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What will happen to Greece in 2013?

What will happen to Greece in 2013?

Australian Investment Education

Greece Financial Outcome 2013Greece – financial mythology and most certainly a real tragedy.
The story of Greece is really at the core of the current wide ranging problems in Europe – more on that in later articles – but what is the possible Greece Economic Outlook 2013?

Greek debt has been rapidly rising – estimates put Debt to GDP at more than 170% – clearly not a good indicator of anything other than a major problem. The cause of this is significant government borrowing, poor economic management and rampant tax evasion – again, all the hallmarks of a major problem.

Reading this may seem like the lecture we probably all had from our parents, when we were younger, on looking after our money, and wise words they no doubt were and a shame not everyone took it on board!

So what are the options? Pay back the money – hmmm tricky, especially when you are used to spending so heavily. Add to that, with the broader economic slowdown, your income would be expected to be a bit lighter too – paying debt off of a smaller income… hmmm.

Secondly, cut your spending back – sounds obvious really but the austerity measures – and granted, they are harsh – really didn’t find a welcome reception from the broader population – hardly surprising but at the end of the day, the reality and who likes change, especially when your own outcome is less for you.

Thirdly, actually start collecting taxes that are due – again, pretty obvious to those on the outside. On this subject, consider this; Tax evasion is rampant in a country that so desperately needs tax revenue, to restore and pay off its enormous debts. In Greece, there is a swimming pool tax – and until recently, only 324 households were registered as having a pool and paying the tax. Aerial reconnaissance revealed 16,974 in the Athens area alone. Go figure!

Even more ridiculous, is that 65% of the population declare an income of less than 12,000Euro, and only 20,000 people admit to an income of more than 100,000 Euro. To put that into perspective – there are more Porsche Cayenne’s registered in Greece than people admitting to an income of more than 50,000 Euros. These figures simply don’t add up and tax evasion is estimated at more than $20bn a year – it has to be close to being a national pastime.

Fourthly – how about refuse/actually not pay back the debt. This is known as default and is not a great place to go. Most people aren’t very happy when this path is taken – as effectively they are writing the money off. Other countries have done this – Russia, Argentina and Iceland have all been there and look at them now. The short term pain is horrific, but there clearly is life after default.

Fifth – how about take your bat and ball and no longer play. The option of dropping from the Euro, back to Drachma is also a possibility. Again, this is not overly palatable – but certainly a realistic prospect. An interesting sidebar is that Greece has spent more (as a proportion of GDP) on its armed forces than any other of its European cousins, with the exception of the UK. Not that relevant? With unemployment running at such high levels, what are the chances of social unrest, especially amongst the youth generation? More so, what are the chances of a military coup – reasonable, I would suggest, given the Country’s history, and the depth of the economic problems. After all, it’s kind of hard to get paid when your counterparty is replying to you, albeit from the turret of a tank!

So, how about this instead – Greece drops from the Euro, the debts get written off, and then we all head down to the local Taverna for some Ouzo and Koftas – of course, with a “cash only” bar!!


about Andrew Baxter

Originally from the UK, Andrew has been a market professional for almost 19 years, trading a wide range of global markets and instruments. As a highly regarded industry speaker, he has spoken alongside Sir Richard Branson, Robert Kiyosaki, Anthony Robbins and Tony Blair, empowering many thousands of people, from all over the world, with the skills, techniques and ...

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  1. How about they ditch the debt money system and change to a treasury credit money system!! Yay true democracy

  2. Hi Andrew,

    In saying what you have said, I can only agree. I do monitor the fundamentals regularly and I see that a lot of big name analysers are putting a hard time on the Euro. Have they forgotten about the debt the US has racked up?

    The US can not spin the printing machines fast enough. They are running out of ink!

    My views are a incline in the EURO and a decline in the US..

  3. The 80% of the above article seems to be true and states the reality. But i have some questions and i would like to be answered by the author of this article.
    1.in Australia , lets say, is there any tax for the pools? Are the “pools” a luxurious good?
    In Greece the: “How much money someone needs to maintain the pool per year” becomes a “standard” of living!!!
    2.Tax evation:Will you accept to have a partner in your busineess with a 38-42% partership payable in taxes and without offering to business anything but trouble (the bureaucracy is a huge monster that eats everything in Greece)? Thus, bribery and corruption applies to every public servant from the simple clerk up to the PM. There is a need to avoid taxes and the 40000 other fiscal laws and regulations that are austere but no one knows how to apply them as the one does not cancel the previous one…!3. Due to Greece’s geographical position, the army should be kept “armed”… this is a lolly that they give to Greek population every time they want to pass new measures and buy new weapons…Well, the European and Global “army” industries supply the little country with the huge debt various weapons such as “default submarines with an inclination to the right side” not in order to protect Greece against other Mediteranean and middle east “enemies” but in order to keep the money laundry open for their own benefit with commissions, holidays, dolce vita, which can not go through the official channels in their countries. Did you know that Geece had a superb army industry which has been closed down due to low cost and high profit ?
    People in Greece – the everyday people who, though, are very intelligent and very educated- said so many times to let them go out of Euro. NO, no, no ..the big sharks do not want that…why? Germany knows!Does default of Greece mean the end of euro? And does this monetary product have a foundation basis? Only a Central Bank supports the currency and there are not common ministries, policies, wills,languages,cultures, religions……..to guide European economy as a unity. Countries in Europe are suffering because internally they can apply only fiscal policies and Euro Union Organisation suffers as it has only the monetary policy. And those two policies are supposed to be considered always together in every macro economic environment.

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