But you really need to listen to it from beginning to end
The summary of the podcast and Greece’s choices are these.
Default and still use the Euro.
Many countries use the dollar as their currency without having access to The Federal Reserve. Greece could do the same.
Anybody can use the Euro as their currency.
What would this mean?
Greece would have no access to the ECB which would mean the banks in Greece would fail because they would not have access to ECB funding.
Government would have to layoff thousands of workers because it would not have the money to pay them.
And the same with pensions.
The Greek government would have to balance their budget immediately by reducing spending.
It will be hard for the government to borrow initially, but in the medium to long term, Greece will be far more appealing to investors than it is now.
Freeing itself from the Euro, Greece could be a tax haven within the Eurozone.
The solution for Greece, is not to tell the people pulling the wagon to pull harder.
The solution is to tell the people riding in the wagon to get out and start pulling themselves.
Greece needs government austerity it does not need higher taxes.
One of the most successful industries in Greece, if not thee most successful, is shipping. Greece has over 20% of all the merchant shipping in the world.
The reason this industry is so big and vibrant and the reason it is so successful is that the industry is not taxed
Now the threat from the Greek government is to start taxing the shipping industry, this is going to hurt one of the few bright parts of the Greek economy.
These shipping companies are going to leave Greece for Singapore or Dubai, taxes are going to destroy this vibrant industry.
The Greek government needs to do the same for the rest of Greek industry as it did for shipping.
The Greek government needs to lower taxes everywhere but the Greek government cannot do this if they want money from Europe.
Greece needs to leave the Eurozone and cut off the government’s access to the ECB
The only other alternative that makes sense, is if Greece were to use their own currency, and to base the new currency on Gold..
Greeks says they want a strong currency, a gold based currency would be stronger than the Euro.
Where would Greece get the Gold if it were to go to a gold backed currency?
From the assets sales of state property and state businesses.
Do the same program as the Europeans want but instead of giving the money to Europe, keep the money and buy gold to back the new currency.
And if the Greek government did not want to use gold as the backing for the new currency, the government could sell the assets in exchange for Euros or Swiss Francs and use these currencies to back the new Greek currency
Either way, the Greek government needs to slash taxes and slash expenditures post default.
Inside the Euro, with the crippling taxes and regulations, the state assets are not going to fetch anywhere near their true value.
In a low tax and low regulation environment the sales of these assets will bring in many billions more Euros than they will under these new austerity measures.
If Greece becomes a tax haven and shakes off socialism, the revenues of state assets will be many billions more.
Greek state assets are worth a lot more in a tax haven.
Why would anyone want to buy these assets in Greece at the moment when they will be subjected to massive taxes, regulations and restrictions.
Taxes and regulations massively diminishes the value of these assets.
Greece should be rich.
When you look at the coastline, the natural resources, this country should be rich.
Look at countries such as Singapore or Hong Kong, they do not have anywhere near the same amount of resources, or geographical location or any of the natural advantages that Greece has.
Another thing that Hong Kong and Singapore don’t have and that is the Greek government.
If you put the Greek government into Singapore or Hong Kong, they would be broke as well.
Put the Greek government anywhere and you are going to strangle an economy.
What Greece needs is a free market, in Greece
Greeks needs to get a Singapore or Hong Kong type of government in Greece
And the situation today would have allowed this to happen.
But the problem is the country is run by socialists. Tspiras can not be honest with the Greek people and say socialism does not work, so he has to bend to the demands of Europe because Socialism needs other people’s money. ie money from European taxpayers.
I am not sure if the Greek political class has the courage or the understanding to embrace a free market.
If Greece had a gold backed currency or a currency backed by foreign exchange reserves and no income tax, the Greek economy could boom.
Especially when the government gets out from under all that debt.
At this point, the Greek economy can not come back. The cuts are not nearly enough and the debt servicing is going to drag on the economy for 20 years of more.
Higher taxes is not the austerity that Greece needs. Greece needs the austerity that slashes government spending
Greece’s problem is this, it can not become a rich country, if the people insist on supporting socialism.
The bottom line is the Greek government is going to get bailed out. Again. And it is not going to work.
The economy is going to get worse, not better.
The government is clinging onto to socialism and blaming others for their problems.
Again, Greece needs to leave the Euro, adopt a sound currency and become a tax haven.