Economy Is Greece's failed economy about to change?

Maciamo

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The Greek economy has been the butt of jokes for over 15 years now. This video explains why it failed so spectacularly in the aftermath of the 2008 financial crisis, and why it has had such a hard time recovering from it. But the new government has a plan for reforms. Let's see if deeds follow words.

 
The Greeks paid a high price for political clientelism, corruption and populists like Varoufakis.
Let's hope the tide is turning for them.

And what about Argentina? It seems it suffered from the same disease. Big reforms are needed. Miley has put his finger on the wound, but is he the right person to implement the reforms? There is a big experiment going on over there.
 
The Greeks paid a high price for political clientelism, corruption and populists like Varoufakis.
Let's hope the tide is turning for them.

And what about Argentina? It seems it suffered from the same disease. Big reforms are needed. Miley has put his finger on the wound, but is he the right person to implement the reforms? There is a big experiment going on over there.
Populism and corruption is not limited to the left side of the political spectrum. Other people's money is easy to spend whether you favor the son of a classmate's company for a multibillion road project or you increase the retirees pension even though the funds that the retirees contributed have long ago been depleted.It does not help that people like my father lived to the ripe old age of 98.
 
The Greeks paid a high price for political clientelism, corruption and populists like Varoufakis.
Let's hope the tide is turning for them.

And what about Argentina? It seems it suffered from the same disease. Big reforms are needed. Miley has put his finger on the wound, but is he the right person to implement the reforms? There is a big experiment going on over there.

I can't see anything wrong with populism as long as it serves the public interest. Just like the financial crisis of 2008, Greek economic collapse was greatly accelerated by neoliberal policies. International banks aka "the markets" played a particularly dramatic role in Greece. First they helped disguise the extent of Greece's debt to get them into the Eurozone. Goldman Sachs was a major player here. Then they'd make loans at interest rates that the Greek government was unable to pay back. They practically doubled that country's debt by the time the crisis broke out. I'm not excusing any internal causes of the Greek debt crisis. But back when everything collapsed, it was fashionable to employ social chauvinism as an explanation such as blaming it on the "lazy Greeks" who retire in their early 50s. Every economy is under great risk if it relies too much on a single sector. In the case of Greece, that would be tourism. If anything contributed internally, it was major tax evasion coupled with corruption. Greece had never been a stable economy. For decades it had been a US military outpost just like Turkey, fed by the Marshall Plan.
 
The video does make a valid point about pensions in Greece being unusually high.

Greece has one of the highest pension replacement rates in the world. Greek pensioners get slightly higher pensions than their old salaries! That's extremely generous. What's more, Greece is a country where 100% of the pension funds are public.

1709474067486.png


As a result, pension benefits weigh more on the economy than anywhere else in the EU or OECD.

Pensions_benefits,_2017_(%,_relative_to_GDP)_AE2020.png


Additionally, Greek citizens over 55 years old have some of the lowest household debt level in the EU, so they can really benefit fro; their pensions.

1709474314962.png


It's a choice that any society has to make, but the Greeks chose to have higher public pensions than anybody else, even it it caused a huge public debt in the long run.
 
The video does make a valid point about pensions in Greece being unusually high.

Greece has one of the highest pension replacement rates in the world. Greek pensioners get slightly higher pensions than their old salaries! That's extremely generous. What's more, Greece is a country where 100% of the pension funds are public.

View attachment 15485

As a result, pension benefits weigh more on the economy than anywhere else in the EU or OECD.

View attachment 15484

Additionally, Greek citizens over 55 years old have some of the lowest household debt level in the EU, so they can really benefit fro; their pensions.

View attachment 15486

It's a choice that any society has to make, but the Greeks chose to have higher public pensions than anybody else, even it it caused a huge public debt in the long run.
The pension problem is because when Greece joined the EU goods prices increased to a level that the pre-EU pensions were completely inadequate post EU. So the pensions were increased to keep up with the new price levels. Then they were increased for political reasons. Of course tax avoidance exacerbated the problem. The same people who cheated on their taxes wanted their mother or father to get a fat pension to which neither they or their parents contributed adequately. The problem with pensions was further exacerbated by longevity that was unaccounted for in the actuarial tables.
 

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