Greece Gambles On “Catastrophic Armageddon” For Europe, Warns It “Only Has Weeks Of Cash Left”
One of the bigger problems facing the new, upstart Greek government, which has set before itself the lofty goal of overturning 6 years of oppressive European policies and countless generations of Greek cronyism, corruption and tax-evasion is not so much the concern about deposit outflows and bank runs – even though it most certainly will be in the next few days unless the Tsipras government finds some resolution to the dramatic standoff with Merkel and the ECB – but something far more trivial: running out of money.
Recall that two weeks into the Greek elections, Greece was rocked by a dire, if entirely underappreciated development, when its already “tax-paying challenged” population decided to completely hold off paying any taxes in advance hopes that the Tsipras government will “overturn” austerity. We wrote:
… while there will be no official confirmation whether Greece did or did not have a bank run for months, unless of course some bank keels over and dies in the interim, one thing is certain: with an increasing probability they may not have a “continuity-promoting” government in less than two weeks, Greeks tax remittances to the government, which were almost non-existent to begin with, have ground to a halt!According to a second Kathimerini report, budget revenues have slumped over the last few days as a result of the upcoming elections and taxpayers’ uncertainty about the future: “Most taxpayers have chosen to delay their payments, given that the positions of the two main parties leading the election polls are diametrically opposite: Poll leader SYRIZA promises to cancel the ENFIA and even write off bad loans, while ruling New Democracy acknowledges the difficulties but is avoiding raising issues that would generate problems and fiscal consequences.
The dwindling state revenues will not only hamper the next government’s fiscal moves, but, given that the fiscal gap will expand, also negotiations with the country’s creditors.
The tax collection mechanism appears to be largely out of action while expired debts are swelling due to taxpayers’ wait-and-see tactics and the reduction in inspections.
So for battered, depressed Europe “austerity” really meant “taxation” – it is no surprise then why so many in peripheral Europe, who for the past 7 years have not seen any benefits from Germany’s delay in reintroducing the Deutsche Mark (and keeping its export industry humming, and Deutsche Bank solvent, courtesy of the much lower Euro), hate “austerity” so much: after all there really should be no “austerity” without representation and most European voices hardly matter in a monetary “Union” where only bankers and unelected eurocrats are heard.
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