Greek Government Admits Economy Is Doomed

Kathimerini & ZeroHedge is reporting today that the Greek government wants to start extra judicially seizing business assets in order to recover unpaid social security contributions.

As reported by ZeroHedge
As reported by ZeroHedge

This “proposal” is wrong on so many levels it is hard to know where to start.

The most obvious problem with this proposal is the fact that it bypasses the legal process. As if the Greek government is above the law. I think it is obvious the massively dangerous precedent this sets.

The legal process is there to determine if the plaintiff is acting in a fair manner, without this check the government can run rough shod over everyone.

But the aspect of this proposal which frankly beggars belief is the government seizing productive assets in order to pay taxes.

With this the government is admitting that the economy is on a downward spiral from which there is no return.

By seizing productive assets to pay social security contributions the government is admitting that is believes the assets of a business, even in a hugely depressed economy, is worth more than any tax revenue that business may generate in the future.

This is very close to the text-book definition of telling a business it has no future.

However it is worth noting that this proposal has been put forward by the The Labor and Social Insurance Ministry.

If any more evidence was needed that this department has not the slightest comprehension of basic economics then this proposal is that evidence.

It is doubtful that the government will recoup 40% of the monies owed using this method.

And in addition to that the government is cutting off the future revenues from these business if their actions lead to the business closing.

And this has further knock effects with any employees of the business being put out of work and therefore not paying social security contributions and instead claiming from the already overstretched social security fund.

But the fact that this department is the one proposing this measure should make it unlikely that is goes through.

The measure is so short-sighted on the part of the Labour and Social Insurance Ministry that any kind of analysis must lead them to believe it is a non starter and that they are far better off reforming the system.

It would also be hard to believe the ministry of finance letting such a self-destructive measure go through given the obvious damage that would be done to income tax & VAT receipts.

And for these reasons the only logical conclusion to come to about this proposal is that it is simply another example of the Greek government attempting to terrorise the Greek population into paying taxes which they simply do not have the money to pay.


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