Saturday, February 20, 2016

#GREXIT and #BREXIT Spell Doom For #Euro without Structural Reforms

While the public has shifted its focus on BREXIT, a game of mostly political posturing regardless of what Britons or Scottish 'think or want', the likelihood of GREXIT is growing. Austerity, the attempt (emphasis here) to balance budgets increased taxation and decreased spending, a similar mistake made by President Hubert Hoover balanced budget strategy adopted in the early stages of the Great Depression, is turning the Greek economy from bad to worse. The deadly cocktail of austerity and contracting economic activity is driving business out of Greece. This leaves an increasing number of productive and industrious Greeks to chose between leaving the country love or staying and requesting assistance from those that taxed them out of business. Either option spells trouble for Greece that will return to the headline discussion by 2017.

Headline: An actual Grexit

WHEN Panagiotis Korfoksyliotis set up a business in Athens in 2011, ferrying tourists around by car, he hoped to do his bit to help Greece emerge from its deep recession. He says he paid his staff a decent wage and declared all his earnings. Unfortunately, the taxman did not repay the kindness. Sharp increases in business taxes have prompted Mr Korfoksyliotis to pack his bags and move his company and his life to Bulgaria. Now he employs drivers to take foreign visitors around that country’s tourist spots instead.

He is part of a growing trend. In recent years Greek governments desperate for cash have sought to squeeze it from companies, despite evidence that this is driving them away to places like Bulgaria, Cyprus and Albania. The combination of a deep recession and rising taxation has meant that by some estimates more than 200,000 businesses have closed or in some cases left Greece since then. Between 2009 and 2014 the taxable profits declared by the country’s businesses fell by more than €5 billion ($5.6 billion) to €10 billion.



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