Saturday, 27 February 2010

Greek bailout - snatching defeat from the jaws of victory.

In the light of the possible rescue for Greece by the German state owned bank KfW which I referenced here , there is the possibility that yet another financial crisis would have been wasted by the ineptitude of politicians and technocrats.

During the last week I remember reading someone's tweet or blog comment (I cannot remember which I have to confess) which suggested that the way the financial markets have been treating Greece's public finance debacle i.e. by selling the euro and ratcheting up the spreads between Greek sovereign debt and German bunds, could finally be sorting out a problem which no Greek politicians have been able to solve.

In the same week I heard a wonderful segment on the BBC World Service - which is available here - about the endemic nature of tax evasion in Greece. According to this program, which featured extensive interviews with average Greek citizens, it appears that a huge amount of transactions between Greeks take place in the gray market where no invoices or paper work is issued, and cash is paid, so that no taxes are paid to a government which is already renowned for profligate inefficiency. In addition, the program made the point that most Greek professionals -doctors were cited as a principal culprit- appear to systematically understate their incomes by many orders of magnitude.

If the German rescue plan comes to pass then politicians-especially that particularly egregious bunch known as Eurocrats- will have demonstrated, yet again, that they have no equals in their ability to snatch defeat from the jaws of victory.

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