinou claimed, the excessive borrowing is a "centrist", "moderate" crime.

But the theory of indiscriminate collective guilt is not particular to ND and PASOK. It is behind Davis' question: his "you" is every Greek. From the children who had no voice and even those not yet born, but who are already sentenced to misery; to the wealthy Greeks who evaded taxes, and last year were buying real estate in the UK as if there was no tomorrow, each and every one of them is equally guilty: you took a loan, you pay for it.

This is when "moderate" politicians and "impartial" journalists discover the virtues of equality.

But, in fact, I do believe ordinary Greeks have some responsibility in this fiasco: they kept ND/PASOK in power since 1974. They can kick them out now.

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I could remind the SBS team that in a genuine fiscal union, surplus member states often subsidize deficit member states. As a matter of fact, and without going much deeper, this happens in Australia. But, never fear, I am willing to help the SBS team by doing part of the research they couldn't do: see here and here for the US (incidentally, note that conservative, fiscally responsible states receive much of the fiscal transfers largely from liberal, fiscally spendthrift states).

Or I could explain that German taxpayers are not subsidizing those profligate Greeks, but their own reckless bankers.

Neither will I go further into reminding the SBS team that Tsipras, rightly or wrongly, has promised to do what's in their power to keep Greece in the Eurozone and that this is in the public record. It is the Troika, Frau Merkel, ND/PASOK and now SBS that insist in tying Greece's membership to the austerity measures that make it impossible for Greece to repay the debt.

Tuesday, June 5, 2012

Spain's Fiscal Fraud Amnesty.


AMNESTY
plural am·nes·ties, 
(...)
noun
(...)
2. Law: an act of forgiveness for past offenses, especially to a class of persons as a whole.
(...) (See here)

Resolute to cut the fiscal deficit by 13.4bn euros, the Rajoy government found Spanish tax fraudsters (literal translation from Spanish defraudador) evaded taxes on about 25bn euros, accumulated as of December 31, 2010, presumably kept in tax havens overseas. (See here. Spanish)

At current top marginal rates (52% persons; 30% corporations) that amount could yield between 7.5 and 13.0bn euros in taxes, not including penalties and interests.

In a very unusual move and even though the ruling "People's" Party controls Parliament since last year, the Rajoy government decided to decree a fiscal fraud amnesty (March, 31). (Official text, in Spanish)

Scree capture. Click on image to enlarge.

For readers not familiar with the terminology: decrees are regulations by fiat of the Executive. Unlike bills and acts, which are discussed and approved by Parliament, decrees bypass parliamentary discussion. This particular decree grants amnesty to tax evaders declaring undeclared incomes earned before December 31, 2010, in exchange for a 10% fine. (See here. Spanish)

In strict money terms, the Rajoy Government unilaterally exchanged a 7.5-13.0bn debt (not including penalties or interests) for an expected 2.5bn. The idea, allegedly, is (1) to accelerate debt collection, and (2) to allow the immediate repatriation and investment in Spain of these capitals (i.e. euro 25.0bn).

I won't draw the readers' attention to this economically questionable rationale, or to the unorthodox legislation by decree, but to something much more basic and elemental.

Regardless of language, amnesties, by definition, refer to past offenses, as can be seen in the quote opening. This should apply to the proposed Rajoy tax fraud amnesty, too. However, it appears, this elemental fact is ignored by the Rajoy goverment.

El País, after consulting taxation experts, identified a remarkable loophole in the decree. (See here. Spanish)

According to the official text of the decree, tax fraudster/evaders don't need to demonstrate their incomes' provenance or the date when they were earned, provided those incomes were kept in cash.

Drug traffickers, for instance, could take the proceeds of deals and deposit them in a bank. By doing so, claiming the transaction took place before December 31, 2010, and paying 10% of the amount as "regularization fee", the deposit would become to all practical purposes legitimate.

As a side note, they might still be liable to a criminal prosecution (for drug smuggling/dealing, for instance), if an eventual police investigation were ordered and found evidence the money deposited was illegally earned.

Further and much more meaningful from the critically important point of view of fiscal policy, the decree provides strong incentive to evade taxes in even perfectly legal transactions. As would-be tax fraudsters/evaders don't need to present evidence of the fiscal year when the income was earned and the decree allows them to use this procedure until November 30, otherwise perfectly legal transactions could avoid taxes, by the simple expedient of claiming they took place before 31/12/2010 (as mentioned, corporate income tax top marginal rate is 30%, and personal income tax, 52%).

In other words, unless remedies are found (and it's unclear whether they exist) the Rajoy tax fraud amnesty would not apply only to past offences. An amnesty with a vision of the future!

Among other effects, opposition PSOE is studying a possible constitutional challenge.

More immediately, this amnesty can potentially affect severely fiscal revenue for the current financial year; liquidity preference could jump real soon, too, at a moment when Spanish banks are already under pressure.

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If I were the Spanish banks, I'd have plenty cash at hand, just in case.