hint of a deal?

Thinking about that notorious Christine Lagarde interview a couple of days back, it occurs to me that it's the first time any big timer has put the issue of tax collection front and central in the Greek austerity debate. Up till now it's all been a combination of supposed unwillingness to work and excessive public spending - things that could be 'cured' by austerity, if you'll forgive the euphemism.

Ordinary Greek taxpayers pay up; at least these days, since taxes have been fed into things like utility prices, they don't have any choice. I also bet that a Syriza government wouldn't have a political problem at all in trying to force the evading classes into paying up; not just because they're left wing but because they're outside the old cozy duopoly.

So despite the insulting nature of Lagarde's demarche, you also have the first hint of common ground between Syriza and what may be its future creditor alliance.

If so , it's about time: it's not as if they're an actual extreme left party. They want to stay in NATO and the EU, which puts them somewhat to the right of Labour in 1983. As I understand it, what they basically want to do is to change the question from 'what are the Greeks prepared to suffer to stay in the Euro' to 'what lengths are the rest of the EU and the relevant organisations prepared to go to keep them there.'  Optimistic I know, but maybe Lagarde's hinting that a deal might be available on these terms. Something like how much extra income can you collect in return for more debt forgiveness/Eurobonds/whatever it takes.

Comments

[CMcM]

Perhaps, perhaps.

But there is another obvious retort from the left (Greek or otherwise): "Sure, we'll collect the little people's taxes, now who is going to collect the taxes from those sovereign wealth funds, hedges & banks we 'owe' money too?"

[ajay]

The plan to link taxes to electricity bills failed because the electricity union refused to disconnect anyone for non payment of bills. So now the Greeks aren't paying taxes OR electricity bills.

[bert]

The IMF view is that there's been on balance too much tax rise and not enough other stuff in what Greece has been doing. Above all they've been pushing for big job culls in the public sector. As with the recent report on the UK, it might make sense to distinguish between the institutional view within the IMF and the political statements of its boss. But it's definitely worth watching to see if Lagarde has got the job of signalling concessions before the election. Assuming that's a job they want done.

On expenditures, Greek military spending as a proportion of GDP is the highest in NATO after the US and the UK. (You recently wondered whether army the would stay in its barracks.)

On revenues, that privatisation windfall through a firesale of state assets? It turns out, not so much.

[dsquared]

Ordinary Greek taxpayers pay up; at least these days

As Ajay notes, there's a lot of unclarity about the extent to which this is true. Part of the hideously bad collection infrastructure is that the tax collection statistics are equally bad.

And the FT article Bert linked to shows us the real problem; the privatisation proceeds can't be delivered unless the Greek nationalised industries are re-organised to look more like industries and less like sinecures for PASOK members[1], and that can't be done because Greece doesn't have a functional government capable of delivering them. But if Greece had a functional government for the last ten years it wouldn't be in this situation. Jason Manopoulos' book "Greece's Odious Debt" is very good on this; the seeds of this crisis were sown a long time before EMU.

[1] Presumably everyone commenting here remembers Thatcherism and is thus viscerally opposed to the restructuring and reorganisation of national industries preliminary to privatisation. Which is a fair point. Although, as with so many other issues, it also needs to be recognised that one's political intuitions developed in the UK don't necessarily travel as far as Greece; many Greek nationalised industries actually are in the kind of state which the worst Thatcherite propaganda attributed to British Leyland. There was always a case to be made for the British mining industry, for example, as one of the more efficient in the world. Greece isn't like that.

[Phil]

Semi-relevantly, back in the 80s I did once see a commuter train in Italy with its full complement of Driver, Conductor, Deputy Conductor and Assistant To The Deputy Conductor - or, quite possibly, Conductor (Christian Democrat), Conductor (Socialist) and Conductor (Communist).

Payroll-padding is a bit like corruption in politics - it genuinely hasn't happened much in this country, but we're quite unusual in that respect.

[ejh]

One important point, and one overlooked by the fuck-the-Greeks-they're-all-corrupt lobby, may be that it's hard to organise a properly functioning government, or improved tax collection, amidst the conscious impoverishment of a nation. I am not, for instance, expecting Spanish tax collection or governance to dramatically improve over the next couple of years. Which kind of brings us back to Jamie's point.

It might also be added that while there is of course payroll-padding on a sizeable scale, this doesn't entitle us to make large and negative assumptions about the public sector per se. Teachers, for instance, still teach, and largely because they want to teach. And if you want people within those sectors to restructure, and help get rid of the abuses and excesses, you need to be giving them something rather than a big fuck-you. Just as it doesn't actually help to accuse people in toto of not paying taxes when most of them do probably pay their taxes.

Syriza probably won't win, unfortunately, which illustrates another thing about Lagarde and other financial-and-political-establishment interventions - that they're carried out in support of the really corrupt Greek parties and against those who have grown in opposition to them. That establishment was perfectly happy with Greek (and Spanish) corruption while the milk was flowing and the honey was sweet, and this should never be (but almost always is) forgotten.

[ajay]

As Ajay notes, there's a lot of unclarity about the extent to which this is true. Part of the hideously bad collection infrastructure is that the tax collection statistics are equally bad.

And it has also, as far as anyone can tell, been getting much worse over the last few months thanks to general political paralysis. Recently I saw an estimate in the Guardian that government revenue per day had dropped from €40m at the start of the year to €25m now.

The only people who absolutely have to pay taxes are the public-sector employees, of course. And they're also the ones who are seeing pay and pension cuts and are therefore (understandably if not necessarily justly) aggrieved. And, of course, they include the tax collectors.

On expenditures, Greek military spending as a proportion of GDP is the highest in NATO after the US and the UK.

That would be the public-sector payroll padding on a sizeable scale that ejh was talking about. Although Greek military spending isn't really that high in world terms - 2.3% of GDP, right around the world average of 2.2% - it has one of the largest armies compared to its population of any country in the world.

But there is another obvious retort from the left (Greek or otherwise): "Sure, we'll collect the little people's taxes, now who is going to collect the taxes from those sovereign wealth funds, hedges & banks we 'owe' money to?"

Answer: "You are, because 28% or so of it is held by Greek banks and pension funds, and much of the rest is held by entities like the IMF and the ECB."
About a third of the total is held by foreign entities - mostly banks rather than hedge funds. I'm not sure that accusing them of tax evasion would be a good way forward for Greece.

[Richard J]

Looking at the Greek treaty network, it's a real dog's breakfast as to the maximum WHT rates they can chanrge on interest payments, but assuming that the EU Savings Directive is one of the first things to go by the wayside, they'd still be trapped by tax treaties into having a maximum 10% WHT on interest payments.

And you only really get to disregard tax treaties if you're the US [or India, for some reason. They really, really, didn't like the result of the Indian Vodafone tax case, to the extent of introducing new legislation that will take retrospective effect from 1965.]

[bert]

Justin, I don't know if you saw the story recently about the guy who tried to set himself up selling olive oil online. One official insisted that, for clarity, much of the website should be in Greek only. Then someone from the health ministry demanded that the directors submit stool samples. (The assumption is that, rather than be FedExed a turd, what he wanted was a payoff.) You don't need to be Beecroft-style crank to see a problem here.

In Brussels, if you notice that the guy you're going to see has a greek name, you brace yourself for dealing with a dud. You'd be right to complain that that's prejudice. Unfortunately, it's repeatedly confirmed by experience (it's a similar story with portuguese names too, to be frank).

[bert]

Maybe the best attitude is to celebrate the exceptions. For analysis, you'd do well to find better than Loukas Tzoukalis.

[Myles]

Teachers, for instance, still teach

Certainly not true in Greece. Greek public schools are nearly useless, and parents rely heavily on outside-of-school help.

[Myles]

The son of a senior New Democracy cadre I was talking to claimed that tax collection has actually been going up, when I brought up the issue that a repeat election would surely mean a collapse in tax revenue, although take that as you will; it's probably not the case at all.

[ejh]

You'd be right to complain that that's prejudice. Unfortunately, it's repeatedly confirmed by experience

But it's an experience that the aforementioned establishment chose to disregard while they were making a lot of money, isn't it?

Also see "massive corruption in Southern Spain and the Balearics, where nevertheless major financial institutions saw fit to invest".

[ajay]

Also see "massive corruption in Southern Spain and the Balearics, where nevertheless major financial institutions saw fit to invest".

As far as I'm aware, the problems of Spain aren't really due to massive corruption or for that matter governmental profligacy. They're due to Spain having had a massive property bubble fuelled by euro loans from the core banks (mostly in Germany). Spain, contrary to what you seem to believe, has a fairly well functioning state in terms of tax collection, services, public order and so on. It's not Greece with tapas. It's not even Italy.

Further to this, corruption in Spain is nowhere near Greek levels. Greece really is sui generis in the EU. Check the CPI - Spain is in a bracket with France and Israel; Greece is way down there below Colombia and China.

[ejh]

Spain, contrary to what you seem to believe, has a fairly well functioning state in terms of tax collection, services, public order and so on.

So it is (or presently is) with the arguable exception of tax collection. It also has a very large black economy and a degree of local-government-linked corruption (awarding of contracts and so forth) well outside what you'd expect from British experience. This varies according to region - much better in Catalunya, say, but much worse in Andalucia and eyewateringly bad in Valencia and the Balearics. On the other hand, no, you don't have to bring a wad of notes with you when you visit the doctor, and as far as I'm aware there's no trace of baksheesh. And you don't get stopped by the traffic police and "fined" for non-existent offences.

But things like the "caso Gürtel" or the Palma de Mallorca cycle stadium affair are really quite something both in the degree of the corruption involved and the depth to which it is embedded in the political system. And there is no way anybody working within the financial or political system does not know this. Absolutely no way.

What relation does this have to the present crisis? Well my main point is that with Greece, when major institutions said - before they were worried about getting their money back - that everything was cool in Greece, let's all do business there because there's money to be made, I am absolutely not interested in hearing from them now that Greece is a corrupt place and Greeks all know this and therefore they must suffer. Because anything all Greeks knew, the financial institutions knew damned well too. And as with Greece, so with Spain.

But also, there is a relationship between corruption and the Spanish banking crisis. How much of one, how big, how fundamental? We don't know, because the government is refusing to investigate it to protect their mates to prevent a collapse of confidence in the system.

So let's make do with Simiocracy* instead...

[* not entirely safe for work]

[ejh]

But we interrupt this film for a news bulletin:

Lagarde pays no tax

[Phil]

I am absolutely not interested in hearing from them now that Greece is a corrupt place and Greeks all know this and therefore they must suffer.

Is this a general-purpose rant, or has anyone on this thread who has either echoed or endorsed views like these?

Whatever anyone thinks about Teh Greeks, there is an element of arithmetic here - there is a direct, and not particularly obscure, relationship between figures with a minus sign in front and ordinary Greeks being made to suffer, both by paying higher taxes and by losing public services. The numbers are negotiable, but they are (agreed to be) real - and any solution is going to come down to replacing one set of numbers with another. So what happens next does matter, and it matters that what happens next is "something changes".

I don't know whether Lagarde & co are gleefully rubbing the Greeks' faces in it; they may be having sleepless nights about the measures they're being forced to implement, for all I know. I don't really care either way.

[Phil]

has anyone on this thread who has

Grammar rearrangement fail - delete the 'who has'.

[CMcM]

I remain to be convinced that the Greek (private sector) reluctance to pay tax, or corruption more generally, is anything more than a contributory factor here in any case. I can't remember who originated the phrase "Debts which can't be repaid, won't be repaid" but it increasingly looks to me as though that's what we're dealing with here.

Now, I'm quite willing to concede my non expert status on the matter. I suppose I could quote one or two economists in support of my view but, hey, it does seem to this non expert that there isn't any great consensus on the way home from here amongst the economists either.

P.S. Ajay: well, it's interesting that Richard Murphy* can convincingly quote IMF documentation to the effect that, in 2010, Greece was largely indebted to the shadow banking system, but I suppose the IMF and ECB may have since taken on some or even most of those liabilities. I mean that's what this crisis has been about since 2008 isn't it? T(*coughs, clears throat, adopts pompous undergrad voice*) the shifting of massive amounts of debt held by International Finance Capital into the hands of States and parastate institutions like the ECB (without any corresponding transfer of power to those states and parastate institutions.

*Yes, I know not everyone's a fan.

[bert]

btw, I don't want to suggest that the Greek representation in Brussels is particularly corrupt in its day to day work. As bureaucracies go, the Commission is a reasonably clean place. But, thanks to the corrupt way they allocate their quota of EU jobs, the Greeks do have a massive incompetence problem.

[Cian]

Certainly not true in Greece. Greek public schools are nearly useless, and parents rely heavily on outside-of-school help.

The audition for the cable news show is down the hall and on the right. I think you'll do just fine.

[ajay]

Ajay: well, it's interesting that Richard Murphy* can convincingly quote IMF documentation to the effect that, in 2010, Greece was largely indebted to the shadow banking system, but I suppose the IMF and ECB may have since taken on some or even most of those liabilities.

They have! I can't open that link, so I don't know what figures he's working off, but as of June last year, the biggest single Greek creditors were the EU institutions and Greek public sector funds. The ECB and others got in there because of the bailout, which consisted of them buying lots of Greek bonds and lending Greece lots of money. (According to some estimates, the end result will be the troika holding 85% of Greek sovereign debt by 2015. Assuming the deal goes through.)

The first bailout was only agreed to in May 2010. Naturally it won't be reflected in 2010 figures!

http://ftalphaville.ft.com/blog/2011/06/17/597776/top-of-the-greek-bond-exposure-pops/

ordinary Greeks being made to suffer, both by paying higher taxes and by losing public services.

I'd be prepared to bet that most of the missing tax money does not belong to "ordinary" Greeks. It belongs to extremely rich Greeks who have the ability and/or the political connections to get away with not paying taxes, and if you listen closely you can hear the world's smallest bouzouki playing tragic music for them as they suffer.

[Cian]

While Greece is undeniably very corrupt, it does annoy me that people ignore the ways in which it was screwed up cold war meddling. First the civil war, then the rule of the colonels. These kinds of things are liable to leave scars.

[Chris Williams]

I wonder if any of these rich Greeks are bleating that they will flee to London if they get taxed? Meanwhile, rich people in London and Paris are bleating that they will flee to the other if they get taxed. If only there were some way of co-ordinating tax policy, such that they'd get stung wherever they were in Europe - then we could re-introduce exchange controls and solve a number of problems. Some kind of European 'union', or 'community', maybe?

[Cian]

It belongs to extremely rich Greeks who have the ability and/or the political connections to get away with not paying taxes, and if you listen closely you can hear the world's smallest bouzouki playing tragic music for them as they suffer.

Not really. For most upper middle class people who are effectively self-employed (lawyers, doctors, accountants), or petit-bourgeoise (developers, hoteliers, etc) - taxes are voluntary. Similarly (as in the UK - its not just the rich who avoid taxes), if you're paid off the books its pretty easy to avoid taxes.

However, a lot of employers refuse to pay employee-contributions also. They pretend that employees are part-time, paid less than they actually are, or simply pay them under the table (this means that the employee is screwed as far as unemployment insurance is concerned).

[ajay]

Cian: that's why I said most of the missing money belonged to the very rich, not that most of the tax evaders were very rich.

I wonder if any of these rich Greeks are bleating that they will flee to London if they get taxed?

They don't have to. They have millions of their fellow Greeks making the argument that it would be brutal and unfair and oppressive for the government to try to extract taxes from them.

[ajay]

I'm thinking here of the 4152 names on this list:
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/01/2012_423640

who owe €14.9 billion euros between them. One of them owes €952 million in unpaid taxes. That's a hell of a lot of doctors and accountants lowballing on their income tax returns.

[ejh]

They have millions of their fellow Greeks making the argument that it would be brutal and unfair and oppressive for the government to try to extract taxes from them.

You might want to develop that point, as it is less than self-evident to me.

[Chris Williams]

SYRIZA - or at least their biggest chunk, Synaspismos - seem to be keen on taxing rich Greeks. See: http://www.coalitionofresistance.org.uk/2012/05/16794/

[ajay]

I haven't noticed any massive anti tax evasion protests in Greece. I might have missed them, I suppose.

[ejh]

Yessss....that's not quite the same thing, is it?

[Alex]

Bribery is a tax, of course - a way of paying public servants to do their jobs. In that sense, it's the flip side of evasion.

[CMcM]

Sorry about that failed link before- here's me trying again: http://www.taxresearch.org.uk/Documents/TaxJusticeforGreece.pdf

Murphy advocates:
-withholding tax on the payment of interest to external lenders;
-a European wide financial transaction tax
-a land value tax
- taxing capital flight

It strikes me that only the third of these can be easily* done on a technical level (tho' possibly not politically easily) by an incoming Greek govt.

(*for certain values of 'easily')

[dsquared]

I remain to be convinced that the Greek (private sector) reluctance to pay tax, or corruption more generally, is anything more than a contributory factor here in any case. I can't remember who originated the phrase "Debts which can't be repaid, won't be repaid" but it increasingly looks to me as though that's what we're dealing with here

The problem isn't the debt. Nobody thinks the debt will be repaid, which is why the evillll bankers wrote 75% of it off. The problem is the *primary* balance - ie government spending on things other than debt interest, minus tax. Ought to be zero over the cycle. Isn't. In the alternative, ought to be a number smaller than GDP growth, over the cycle. Also isn't. Greece really isn't like Spain, Ireland or Italy.

I think Cian is righter than Ajay on the tax evasion thing; the Greek problem is a failure to collect taxes on the middle class, not on the very rich (Greece has never collected all that much of taxes on the very rich). Alex also makes the important point that tax is generally not paid on bribes, so we can't even assume that public sector workers are paying their fair share (including teachers and university professors, the propensity of whom to do cash-in-hand tutoring work was a major factor in one of my friends' decisions to leave his native country and never work there again).

Read the Manopolous book; it's very fair minded. Greece's tax collection and economic pathologies aren't the result of racial biology or anything; they're a specific and entirely comprehensible result of the post-war political environment. But they do exist and any solution to them is going to involve either more tax and less spending, or a complete loss of political independence, or some linear combination of those two corner solutions.

[ejh]

Nobody thinks the debt will be repaid

Which is why the institutions are saying "we accept that the debt won't be paid".

Except that they're not, of course. (Examples to the contrary are invited.) And why the effort continues to squeeze as much as possible out of Greece in the present while politically supporting the Greek parties which have created - and depend on - the structures of corruption.

There are no exits, no settlements, deriving from the financial institutions. This would involve a complete reversal of direction, and they're not up for that.

[Phil]

Except that they're not, of course. (Examples to the contrary are invited.)

Perhaps just up above where D^2 wrote

"which is why the evillll bankers wrote 75% of it off"?

I'm convinced that more than 75% of it will end up being written off; perhaps a lot more. I think that's probably a good thing, and if loudly-stated refusals to pay another cent are part of the negotiating process that achieves that result, they're all to the good. But stuff has been going wrong in Greece that needs to stop going wrong, and - for whatever reason - the option of reform without widespread misery and desperation wasn't taken when it could have been.

[ejh]

Oh, so do I. But that was obvious four years ago - or at least, it was obvious that the option of destroying Greece's economy in order to increase its indetedness wasn't terribly promising. But if we were to take the view of "oh it's all the Greeks fault" then that was going to happen, wasn't it? And hence the predictable, and predicted, disaster.

And to turn that round, you need the opposite of Lagarde. You need somebody saying overtly (again, I am interested in statements from the institutions to the contrary) "we agree, this is a disaster, this is the wrong way, the money's gone and we're not going to get most of it back". And you don't back up the same political system that just the other day you were saying was corrupt in order to keep that same vicious cycle going.

But that's what is, actually, happening.

Meanwhile, back in Spain, the relationship between the banks and political corruption.

[ejh]

That "oh, so do I" should have been a response to

I'm convinced that more than 75% of it will end up being written off; perhaps a lot more.

In which case it should have been "oh, so am I". It's late here. Perhaps late everywhere.

[skidmarx]

the Greek problem is a failure to collect taxes on the middle class, not on the very rich (Greece has never collected all that much of taxes on the very rich)
Well, no. Firstly, the problem for most Greeks is that they are being held to ransom by the EU and the international financial system. It may be that the solution to that may to collect from the middle-class because to do so from the rich (who are apparently not like you and me, only the little people pay taxes) is impossible, that supposed impossibility is as much the problem if those riches are not so insignificant as not to be worth taxing.
we can't even assume that public sector workers are paying their fair share.
I know you're talking about the public sector here, but I do do think this, sent to me by a friend who thought it showed greek unwillingness to have taxes paid:
"The problem of black economy wages persists in some areas, as those who employ casual labour often persist in paying cash-in-hand in order to reduce the costs of paying national insurance (IKA) for their employees.
Employees would often rather pay the IKA to ensure they have the benefits."
http://digitaljournal.com/article/316094#ixzz1wIPWfLhK

Why can't the super-rich be made to pay taxes? If it would take the dictatorship of the proletariat to do it,...

[dsquared]

Firstly, the problem for most Greeks is that they are being held to ransom by the EU and the international financial system.

Not so. The EU and international system has so far provided Greece with rather more than EUR150bn, which would otherwise have had to have been found from immediate fiscal contraction. The EU and IMF have financed the Greek primary deficit for the last three years, which is something like 30% of GDP in total. Again, Greece isn't like lots of other places. The relationship with the international institutions has made Greek living standards incalculably less bad than they would otherwise have been.

This really needs to be understood; I'll recommend the Manopolous book a third time. For as long as people want to fit this into their Robin Hood plot in which Greece is somehow a victim of some dastardly plot inflicted on them by other people, they're going to misunderstand; at least the Greek people themselves are not quite so far into delusion as to think they would be better off leaving the euro.

[dsquared]

Why can't the super-rich be made to pay taxes?

there aren't enough of them. The Greek estimate of total tax avoidance per year is EUR40-45bn. There aren't enough super-rich Greek taxpayers to account for more than a tenth of that. Any attempt to address the problem has to address the actual problem.

[jamie]

"The Greek estimate of total tax avoidance per year is EUR40-45bn. There aren't enough super-rich Greek taxpayers to account for more than a tenth of that."

A tenth of that amount would ameliorate the problem to the extent that it might be worth doing, whatever else you do, given honest government: if every Greek, no matter what, has to descend towards poverty, then the super rich can descend harder and further while being no worse off than the rest. It's basically a matter of extracting the right price for the job.

We're basically talking negotiated War Communism here, right?

[Cian]

Skidmarx: the upper middle class are hardly little people. I also would not underestimate the size of the corruption problem. Greece nominally has national health. Good luck getting treated without a bribe. On the other hand, doctor's salaries are well below the market rate. So...

Ajay - Greece has conscription. Hence the size of the army.

I do see Justin's point. However dsquared is right. Forget the debt. Right it off entirely. They are still fucked.

[dsquared]

A tenth of that amount would ameliorate the problem to the extent that it might be worth doing

It's always worth doing, but it's a bad idea to allow anyone to think that it's more than a smallish part of the solution. Also the nature of the shipping industry is that the really really super-rich Greeks are very much citizens of the world and a lot of their assets are part of the tax base of other countries.

Ireland also has a load of issues with respect to their tax system which are going to involve bad news for the Plain People - due to a load of allowances and tax credits and jiggerypokery, the Irish treasury has managed to create a tax system which combines "really poor progressivity of marginal rates" with "majority of the revenue generated from the top few percentiles of the income distribution".

[ajay]

The Greek estimate of total tax avoidance per year is EUR40-45bn. There aren't enough super-rich Greek taxpayers to account for more than a tenth of that

Good Lord. In that case, I take back what I said. I had no idea it was such a large amount. That's about half of total government revenues!

[bert]

Krugman was on the radio this morning, fresh from a lecture/book event at the LSE, and said the Irish should vote No to the fiscal treaty as a way to force a change of approach.

The technicalities of tax policy are important, but the crucial question in Jamie's post was whether in advance of the elections a rhetorical focus on tax would encourage Greek voters to choose dutiful cooperation (as the Irish have up til now) or confrontation and brinkmanship (the Syriza approach).

We'll see soon enough. Public opinion in Europe is very volatile, and political considerations are becoming more and more of a factor in the previously dry and technical eurozone discussions. There's a new Pew poll out, which is pretty fascinating throughout. I'll see if I can hotlink one of the tables (the "most hardworking" column relates to the discussion upthread) but if it screws up, the whole thing is at http://www.pewglobal.org/2012/05/29/european-unity-on-the-rocks/

[Richard J]

The Greek estimate of total tax avoidance per year is EUR40-45bn. There aren't enough super-rich Greek taxpayers to account for more than a tenth of that

Which is about 25% higher than HMRC's estimate of the overall tax gap in an economy[1], um, tumpty times smaller, I note.

[1] Richard Murphy's version was rather comprehensively rebutted by HMRC in comments it made to the Treasury Select Committee recently.

[skidmarx]

The EU and international system has so far provided Greece with rather more than EUR150bn.
For whom? The Greek people, or the Greek state's creditors?

the upper middle class are hardly little people.
That was never my contention; quite the reverse.

[ajay]

For whom? The Greek people, or the Greek state's creditors?

Both, as dsquared said:

"The EU and IMF have financed the Greek primary deficit for the last three years, which is something like 30% of GDP in total."

Some of the money coming into Greece will have turned round and gone right back out again as payments to Greek bondholders. Some of it will have stayed in Greece as payments to Greek Greek bondholders, if you see what I mean - banks, pension funds, etc.

But even once you take all the interest payment business out of the picture, Greece has still been running a large deficit - this is what a primary deficit is - and that gap between tax income and government expenditure has been filled by money coming from the EU and the IMF.

[bert]

Oi, Krugman, no!!
http://www.youtube.com/watch?v=TZfzAOooEOU