All over the media we read headlines such as “Fears of Greek Default Ease” and when you read the details of these reports, what you find that they are based on is the fact that Angela Merkel after meeting with Sarkozy said that Germany would soften its position to private investors. Rather than force them to bear a substantial part of the burden of a rescue Germany agreed to ask investors to participate in the bailout on a voluntary basis. (And what exactly does this mean in plain English? that they can choose to not be part of a community when it does not serve their profitability and then be part of a community when it profits them? My Mom used to call that “fair weather friends.” ) Unless you give a-moral people a very strong incentive for ethical behavior, don’t expect it to be forthcoming on a volunteer basis. Look to the off shore accounts set up by these people to evade taxes for one example.
As far as I can tell, no one has asked the people on the streets of Greece what they think. If they did, and “the Markets” that the rich love to personify could actually read these reports, their fears of Greek default might not be easing. If anything, this news about going soft on the rich is more likely to inflame the Greeks.
WHAT IS KEY TO THE GREEK ECONOMIC PROBLEM IS AT THE HEART OF THE U.S. PROBLEM AS WELL: RICH FREELOADERS WHO EVADE TAXES.
Like many countries, the Greek government relies on borrowed money to balance its books. The recession has made this harder to achieve, because tax revenues are falling just as welfare payments start to rise. It doesn’t help that, in Greece, tax evasion is commonplace.
In the USA tax evasion added $3 trillion to the deficit over the past decade alone, an average of $300 billion a year, according to IRS data. This isn’t revenue lost from legal tax write-offs, like the mortgage interest deduction. It’s not even, as the IRS notes, “taxes that should have been paid on income from the illegal sector of the economy.” That $300 billion represents the amount of revenue lost from people deliberately cheating on their taxes every year. This includes underreporting income, hidden offshore bank accounts, sham trusts, and other ways to illegally stiff the IRS.