

Greeks are sure of one thing: they can’t trust their fellow Greeks. - surlyadopter
http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010?currentPage=all
Fantastic article. I can only wonder how the Greek government will move forward.
======
StavrosK
Something the article doesn't mention (or that I didn't see when I skimmed
it):

The value of the entire Greek church is in the billions of euros, and _nothing
is taxed_. The government _asked_ them to be taxed a while ago, and the church
said that, if they were taxed, they would have to stop charity work because
they didn't have enough money. Meanwhile, the high priests wear 30k euro hats
and ride around in limousines.

On the other hand, if they _did_ get taxed, a good chunk of it would end up in
the pockets of politicians and big companies, as usual. The whole situation
isn't very encouraging for citizens who pay taxes...

EDIT: This article [1] mentions that the church put the value of its property
at 700m euros. External parties place it at 2-15b euros, while at some point,
years ago, 5 monasteries said that they evaluated the value of their
properties at around 20b of today's euros (this is just for 5 monasteries).
You can imagine how taxing the church would pay off a good chunk of the debt,
but, in Greece, you don't get taxed when you have this much money.

[1]: [http://dialogoi.enet.gr/post/νάνος-ή-γίγαντας-η-
εκκλησιαστικ...](http://dialogoi.enet.gr/post/νάνος-ή-γίγαντας-η-
εκκλησιαστική-περιουσία-μέρος-1ο)

~~~
pbhjpbhj
>5 monasteries said that they evaluated the value of their properties at
around 20b of today's euros (this is just for 5 monasteries). You can imagine
how taxing the church would pay off a good chunk of the debt

So are you proposing that they instigate a one-off property tax on everyone in
Greece or just on the monasteries. The reason that 5 monasteries have so much
valuable land is not necessarily that they are rich (the meals described in
the article and lifestyle aren't exactly lavish either) but because they own
large areas of land which when they adopted them 100s of years ago were
probably unwanted, but now (speculating) are probably places where holiday
resorts would be built.

Demanding a piece of a valuation of the properties would I imagine mean many
such properties would be sold off and a great swathe of Greek heritage from
the last millenium or so would then be following all the unpaid taxes and
disappearing.

Perhaps you could explain further how you propose to get cash out of monastic
property?

~~~
_delirium
The "value" of the monasteries also seems like it requires assumptions about
what would be permitted. I imagine Mount Athos, for example, could be quite
valuable as a tourist and resort destination--- could make some nice boutique
hotels out of those historic monasteries. But since secular development has
been banned on the peninsula for centuries, I can't imagine that actually
happening. If we assume that Mouth Athos will stay off-limits to secular
development, and assume that the removal/sale of historic items from the
monasteries wouldn't be permitted, the value of their land and holdings (e.g.
manuscripts) is much lower, because it isn't commercially exploitable.

Now shell companies owned by the church engaged in normal for-profit business,
those seem pretty reasonable to tax.

~~~
ovi256
> nice boutique hotels out of those historic monasteries

Are you kidding ? That's incredibly rude. How would you feel is someone
proposed commercializing in the same way that you hold most dear ? I think
this is just ignorance and you in no way realize the cultural, historical, and
yes, mystical significance of those places.

~~~
blasdel
He's ignorant? Finish reading the paragraph!

------
georgecmu
_“The second day on the job I had to call a meeting to look at the budget,” he
says. “I gathered everyone from the general accounting office, and we started
this, like, discovery process.” Each day they discovered some incredible
omission._

Last week there was a post about a woman that was $185K in debt and didn't
know it. There were a lot of comments asking how that could happen. Here's an
example of a whole country that didn't know how much it owed.

------
DuncanIdaho
"There’s no question that the government is resolved to at least try to re-
create Greek civic life. The only question is: Can such a thing, once lost,
ever be re-created?"

I reccomend reading Machiavelli's Discourses to anyone interested in the
particular subject. He has put much study into this question.

To provide short answer - Niccolo believes that once the "civic virtue" of the
state (and thus its citizens) gets corrupted it certainly is possible to
restore it - but that he sadly cannot think of a single person that would be
capable of pulling it of (it is such a monumental undertaking, requiring an
honest person to commit some amoral actions - without succumbing to corruption
of power).

Thus a more probable course of action according to Machiavelli is - that such
a state (or nation) is condemned to "eternal" turomoil and/or domination from
an other (more virtous) power.

------
code_duck
Nice that we can still rely on Vanity Fair, the New Yorker and (sometimes) the
Atlantic for journalism this thorough.

Greece seems insane, of course - but there's always Italy.

~~~
jseliger
The question is: do you convert that sentiment to subscribing?

I ask because the only way good journalism venues can survive in the short to
medium term is through print subscriptions, which subsidize their websites.

(For those of you about to level the charge of hypocrisy: I get the New Yorker
and the Atlantic. Reading the latter starting when I was a college freshmen
has probably taught nearly as much as all my non-technical classes combined.)

~~~
natrius
It's a nice sentiment, but expecting people to subscribe to your print
magazine because they like reading your articles online is a recipe for a
broken business model. People like good journalism and they're willing to
support it, but such support needs to be requested in a logical manner. When
non-profits request donations, that makes sense. When for-profit print
publications ask for subscriptions, people are disinclined to follow through
because they don't actually want what they're presumably paying for.

~~~
jseliger
_It's a nice sentiment, but expecting people to subscribe to your print
magazine because they like reading your articles online is a recipe for a
broken business model._

Maybe so. But if you, as an individual, like the high-quality journalism
that's being produced, the question is not whether the magazine has an optimal
business model but whether you want to keep reading the high-quality
journalism. The optimal way to signal that you do is to subscribe.

 _When for-profit print publications ask for subscriptions, people are
disinclined to follow through because they don't actually want what they're
presumably paying for._

I think I'm paying for high-quality journalism, unbiased stories, and deep
reporting. It happens to be delivered in a convenient package of pages bound
with a stable and mailed. What do you think you (or others) are paying for?

~~~
natrius
> _The optimal way to signal that you do is to subscribe._

Agreed.

> _I think I'm paying for high-quality journalism, unbiased stories, and deep
> reporting. It happens to be delivered in a convenient package of pages bound
> with a stable and mailed. What do you think you (or others) are paying for?_

You're not paying for that. Anyone can get that for free. You're donating your
money to them so they can continue to do their work. You don't actually want
what they're _selling_ , you just want them to continue producing the stuff
that they give away to everyone. Sounds like a non-profit to me.

High-quality journalism isn't in much trouble. People are willing to pay for
it (and my job security relies on that fact), but most publications are using
a psychologically suboptimal way to get that money. If they explicitly said,
"Donate money to us or buy a subscription so we can keep producing great
journalism", they'd probably be more successful.

------
sx
The article points out many of the problems of the greek economy, like:

* The inflated public sector

* The power of the unions over the government

* The corruption in certain areas of the public sector (e.g. hospitals)

* The loose observance of laws

But it mischaracterizes several important points, as it is commons with
articles that describe such complicated issues after a minimal exposure of the
journalist to the situation:

* Tax evasion does not hurt the real economy. Especially not in a country like Greece where the public sector is so inefficient. It might be unfair for some but it doesn't really hurt the economy. In some cases it enables smart and motivated entrepreneurs to start their businesses.

* Most public sector workers are not corrupted but they are part of the problem simply because of the fact that they work in the public sector. Think of DMV x1000.

* The majority of Greeks are against the unions and would like to see the public sector shrink.

~~~
jakarta
Tax evasion hurts when a government owes tons of money that it cannot pay back
with the current tax revenue coming in.

~~~
sx
But this is not the cause of the economic problems. The more appropriate
solution would be to shut down the money-loosing public businesses (like the
train org) and lay off as many people as needed from the public sector.

This way, they will reduce government spending and will also allow people to
do something more productive.

More taxation will just slow down the economy even further.

~~~
mfukar
Really? Shut down public transportation, public health care, public
telecommunications and public power? Do you have an equally brief transition
plan?

~~~
sx
I am not advocating something that extreme here. Not sure how familiar you are
with Greece. Each of these organizations is overstaffed to a great extend.
Then some of them are totally useless, like the public railroad. On the top of
that there are businesses that would be very healthy in the private sector
(see banks) and that the government has absolutely no reason to be in. The
fact that the government is actually in those businesses, profitable or not,
screws up the incentives of everyone involved.

~~~
mfukar
I happen to be somewhat familiar, since I've been living there for 26 years.
The majority of state enterprises (or those the state has a share in) right
now are profitable, with the notable exceptions of a) railroads and b) the
off-the-books units created by ministries to handle short-term tasks. Could
they benefit from a restructuring and would lay offs be helpful? Probably so.

Does the state's involvement in public corporation screw up incentives?
Telecommunications is a good example of why not. Banks still don't convince
me; they pay taxes with interest rates significantly less than 18-20%, which
is the norm and they have resisted any and all attempts of the state for
policy changes.

Personally, I am more concerned with other issues: the legislation that often
proves to be shortsighted and inefficient, limited (and that's a euphemism)
opportunities to young entrepreneurs, poor education, but the one thing that
bugs me the most is that Greeks (yeah, I'm one of them) have no regard for
public interest. The why is a longer story than what can fit in this post.

PS. You hinted to "shut down the money-loosing public businesses" as the "more
appropriate solution"; if you're not advocating for it I may have to brush up
on my English comprehension skills.

~~~
sx
A point with which I strongly disagree is that some public businesses are
profitable so we should leave them alone. First of all, it's trivial to be
profitable if you control a monopoly. Also, being profitable doesn't mean you
are efficient, some things could be done much more effectively in the private
sector. Also, by being overstaffed, even if profitable, you are not allowing
all these people working for you to do something more productive.

Beyond that, when talking about profitability, you should consider pension
plans and future obligations. Some of these businesses might have a positive
balance sheet for the year but what's going to happen if you consider their
future, inflated, obligations. A good example are the pensions the Public
Electric Company employees get. They are mostly funded by the government.

Let's see why it screws up incentives: \-- What do you think any of the people
working in the public sector tries to optimize? Is it the successe of the
business they are working on? Do they try to advance their careers? Or do they
try to work as little as possible? \-- If an employee is not good, is a
government controlled company ever going to fire them? \-- The guy who
controls the supplies in the hospitals, does he ever have to report to
somebody about that? \-- Do you know a single person in the public sector that
he has ever been promoted or fired because of his skills or lack there of?

~~~
mfukar
_A point with which I strongly disagree is that some public businesses are
profitable so we should leave them alone._

A point which I didn't make. Improvements can always take place. But no
matter; not all businesses I was talking about are monopolies. In fact, the
telecom sector is free since 2001, and it's doing great, considering HTO
possessed 100% of the infrastructure up to that point.

Incentives are given by management. It is extremely easy for any business to
motivate their employers, as it is easy to lay off slackers. It mostly does
not happen; this is a result of corruption, incoherent legislation, and poor
law enforcement as well as financial and management review (among others).
I've already mentioned those factors, I view them as extremely dangerous for
our economy and I highly doubt they'll be waived in any reasonable amount of
time. I think we mostly agree on this part.

------
artpop
I read that as "Geeks are sure of one thing: they can’t trust their fellow
Geeks" and was subsequently rather surprised when the photo of that chap came
up.

~~~
jhen095
haha, me too. Every time. Probably also very true, someone should blog about
this.

------
brc
I thought that was an excellent, well written and entertaining article. Well
worth the time if you are interested.

To me the only solution is to remove themselves from the EU and go back to
their own currency. And for some type of structured devaluation of their
existing debts to gradually -rather than overnight- allow the other european
banks to write off the losses. Though I'm not sure how you could get it to
work out in practice. But the inflation rate and deficits were all a sham, I'm
sure they can come up with some sort of sham valuation on untraded paper.

~~~
forgottenpaswrd
They thought about this. What happens is that there is no way the devaluation
could become "gradual".

Imagine being Greek and having all your live savings in the bank, in euros,
and tomorrow they become drachmas and in the process losing 25% purchasing
power. What do you do? You sell all your drachmas and buy euros or dollars
because you know drachmas are going to be even less tomorrow.

It doesn't matter you make it illegal, people is going to do it anyway. This
is what happened in Argentina, nobody wanted pesos, they wanted USD. People
stopped using banks(this way the government has less power over your money).

Also, people feel enormously betrayed when they realize their hard earned
savings become nothing and politician heads roll down, so politicians try to
delay it as much as possible. IMO it will happen sooner or later anyway,
unfortunately because they were in fact betrayed.

~~~
gaius
A currency is "legal tender" because a government will accept taxes in it, so
in practice everyone has to have it, and use it for their own commercial
activity.

But in an economy where no-one pays taxes anyway...

------
whakojacko
Well that was incredibly depressing...the amount of social change (nevermind
laws and enforcement and such) needed to fix Greece sounds nearly impossible.

------
surlyadopter
“The Greek people never learned to pay their taxes. And they never did because
no one is punished. No one has ever been punished. It’s a cavalier
offense—like a gentleman not opening a door for a lady.”

The article makes it clear that for Greece to improve this type of behavior
must change. But is it even possible for Greece to do this in the span of say,
less than one generation?

~~~
_delirium
I can't seem to find it, but I recall reading a piece at one point that
suggested the general disregard for government rules in the eastern
Mediterranean goes back centuries, to the rule of the Byzantines, Arabs, and
Ottomans at various times. The rulers kept changing, and were generally
bureaucratic, so people got used to doing whatever minimum was necessary to
appease them, and generally ignore them whenever possible. Hence rampant
avoidance of taxation, buildings often built in blatant violation of zoning or
building codes, large informal economies, preference for dealing with
officials you personally know / are related to, etc.

(IIRC, the author grouped Greece, Turkey, Lebanon, Israel, and Egypt in that
analysis.)

~~~
ovi256
You can safely add the Balkans and Romania to that group. Although many things
work well without a bribe in Romania, most important things, I'm told, do not.
The first thing my parents do when they have to deal with the government is
ask themselves who do we know that works in that department ? As teachers,
that works great for them. TBH, they do that when dealing with private
businesses too, maybe even more so, but then I realize that's just how
business works.

~~~
radu_floricica
As a Romanian, this article mostly made me feel good there are worse places.
Not a noble feeling, but I'll take what I can.

This being said, this instinct about looking for acquaintances first is
starting to be not so useful, and used mostly by the older generation. I've
seen instances where inside intervention was less efficient - but I've also
seen official free consultants (good ones) with too much free time because
most people went over their. But still, it is unfortunately far from being a
useless strategy in way too many cases.

Compared to how the article paints Greece though, our problems are different.
Tax evasion is real here, but not critical. What _is_ extremely painful at the
moment is the widespread politicization of public institutions. Everything
starting from middle school headmasters has to belong to a party or another
(and of course usually it's the ruling one).

------
georgecmu
Actually, wasn't this article in the top just a few days ago?

[UPD:] Here's the link to the prior submission:
<http://news.ycombinator.com/item?id=1670824>

------
davidw
Sounds like Italy ^ 2.

------
mmphosis
I don't think that the "money as debt" problem is specific to Greece. You know
that your country, province/state, city/county is probably in similar
circumstances. And the problem is not about local people not being able to
trust their fellow people. The problem is usury: banks, and the financial
systems that loan money where there is no money to pay back the compounded
interest.

Here is the top comment on this
[http://www.cbc.ca/money/story/2010/09/08/bank-rate-
decision-...](http://www.cbc.ca/money/story/2010/09/08/bank-rate-decision-
sept.html) cbc story about the Bank Of Canada.

 _Watch the movie:<http://ohcanadamovie.com/>

"If the American people ever allow private banks to control the issue of their
currency, first by inflation and then by deflation, the banks and corporations
that will grow up around them will deprive the people of all property until
their children wake up homeless on the continent their fathers conquered"

Thomas Jefferson 1816

Did you know that PRIVATE Banks print 85% of our money supply in Canada and
100% of the money supply in the US ( the Federal Reserve )

1 they print money out of thin air

2 lend it to our governments with interest

3 fiat currency

4 fractional reserves ( for every $ 1 printed they can loan another $ 9 out of
thin air

5 they control the money supply and devalue YOUR money in order to profit

Our monetary system is the biggest SCAM going

Banks love a DEBT ECONOMY & they love Government Deficits – the more debt the
dump into the system the higher the profits they make

The Bank Of Canada (Central Bank Of Canada) used to be under the authority of
the Federal Finance Minister. Ostensibly, to this day, it still is. But there
is a catch that most people don't know about. From 1934 until 1974 it created
currency and the issuance of credit for the PEOPLE OF CANADA The interest on
these loans was put back into Canada and was used to build the Trans Canada
Hwy and various infrastructure

In 1974, however, when Canada joined the G7, which became the G8, which is now
the G20, it gave up it's monetary control and credit issuance to private
banking cartels that run most of the western industrial nations (Germany,
England, France, Switzerland, Italy etc). The Canadian National Debt has since
gone from 18 billion in 1974, to now 500 billion in 2009

"Once a nation parts with the control of Its currency and credit, it matters
not who makes that nations laws. Usury, once in control, will wreck any
nation. Until the control of the issue of currency and credit is restored to
government and recognized as its most conspicuous and sacred responsibility,
all talk of the sovereignty of parliament and of democracy is idle and
futile."

William Lyon Mackenzie King 10th Prime Minister of Canada.

"History records that the money changers have used every form of abuse,
intrigue, deceit, and violent means possible to maintain their control over
governments by controlling money and its issuance."

James Madison

"It is well enough that people of the nation do not understand our banking and
monetary system, for if they did, I believe there would be a revolution before
tomorrow morning".

Henry Ford_

------
narkee
Well written, although it reads more like an opinion piece than an objective
report.

If Greece were a business, it would become bankrupt and be dissolved. I guess
that realistically can't happen for an entire country - but they really need a
solid reboot.

~~~
oiuygtfrtghyju
Bankruptcy can happen for a country.

Happy exporting something to Somalia and getting a Somali currency bank check
as payment - No?

It's trickier to go bankrupt if your country use somebody else's money. Would
you sell to Greece and accept euros you can spend in Germany - Yes ?

~~~
mfukar
True; expulsion (or leave) from a monetary union will also effect the euro
considerably, and those issues (mistrust, bond revaluation, etc.) can quickly
evolve in an avalanche effect. No sane person in the EU wants that.

~~~
oiuygtfrtghyju
Also physically a bit tricky. You would have to announce it in advance, to
allow time for the new currency to be produced - in which time everybody would
hoard euros. Then everyone waits for the new currency to fall like a stone, so
nobody uses it, so no tax revenue.

------
nodata
This is truly an excellent article. I've never read an article online of this
length before where I haven't taken a break or switched tabs.

Having said that, the Vanity Fair website has a lot of fluff ("Which President
Decorated the Oval Office Best?" anybody?). If they concentrated on quality
articles like this one I'd subscribe in an instant.

------
mindslight
This entire article presumes that the Greek people are responsible for the
debts of the Greek government.

~~~
varjag
Well they elect the government, so yes they are.

~~~
mindslight
Having the ability to cast a vote makes one responsible for all actions of
whomever gets elected, plus the entire standing government?

~~~
varjag
Voting in representative democracy is statistical quality, so no, not one in
particular but a nation as a whole. Like in the USA you might not be
personally responsible for Iraq war, but as an American, you are.

Of course such property makes it attractive to neglect personal political
responsibility. But in some situations, like with Greeks now, it can come back
and bite you in the ass.

(Also, read the article - it's not quite about benign populi paying for
mistakes of the Government)

~~~
mindslight
To be partially responsible for something, there must be something one could
have done that may have prevented it. Please tell me as an American, what I
could have done that could have possibly prevented the Iraq war. I'm not
asking for monumental results, but at least what would have withdrawn my
alleged contribution to the war?

I did read the article, and all of its prescriptions presume that the Greek
people are indebted to their government. Is it not possible that the informal
economy grows, the government goes bankrupt, but the society (held together by
local structures) continues on?

~~~
varjag
You could not do much I'm afraid, it's sad but it still holds you responsible
as part of the group. May sound too harsh, but collective responsibility is
acknowledged explicitly e.g. in post-war German ideology. Being taught that in
schools might alone make people more considerate of their choices in general.

As for the article, it suggests that Greeks despise and distrust each other in
first place. Not sure it's a good starting point for anarchic type of society.
Also, notice how the most vocal protesters there were the government workers
(who earn triple of the private sector on average).

------
patinador
When things are going bad is not easy to change. It is easy to spend money, to
borrow and to forget to pay taxes. But the other way round is another story,
one to be written and not a gay one.

