The Tireless Agorist looks at the burgeoning underground economy in Greece.
And Forbes asks if Bitcoin might become the favored currency of an international System D.
I’m as skeptical of Bitcoin as I am of every cyber currency (once burned …). And my first thought on reading the Forbes piece was, “What will the USA fedgov’s 900-pound gorilla do?” But one of these days, the flailing arms of that monster gorilla will be able to do … nothing. Some innovation in free-market money will defeat it. If it’s Bitcoin, good for Bitcoin.
Having Greek friends has proved invaluable for understanding how “reality” works. They are taxing private businesses out of existence, while leaving lazy and worthless Greek public employees alone. In a move of pure German idiocy, they’ve insisted that wages are not just frozen, they’ve reduced them by 2/3s. A friend of mine was making 2000 Euros a month just a year ago. Now she makes 600, and her boss recently reduced wages by another 10 % on his own. He’s trying to keep the doors open, but it’s impossible. If the business did make any money the tax man would show up immediately and take it. My friend’s mortgage is 1000 Euros a months, her energy bill has gone from 120 Euros a month to 600, and all of the increase is taxes. Taxes, taxes and more taxes, on every commodity, transaction and property… and all the while the government remains unchanged. The Germans have even appointed the Greek prime minister (derisively called “Hans” Papademos) and they are taking all kinds of Greek minerals for collateral, minerals that the EU has prevented Greeks from exploiting for “environmental” reasons (I’m sure the Germans will be allowed` to exploit said minerals without such concerns). The bottom line is they have destroyed the Greek above ground economy, maybe for as long as a century if they adhere to the terms of the “loans” given by the so-called “Troika”. But the Greeks must find a way to live in the mean time.
And they have. Grocery stores are closing all over the place because they are heavily taxed. My friend has started buying everything outside of the above ground market system and relies on “Street purchases” of everything from eggs to vegetables. Last week she had some major stone work done inside her house in a deal so Byzantine in it’s workings that I’m still not sure how or why the work got done. The one thing I’m sure of is that no Euros were used and no taxes were paid. It’s a matter of survival for the Greeks to go outside the economy.
The Germans claim that the Greeks are in such bad financial straights because they have had too large of an underground economy that doesn’t pay taxes. Two weeks ago they wanted to send 134 tax collectors to Athens to get more revenue. Mind you, private business is already being taxed out of existence, which means that no job and starvation are real possibilities if the Greeks do what the moronic Germans want, and the Germans (who I won’t even bother to hide my contempt for) think that more taxes is the answer. The only way Greeks can survive is with an underground economy. My friend is close to losing everything if she is honest and stays within the system. She and her two daughters will literally starve, and I mean that in the most cold and real way imaginable. For ten million Greeks the only answer is to act “illegally”.
That’s even worse than I’d have imagined, and I thought I’d been watching fairly closely. Some folks have accused the Germans of making their third try in the last 100 years at conquering Europe.
Tell your friend there are people out here wishing her well — for whatever that may be worth.
It’s very difficult to get the truth about Greece within the MSM. Almost all of it is statist half truths. A reporter interviewing Merkozy, a central banker, or a German EU official, isn’t likely to hear how EU/ECB/IMF measures are making it worse. Brit papers and a lot of financial news outlets have done a fair job of reporting the nasty truths. The bottom line in all this is that the Germans, like all statist asshats, are creating a vibrant black market, the very thing they are trying to stop. It’s amusing that all the sold called “Austerity Measures” were meant to increase revenues. Instead revenues are down 35% and not to surprisingly new taxes end up collecting less revenue. I will pass along your best wishes and it will be appreciated. Greeks feel very alone right now.
I applaud the Greek people for taking matters into their own hands on this, but the concept isn’t as new as this blogger makes it seem. My father-in-law who was Greek had been doing this on a less formal basis back in the old country from a kid onward. He lived to be 86.
They also have exchanges like this in U.S., but the difference is the IRS has NO intention of letting the taxes go on it. Every “trade dollar” which is like the “tems” in the story was considered an actual dollar by the IRS for tax purposes. I used to belong to one of those exchanges, but later found it wasn’t as useful as working out my own private trades directly with someone instead of using the exchange to do it.
I hope this exchange helps the Greek people, but I fear they have a hard road ahead of them. I worry about my god mother who still lives over there.
Thanks again for the mention, Claire, and to all the commenters here; reports from ground zero are always valuable. Mic, I didn’t mean to imply that the underground is a new thing. What’s new is the Greek government’s law sort of blessing the concept – or at least that’s my understanding. There’s an underground economy in every country, always have been and always will be. Half the world’s workers, by at least one estimate — and it’s growing fast.
Don, the Troika in front of MEP at the Economic and Employment comittee on 3-27 was questioned by MEPs about an internal memorandum on their intentions about wages in Greece. They didn’t actually say how much they wanted to reduce wages, just that they wanted them in line with Romania and Bulgaria (150 Euros a month). This is amusing since the Troika is also practicing price controls in places like energy (the average energy bill is now 600 Euros a months per household) and business taxes that essentially give all profits to the Troika. No one in the socialist moronfest of the EU seems to understand the results of price and wage controls… or do they?
From a Greek newspaper:
“Today in a joint meeting of the Committee on Economic and Employment of the European Parliament representatives of the Troika (Olli Rehn, Jorg Asmousen and Paul Thomsen, answering a question by MEP SYRIZA, Nick Hood, having confessed the fiasco of the Memorandum today, admitted that purpose is salaries and pensions in Greece to reach levels of Bulgaria and Romania, ie the level of 150 euros per month.
More specifically, Nikos Chountis in his speech, after stating that the program implemented in Greece, through the Memorandum has failed completely and creates a vicious cycle of recession and deficits, asked the representatives of the Troika to commit unequivocally, and to reassure the Greek people, it is not their purpose to get wages in Greece, at the same level as Bulgaria and Romania.
The answer of three representatives of the Troika, was anything but reassuring. All three (Rennes, Asmousen, Thomsen), not only did not exclude the possibility of taking up new sacrifices of the Greek people and new cuts in wages of public and private sector but recognized very clearly that the focus is to bring the Greece the wage level that exists in Bulgaria and Romania.”