Yesterday, opened StreetEye to see the day’s most popular articles about the markets. Similar to last week, I found another article about Greece near the top of the page. It was an interview from the BBC titled, “Stathakis: Greece rescued,” with Greece’s Economic Minister Giorgos Stathakis who should not be confused with the flamboyant leather jacket wearing Finance Minister Yanis Varoufakis. Giorgos talks about the deal he’s says is close to complete will save Greece so technically Greece hasn’t been saved yet. The plan in place will be reviewed by the European Union and he believes the will approve financial support for the government and allow Greece to avoid default.
The details of the plan seem to be similar details to any quick, current economic plan that doesn’t really solve the issues facing the country.
The key points:
- A new tax on businesses.
- A new tax on the wealthy.
- Some increases in the value-added tax (VAT) on selected items.
The deal will not touch pension or public sector wages, which are two of the biggest long-term issues for Greece. Greece has also agreed to IMF and Eurozone governments that the targeted budget surplus would be 1% of GDP or national income this year, 2% next year, and 3% the year after. These are all steep declines from the previous agreement. There is also no agreement decreasing the debt burden on Greece.
In many ways the issues Greece has been dealing with are similar to issues in the US. Government hasn’t lead. They’ve allowed special interests to saddle their countries with debt and not have the strength and courage to create solutions to solve these issues. They’re all too worried about saving their own jobs instead of working for their constituents. The US has had this problem with the debt ceiling. A lot of fuss around the country defaulting, a last-minute deal that solves nothing, and then revisit the same issue at a later date.
Things never change and politicians seem to never get anything they say done.