ANALYSIS: 10% Flat Tax! Shock Economics or the Key to Greece’s problems? The Current Situation

Although the Greek economy is classified as an advanced high income economy, this has done very little in convincing its Eurozone partners, creditors and especially the markets, that Greece is anything but ‘’fiscally undisciplined’’. Since 2009, the country has been following an externally imposed policy of fiscal austerity, spearheaded by the ‘’fiscally disciplined’’ Germany.

Exclusive to HellasFrappe

From Vasillis (Basil) Tomaras

Leading economists, business leaders, fund managers and even the current SYRIZA government, all agree that policies have done very little to improve the situation of the Greek people. The levels of unemployment levels, the prime indicator of the effect austerity has on the ground , are/is still at an appalling 26% and a vast majority of which is youth as half of the population between 15-24 is currently unemployed.

The ‘’welfare state’’, the myth and the real causes

A common and dominant narrative about Greece and the causes of the crisis is that it is a generous over- bloated welfare state. According to the OECD’s statistics for social expenditure over GDP, this is not the case:

The full Greek state expenditure is at close to 48.7%, which is marginally higher than the EU-15 average (estimated at 0.6%). However, budget deficit is approximately 4.3% higher than the EU-15 average. What does this all mean? In simple terms, it’s not state expenditures that heightened the economic crisis in Greece but rather state revenue, or to be more precise a lack thereof.

Traditionally, tax evasion in Greece has been described as a ‘’national sport’’ by even the highest ranked government officials. The problem of corruption and tax evasion in Greece is well known and is influenced by many factors.

Austerity, the real shock economics!

Without a doubt, the impact of austerity has been felt in all aspects of life and in all sectors of the economy: 

• Recession with no end in sight: The continuous drop in GDP, the lowest in the entire post-war period, led to the lowest reduction in domestic demand and consumption. Ensuing decrease in production led to the loss of thousands of jobs in the private sector (at one point even numbering in the thousands daily).
• Rapid labour decline: This resulted from the steep increase of insecure and uninsured work, degrading wages, decline of workers’ rights and also from the deregulation of workers accords.
• ·The slow killing of the middle class: Traditionally, the middle class economy consisted of small and medium sized businesses that were generously funded in the past by the banking sector which had no apprehensions about granting generous loans and overdraft lines with minimal collateral and oversight. After these financial institutions were respectively starved of funds, a lethal combination of liquidity depletion, decline in consumption and introduction of ‘’emergency’’ taxes, resulted in most of these middle income enterprises subsequently closing down (65.000 in 2010 alone).
• Migration push factors and ‘’brain drain’’: In contrast to the usual yellow press publications of the ‘’lazy’’ Greek, the truth is that the workforce in Greece is among the best educated in Europe and the most productive, actually surpassing their German counterparts. While those studying in academic institutions abroad were discouraged from returning to Greece after graduating, many already educated and skilled professionals also left the country.
• ·Homelessness: Along with the pre-crisis immigrant homelessness which was largely unreported, newly austerity borne destitute also joined their ranks. People and families with medium and higher educational backgrounds who previously belonged to the middle class. Notably, homelessness increased 25% between the period 2009-2011 (over 20.000 by NGO estimates).
• ·    Record level of suicides: One can only feel sorrow and sympathy for Dimitris Christoulas, a retired pensioner, who publicly committed suicide in early April 2012 at Syntagma square, just outside the Greek Parliament, leaving his family in complete sorrow. This gentle, cultured and above all sane man cited in a politically fueled suicide letter, that he preferred a dignified end to his life in lieu of an undignified existence after government austerity measures slashed his pension. Sadly, he is not the only victim of this crisis, as austerity driven suicides skyrocketed as much as 40% between the period 2010-2011.      
• ·    Disintegration of the health services: The health care system also suffered greatly, through reduced access to health care services following massive cuts. As a result, HIV infections increased by 52% between the periods 2010-2011, while drug prevention centers and psychiatric clinics shut down after tough budget cuts.

The Shadow economy of Sandanski and how Bulgaria is benefitting from the crisis

Greece and Bulgaria have very different social and economic environments. In the interest of not confusing the reader with national quantitative data, I will rather limit indication to a bite size measure by making reference to Sandanski.

To most Europeans and Greeks alike, the Bulgarian border town of Sandanski may not be on their radar, but to the inhabitants of Northern Greece, the town is very well known. This is due to the fact it has benefited extremely well from the Greek financial crisis. Thousands of Greek vehicles cross the border every day to fill up on gas since it is 40% less expensive; Housewives do their grocery shopping; Dentists, many of whom have relocated from the capital Sofia, have opened up offices in Sandanski to service Greek patients bearing Euros; etc.. Additionally, scores of Greek pensioners made a permanent move to Sandanski simply because their reduced pensions were not enough to live on in Greece.

The most notable migration trend to Sandanski of all are Greek businesses. The traditionally bustling Northeastern Greek town of Serres, 50Kms south of the border has become a shadow of its former past as many businesses moved north to Bulgaria. According to Dimitris Giannakis, the president of Serres’ Chamber of Commerce and industry, at least 5.000 Greek businesses were struck from the registry over the past five years. It’s painfully obvious where they moved to (according to the Bulgarian Register these estimates could be as high as 8.000). This is not taking into account migration to other countries such as FYROM, Albania, Romania and Serbia. As it stands, Greece is the third largest investor in Bulgaria after the Netherlands and Austria.

So the obvious question is, why did all these Greek businesses move to Bulgaria? And what are the Bulgarians doing better which the Greeks are not?

Taxation - Greece’s Achilles heel.

Two countries with radically different taxation policies put into debt perspective.

Bulgaria - When Bulgaria exited the Eastern-Bloc sphere of influence in 1991, it had just over €10 Billion state debt, which represented 180% of GDP. Bulgaria entered the EU in 2007 after maintaining a decade long policy of budget surpluses and reforming their tax codes in the process, after which public debt reached a record low of 13.7% over GDP (the second lowest in Europe after Estonia). Although Bulgaria was not immune to the European financial crisis, thanks to sound fiscal policies and the resulting €4.3 Billion state fiscal reserve, they managed to ride out the financial storm and maintain a public debt of only 18%. These post crisis deficits levels are comparable to those of Norway, Sweden and Austria.

Greece - Although Eurozone entry had ‘’strict’’ criteria for government to GDP ratio of under 60%, we can all agree that 14 years down the line and omitting creative accounting practices of the past, the true present situation is anything but Maastricht compliant.

Balkan economic wars

Bulgaria has benefited from major investments. Here are a few examples. 

• ·         Montupet automotive (for those who remember the DeLorean) has invested €100M in Bulgaria and employed almost 1.000 people.
• ·         The telecommunications arm of AIG invested $2B in several plants.
• ·         American Standard - $240M.
• ·         AES Energy Generation Corp - $1.4B.
• ·         NU Image Film Productions - $28M.
• ·         Microsoft, Hewlett Packard and IBM have their European call and service centres in Sofia.
• ·         Turkish companies Sisecam and Alcomet opened plants that employ 2.000 people (blue & white collar) combined.
• ·         Germany’s SAP opened SAP labs, an ICT facility in Bulgaria employing over 500.

Bulgaria is not the only country that did the prudent thing by lowering its taxes and simplifying their tax codes.  Albania and FYROM both have 10%, while Romania and Serbia have 16% and 15% respectively. Add to the mix, the brutal Greek 23% VAT rate and the fact that you can open a limited liability company in Bulgaria with just €1 share capital (€4.500 in Greece), it’s no wonder why Greece is losing the economic war against its Balkan neighbors.

In conclusion, and according to very conservative estimates, a combination of intolerable tax rates, a high VAT rate and inflated payroll tax has driven one quarter of the Greek economy underground by tax evasion, transfer pricing practices etc., while the more honest ones in the formal economy are either forced to shut down or move to other countries such as Bulgaria. What’s more, massive migration of businesses from Greece continually gains momentum and at the same time delivering a huge blow to the state coffers in the process.

The call to reduce taxes and tackle reforms

The promises made by the previous ND-PASOK administration that there would be a return to markets in 2014 has yet to materialize. It also hasn’t silenced market experts and economists alike who claim that this will not be attainable in 2015 either, since a third bailout package is looming on the horizon.

As EU-IMF bailout packages come with painful reforms and demands, there is no doubt that Greece will once again be forced into a vicious storm of austerity amidst a tranquil sea of more competitive economies right smack on its borders.

There has recently been several appeals by the likes of economists such as Nathan Lewis and even Steve Forbes to adopt measures that will not only stem the exodus of businesses, but also provide a stimulus to foreign investment and economic development.

•  Adoption of a flat tax on personal income and corporate profits (which will also deter tax evasion. After all, who in their right mind is going to evade 10%?).
• Axing the ridiculously high payroll tax from 45% to 10%.
•  Reducing VAT to 15%. 

The current leftist-led coalition government of SYRIZA which claimed victory during the January elections did so largely on a radical platform of taxing the wealthy, easing tax burdens on the poor and more state interference in the economy. This approach is a trip down the wrong avenue known in economists’ circles as Sweetwater economics and is doomed to fail. It will not only deteriorate the already toxic situation, but it is also going to alienate valuable investors (domestic and foreign).

Is the Greek government seriously seeking a development stimulus that will bring in foreign investment, deter tax evasion and fill up the state coffers? Are they willing to learn from Bulgaria’s proven model? If yes, then they should follow Bulgaria’s approach by reducing taxes, simplifying tax codes and axing bureaucracy. The question is, will the government eventually get a grip of reality and pick up the courage to fearlessly serve it to the EU and IMF on a take it or leave it basis?

All self-respecting Greeks, who either live in Greece and/or abroad, need to unite and make a stand to promote this policy by lobbying to their MP’s and other interest groups. We also need to do this now as time is Greece’s number one enemy and a commodity that our nation simply does not have.

Anti-Hellenism in the United States - Part l

The story of Anti-Hellenism in the United States is one that is heavily intertwined with the country’s history of Nativism and Nordic Supremacy. It is a tale which begins in the early 20th century as an influx of immigrants began to come to the country from Southern and Eastern Europe. This increase in new immigrants led to some within America’s elite, specifically lawyers and academics, to begin expounding theories of scientific racism, which eventually resulted in the rise of Nativist organizations and the birth of an American Eugenics movement [1].

Contributed to HellasFrappe
By Ioannis Fidanakis
ethniki-epanastasi

Funded by various corporate foundations, such as the Carnegie Institution and the Rockefeller Foundation [2], American Eugenists would help to found organizations such as the Immigration Restriction League [1]. These Nativist organizations would work to prevent “inferior races” from entering the United State and “polluting” the American gene pool. According to them, Greeks and other Southeastern Europeans were racially inferior, and a threat to the Anglo-Saxon purity of White America [1]. In many ways, it was directly due to Southern and Eastern European immigrants that the United States began passing anti-immigration laws, such as the Immigration Act of 1924 [3], and created a hierarchy of nationalities [4].

What is Nordicism and how is it relevant to Anti-Hellenism

For Greek-Americans, Nordicism presents itself as one of many racist philosophies whose ideological core emanates Anti-Hellenism. Many of the first manifestations of anti-Greek behavior in the United States can be seen as a direct result of the popularity and influence of Nordicism in American society. “Nordicism”, says Professor Anthony Gregor, “involves the belief that men of the ‘Nordic Race’ – tall, slender, fair-skinned, blond, blue-eyed, narrow-faced, narrow-nosed, long-headed individuals- are qualitatively superior to the remainder of mankind. They are the creators of civilization, and their passing marks the passing of civilization” [5]. Nordicism, commonly identified in the United States as merely “White Supremacy”, is actually the racial theory that the “Nordic Race” alone constitutes a master race [6]; and thereby, is superior from all other races, as well as other subgroups within the greater Caucasiod or “White Race”. Therefore, “Nordids” are seen as “pure” and true contenders to the phrase “White”.

In the United States, the primary proponent of Nordicism in early 20th century was eugenicist Madison Grant. Author of the popular book, The Passing of the Great race [7], Grant supported a version of Nordicism, which fit within the many different racial philosophies of his time. Like others he divided humanity into three distinct races: Caucasiods, Negroids, and Mongoloids, and further divide Caucasiods into Nordics, Alpines, and Mediterraneans. In his theory, Alpines were the most inferior of the three Caucasiod subraces while Nordics were the superior. The main difference between his version of Nordicism and other types popular in Europe was his rejection of the “Nordic Migration Theory”, as an explanation for Greco-Roman Civilization. Instead, he supported an equally ridiculous claim that Greco-Roman Civilization was the result of the indigenous element mixing with a Nordic one and founding their civilization on Nordic ideas.

The Greek American experience with Nordicism and Anglo-Conformity

"White," which nowadays includes anyone of European origin, was then reserved for people of Anglo-Saxon and Nordic stock. Greeks were considered to be of mixed race, mongrels genetically inferior to their allegedly pure ancestors of ancient times and, therefore, incapable of ever approaching their accomplishments. Inasmuch as these writers saw the Greeks as inferior and not white, and despised them for this, their behavior was clearly racist. -- E.D. Karampetsos. Nativism in Nevada: Greek Immigrants in White Pine County

An Essential chapter in the story of racial bigotry in American society, the Greek-American experience, is often left out. The days of being deemed the ‘scum of Europe’ and ‘unfit for citizenship’ [8] or simply called ‘filthy’ [9] are all but forgotten. Somehow the Greek-American psyche has blocked out any memory of its experience with racial discrimination and instead has created an illusionary memory of a painless immigration experience. However, the truth is that Greeks were never welcomed with open arms by Anglo-Saxon establishment. In the early days, Greek immigrants were constantly harassed by organizations, such as the Ku Klux Klan because they were viewed as ‘mongrelized members of a once great Nordic nation’ [10].

For many Greek immigrants, direct and indirect policies of Anglo-Conformism would make them twice victimized. Newly immigrated Greeks often surrendered their identity and integrity due to pressure to conform to the Anglo-dominated notions of “American” and “White”. Thus, a process was born of becoming more “Anglo” than the Anglo-Americans, in order to survive and succeed in American Society. As a result, some Greeks Anglicized their names while others refrained from speaking Greek or teaching it to their children. Many willing committed a form of ethnic suicide, sacrificing their ethnic heritage in order to be reborn as Anglicized Americans for social and economic security [10] [11].

Violence and Persecution in the 1900s

The first documented acts of anti-Greek behavior would be witnessed in 1907 in the form of violent riots, which befell the Greek community of Roanoke, Virginia [10], and the 1909 passing of anti-Greek legislation, which was directly aimed at the Greek community living in Newport, Rhode Island [21]. These two events, however, were just a taste of things to come. Throughout the early 20th century, Greek-Americans would suffer racial discrimination and economic intimidation at the hands of Nativist groups across the country.

The extent of intolerance that early Greek immigrants were forced to endure can be summed up by two anti-Greek riots, the first in Nevada 1908 and the second in Nebraska 1909. Although neither riot was the first of its kind in the United States, both are well documented and perfect examples of the racist nature of these attacks towards the Greek community.

The first incident took place in the Census-designated Place (CDP) of McGill, located in White Pine County, Nevada. The match, which ignited the violence, was the shooting of Constable Sam Davis by Antonis Vasilopoulos. Nativist reports claim that Constable Davis, a known anti-Greek, was in McGill searching for stolen lumber when the incident occurred. While local Greek reports, claim the Constable had come to harass the Greeks for building a stable.

An ensuing argument resulted, in which the Constable pulled his gun and shot at Antonis. In court, Davis claimed that he came upon Vasilopoulos sawing lumber and “recognized” it to be the stolen lumber in question. While questioning Vasilopoulos, the defendant pulled a gun and shot the constable unprovoked. However, Vasilopoulos testified that it was the Constable that fired first, wounding a horse, thus forcing him to shoot back in self-defense.

As a result of the encounter, Davis fled the scene. What happen next was reported at the time by the Tonopah Sun as, “A serious time bordering on riots has been the experience of Ely for several days with the Greek population of the district” [10]. Davis eventually rounded up a posse and pursued Vasilopoulos. At least one man, Dimitris Kalampokas, was murdered during the witch-hunt. Reports claim Yardmaster James A. Smith and group of men hunted down Kalampokas who was hiding from the mob. When found, he was commanded to surrender. Kalampokas refused and was shot several times. Vasilopoulos and several witnesses eventually would be arrested.

Local media kept tensions high, with claims of a “Greek Revolt” while rumors of a Greek “Black Hand” society spread. Tensions grew so much that, on January 22, 1908, the local paper reported: “Loaded into two box cars, herded together by armed guards, nearly a hundred Greeks passed last night in Ely waiting to be transported to some other points, most probably to Cobre. This will be done it states, this morning” [10]. The undesirable Greeks were rounded up and asked to pay for their own expulsion. The Nevada Northern Railway refused to haul them for free, and finally those rounded up were released. Many left, of their own will the next day, no longer feeling safe in White Pine County.

The second and perhaps even worse act of anti-Greek violence to befall the Greek American Community would be the Greek Town Riot of South Omaha on February 21, 1909. The New York Times reported on the violence, stating the entire Greek neighborhood was burned down while the Greek population of the town was expelled [13]. The entire ordeal began two days earlier on the 19th when John Masourides [14] was arrested by Edward Lowery, without provocation while taking English lessons from a local woman. The story goes that during transport to the local jailhouse; Masourides pulled out a gun and killed officer Lowery [15].

Two days after the shooting, two state legislators and a local attorney called for a mass town meeting. During which organizers went on racist and anti-Greek tirades, exploiting tensions and raising emotions against Greeks [13]. The mob eventually grew and marched on the South Omaha Jail, forcing police to transport the prisoner to the main Omaha jail. Unable to lynch Masourides, the mob turned on Greek Town itself.

The mob of 3,000 [13] descended upon the ethnic enclave looting homes and businesses. Men, women, and even children were beaten while the entire enclave was burned to the ground. In the end, five people suffered gunshot wounds; eleven were severely beaten [16], and one young Greek boy was killed [17]. Within a few days, the local Greek community fled to places such as Council Bluffs, Sioux City, and Salt Lake City [18]. To make matters worse, a year later, local police took revenge against those remaining Greeks by lynching a young man named Nicholas Jimikas [14].

Anti-Greek Sentiment continues in the 1910s & 20s

The wave of anti-Greek discrimination across the United States would continue into the next several decades, with incident such as Gray’s Harbor, Washington in 1912 where Greek lumber workers were expelled from the area or the city ordinance of Pocatella, Idaho, which enforced segregated seating on Greeks in theaters and certain neighborhoods [12]. In places like Utah, at the end of the First World War, groups such as the American Legion would harass immigrant communities, especially the Greeks [19].

In the 1920s, the revival of the Ku Klux Klan would mean attacks on Greeks across the country. In Utah, Greeks would witness intense prejudice, such as one Magna Greek resident who had married an American woman, in response the Klan burned a cross in front of his store and his wife’s family home[19]. In Florida, the story of Chris Lochas demonstrates a typical strategy of the Klans towards Greeks. On July 8, 1921, three cars full of Klansmen drove out to Lochas’ restaurant. Three men entered his establishment and handed Lochas a letter, which read, “You are an undesirable citizen. You violate the Federal prohibition laws, the laws of decency, and you are a running sore on society. Several trains are leaving Pensacola daily. Take your choice, but don’t take too much time” [20].

Intimidation by the Klan in the form of boycotts and cross burnings were common place towards Greeks. In response to these growing racist attacks, organizations like the American Hellenic Educational Progressive Association were born.

Anti-Hellenism’s role in the 1920s anti-Immigration Laws

In 1907, a bipartisan special committee was formed by Congress, due to intense pressure from growing nativist organizations. Commonly referred to as the Dillingham Commission after its chairman, Senator William P. Dillingham, the United States Immigration Commission was organized to study the origins and consequences of recent immigrants to the United States. Concluding in 1911, the commission found that immigrants from Southern and Eastern Europe posed a threat to American culture and society. A decision, which the commission was led to by individuals such as Senator Henry Cabot Lodge, a Republican Senator from Massachusetts and member of the Immigration Restriction League, who first proposed in 1909, the restriction of Southern and Eastern European immigration [22].

Rising pressure from Nativist organizations finally scored a major victory in 1921 for Nordicists in American immigration policy with the Emergency Quota Act. Intended to be temporary, the law added new features to immigration law, such as, numerical limits from Europe and a quota system for establishing those limits. The Act ultimately put into effect suggestions from the Dillingham Commission, thereby, favoring people of Northern Europe and discriminating against Southern and Eastern Europe.

Interestingly the action set no limits on immigration from Latin America.

The law eventually was superseded by the Immigration Act of 1924, which included both the National Origins Act and the Asian Exclusion Act. It is this federal law, which Alexander Makedon points to in his paper, The Social-Psychology of Immigration: The Greek-American Experience that makes Greeks the most discriminated European immigrant. “As a result of the new immigration law of 1924, Greek immigrants were restricted to the lowest immigration quota than any other European group. If past immigration quotas can be used as a ‘discrimination index’, it may be argued that since Greeks were allowed the lowest immigration quota, they were ‘officially’ discriminated against the most” [23].

Also referred to as the Johnson-Reed Act, after its two main architects, the vehemently racist Congressman Albert Johnson and Senator David Reed. The 1924 Act, limited the annual number of new immigrants from 3% to 2%, of any ethnicity's population already residing in the United States. However, the statistics used were according to the Census of 1890, rather than the Census of 1910. Supporters wished to establish a national identity, which favored native-born Anglo-Saxon Americans over Southern and Eastern Europeans [10], so to “maintain the racial preponderance of the basic strain on our people and thereby to stabilize the ethnic composition of the population” [24].

Conclusion

Today, Greek-Americans have no knowledge that Nativist groups such as the Klan burned crosses in front of Greek homes and boycotted Greek-owned businesses. Today, the very term Anti-Hellenism does not even warrant a Wikipedia page, let alone an actual discussion of its existence. Why have the experiences of others that suffered side by side or for similar reasons been deemed worthy of study and official classification and yet the Greek experience continues to be viewed as merely the “average Immigrate experience”?

How is it that concepts such as Anti-Italianism can spawn academic study, yet Anti-Hellenism is left to the world of blogs? How is it, that anti-immigration legislation such as the Immigration Act of 1924 can be seen as evidence of Italophobia and Anti-Semitism, but, not of Anti-Hellenism? How have other immigrant groups been able to use the same experiences and legislative acts to legitimize their own unique forms of discrimination while Greek-Americans have not? This need to white wash the Greek-American experience and paint a picture of a happy and willingly assimilated community does nothing but harm to the Greek-American psyche. In fact, it is a dishonor to the memory of martyrs like, Dimitris Kalampokas and Nicholas Jimikas, who died because they were Greek.

Sources:

• [1] Margaret Quigley. The Roots of the I.Q.Debate
• [2] Kühl, Stefan. The Nazi Connection: Eugenics, American Racism, and German National Socialism.
• [3] Watson, James D.; Berry, Andrew. DNA: The Secret of Life.
• [4] Lombardo, Paul; "Eugenics Laws Restricting Immigration,", Eugenics Archive
• [5] Gregor, A James. "Nordicism Revisted"
• [6] Gregor, A James. "Nordicism Revisted"
• [7] Lindsay, J. A. "The Passing of the Great Race, or the Racial Basis of European History," The Eugenics Review
• [8] Evangelis Tastoglou and George Stubos. Ryerson Polytechnical Institute, York University. The Pioneer Greek Immigrant in the United States and Canada(1880-1920s): Survival Strategies of a traditional family
• [9] Evangelos Goulas. George Tselos: “Memories Guardian” on Ellis Island
• [10] E.D. Karampetsos. Nativism in Nevada: Greek Immigrantsin White Pine County
• [11] Alexander Makedon. The Social Psychology of Immigration: The Greek-American Experience.Chicago State University
• [12] Dan Georgakas. The Greeks in America
• [13] South Omaha mob wars on Greeks", The New York Times. February 21, 1909.
• [14] Matthew Namee. Anti-Greek Riots in Omaha
• [15] Officer Lowery also pulled out his service revolver and shot the Greek man."Edward Lowery", Policeman Down Memorial Page
• [16] South Omaha Anti-Greek Riot over today. The Eugene Weekly Guard Thursday February 25, 1909
• [17] Hill, J. (nd) “Interview: Helen Papanikolas.”
• [18] Larsen, L. & Cotrell, B. The gate city: A history of Omaha, Lincoln: University of Nebraska Press
• [19] Helen Z. Papanikolas. The Exiled Greeks
• [20] Henry P. Fry. The Modern Ku Klux Klan. Small, Maynard & Company, 1922.
• [21] Baker, Dr. Laura. Southern and Eastern EuropeanImmigrants: The Greek and Polish Experience
• [22] Senate Vote #126 (May 15, 1924)". govtrack.us. Civic Impulse, LLC.
• [23] Alexander Makedon. The Social Psychology of Immigration: The Greek-American Experience.Chicago State University
• [24] Eckerson, Helen F. (1966). "Immigration and National Origins". Annals of the American Academy of Political and Social Science. The New Immigration

NEW SCANDAL: 19 Summoned On Felony Charges In Shady Defense System Sale

According to press reports a Greek prosecutor on Thursday summoned 19 people to respond to felony charges in connection to the sale of a system designed to jam enemy communications to the Defense Ministry in 2001.

Following an investigation carried out by prosecutor Popi Papandreou, the Defense Ministry agreed to purchase the system for roughly 72 million euros (excluding value-added tax). However, press reports in Athens claim that it never accepted delivery of the software and hardware, despite providing the company with a 35-million-Euro advance.

Charges of defrauding the Greek state, and serving as accomplices, were apparently leveled against two ex-general secretaries who served at the Defense Ministry, an former army chief, the owner of the company involved, the company's managing director and about 14 members of the armed forces who served on committees that approved the deal.

A magistrate dealing with corruption issues is now expected to take over the case.

Alexis Tsipras: What’s his Real Mask?

(credit: Wikipedia)

Exclusive To HellasFrappe
By Alex Aliferis

(WASHINGTON) - SYRIZA’s Alexis Tsipras spoke at the Brookings Institute on Jan 22 in Washington D.C in what some say was a speech that was trying desperately to hide its violent past and radical agenda. Has SYRIZA put on a different mask in a PR ploy to communicate its message? No one knows, but Tsipras attempted to "act" as a Prime Minister, but those attending agreed that he is unfit to govern because he has no concrete plan to grow the economy, or tackle corruption.

At Brookings, the topic was ‘Greece and the Economic Challenges Ahead’. The moderators were Greek American William Antholis of Brookings and Domenico Lombardi, a senior fellow at Brookings.
The first thing I noticed while attending the event was the Brookings Bio for Alexis Tsipras which mentioned that he was elected in 2004 to the Central Committee of the Coalition of the Radical Left Synaspismos where he had first served as Political Secretariat. It said that in Feb 2008 he was elected president of the party when it adopted the title of Coalition of the Radical Left (SYRIZA) replacing Synaspismos. They said that in 2006 Tsipras ran for Mayor of Athens and that he was first elected to Greek parliament in 2009. While it was also mentioned that Tsipras attended Athens Polytechnic University and obtained a civil engineering degree with post graduate studies in urban planning. The only thing they did not mention was how he ended up siding with Synaspismos.

In fact, the Brookings Institute ignored the subject altogether leaving out the history of how SYRIZA ended up splitting up from the Greek Communist Party (KKE). This was a little bizzare to me considering Alexis Tsipras was President of the Communist Youth in the early 1990’s.

Maybe this is an irrelevant observation, but it should be noted that SYRIZA acknowledges its Trotskyite Communist roots, and from what I gather the Brookings Institute is tied to the leftist Democrat party.
What some people might not know, however, is that the Turkish government funded the Brookings Institute in the past. In fact, ex-Turkish Cypriot leader Mehmet Talat spoke at Brookings in 2005.
And what is even more interesting is that when SYRIZA arrived at the Institute -with a large entourage from Athens- the majority in the room were indeed of Greek origin, but at the same time many members of the Turkish and Skopian Lobbies attended.


What’s SYRIZA’s Philosophy?

So what is SYRIZA's real philosophy? This is a good question and it is still unanswered. The Brookings event never mentioned the true background of SYRIZA but being of Greek background, I know that they are a coalition of fringe left wing groups with roots in the Euro Communist movement of the late 1960’s which split from KKE (Greek Communist Party of Greece) in 1999 and adhered to Trotskyite Communism.
From what we read in the press, we also know that some key members of SYRIZA have openly defined themselves as anarchists. Some anarchists have even apparently expressed their indirect support for an armed struggle to take over Greece through violence.

Rena Douroucoulis said, “SYRIZA will not back off one step from the declaration of Koryschades.” The declaration refers to a May 27, 1944 political declaration of Greek communists to take over power through an armed struggle. On Dec 1944, the Communists rose up in violent revolt. The Greek Communists went on a murderous rampage killing thousands of innocent Greeks till 1949.

A candidate for the SYRIZA party in the first Greek elections last May, (even though SYRIZA denies this), Ifikratis Amryas, advocated for an urban guerilla war to take over Greece. In fact his statements made headlines before the second elections in June. He was later questioned by the prosecution over the videos he uploaded on YouTube describing these guerrilla warfare tactics, and till this day he openly and publicly still makes such statements on alternative news channels.

Moreover, in recent weeks, Greek police have raided several historic villas (or anarchist squats) that were illegally occupied by anarchist or anti-authoritarian groups as hangouts. This caused an angry reaction by SYRIZA, and some of its MPs even went on national television and indirectly defended the weaponry that was found at these premises which consisted of materials used for Molotov bombs, clubs, gas masks, cement slabs, etc. In fact one MP said that items such as clubs, and gas masks can be found in most Greek homes!

Some bomb attacks or threats by the anarchist movement -which is indirectly (and very discretely) supported by SYRIZA- has apparently set off blasts around Athens, including a recent one at the infamous "The Mall" department store. And let us not forget that several hooligans, or anarchists, are also reportedly suspected of torching the Marfin Bank in 2010 where three people died, including a woman who was pregnant.

Finally, a prominent SYRIZA MP recently proposed that Orthodox Christians be taxed in support of their Church. He did not however mention if such a tax would be applied on other religions, but rather only went on a rant about Greek Orthodox Christians.





SYRIZA’s Economy

According to Tsipras, the economic crisis is not strictly Greek. The credit system stopped because Greek banks could not lend out any more capital. At the event, the leader of SYRIZA spoke about the high level of unemployment, described how businesses are closing because of a long recession, he spoke about the housing collapse and the debt while he even gave a few suggestions as to how the State should tackle the oligarchy, corruption and scandals.

He then addressed the issue of a poorly designed currency system and compared the Central Bank to the Federal Reserve. At this point, he went on the attack by stating “we now have the phenomena of fascism in the parliament, we are faced to stand next to them.”

At some point in his speech he asked if there is a solid “reason to fear the left.”  Tsipras defended the term ‘Radical’ used in Greece, and SYRIZA, by saying he is the Euro party.

After a speech filled with generalizations, he suddenly opened up his cards and touched on several points about his party's strategy. It was at this point that Tsipras noted that Greece needs to renegotiate the terms of the Memorandum with Germany. SYRIZA, he said, stands with the redistribution of wealth and as such he spoke about a European New Deal.

Several questions were asked by William Antholis on labor strikes. Tsipras said, “No one is happy to strike … Strikes are an effective means to state some one's frustration."

Lombardi jumped in by saying how will you negotiate? (Meaning of course how is his party planning to negotiate with the Troika) and Tsipras answered, “we’re prepared for a battle.” According to him, SYRIZA wants to write off 60% of the debt, promote growth, and get rid of robber barons. Tsipras left it to be understood that he supports social justice, renewable energies, agricultural production, and energy, while he also said he wants to promote increased tourism to Greece.


SYRIZA Foreign Policy
A question was asked about foreign policy. He explained how Greek borders are a hot bed and spoke about a Greek energy hub, peace, cooperation, and stability. Tsipras said, “We have open wounds like Cyprus.”

On the issue of FYROM, Tsipras said he supports a name with a geographical qualifier, but refused to address anything about Turkey or the Greek declaration of the EEZ. In regards to Israel, Tsipras said he wants to develop mutual interests, but noted that he has some reservations over Greek-Israeli military cooperation because, according to him, his party would like to develop relations with Arab countries.

See what I mean... A very weak speech, full of generalizations, that basically did not address anything. I have a feeling Tsipras just wanted to introduce himself to the "big boys". Basic PR, and nothing else!

Turkish Lobby In US Beefs Up Activities To Push Forward Ankara's Positions

Flag of Turkey. (Photo credit: Wikipedia)

Contributed To HellasFrappe
By Alex Aliferis

WASHINGTON  - The Washington based newspaper "Roll Call" on Jan 15th said that the Turkish Coalition of America is one of the leading spenders for US congressional trips and records by LegisStorm note that the Turkish Coalition of America is one of the top spenders.

In fact, it spent a whopping US $159, 942 in 2012 to send bipartisan groups of staffers to Turkey
in February, March, May, and August of 2012. The August trip included a stop in Bosnia so the Turkish Coalition of America can show efforts by Turkey and the United States to end the Bosnian War.

These trips are designed to increase support for Turkey.

Roll Call notes how the Turkish Coalition has beefed up its travel expenditures in recent years. Apart from this, the Turkish Coalition of America has sent groups of FYROManian Lobbyists, Native Americans, African Americans, and Latino Americans to visit Turkey.

Due to the recent economic crisis in Greece, it is important to note that the Turkish Lobby and its allies (Albanian, FYROManian and Bosnian) have beefed up their activities.

When checking out their site, we found out that the Turkish Coalition provides informational bulletins to members of Congress 12 months a year, and at the same time it apparently organizes and sponsors congressional delegations to Turkey, as well as events on Capitol Hill. Parallel to this it provides a platform for Turkish American activism and advocacy on issues that concern Turkish Americans.

The Turkish lobby believes that through efforts such as the above, that it can easily strengthen a balanced dialogue in Washington, DC on issues relating to US-Turkey relations as well as US policies in the region.

Is the Greek lobby in DC listening?

The Cry Of "Mana" Hellas

What does the loss of a child do to a parent? To a mother that yearns to hold her son or daughter and is not able to?  To a father that yearns to see his child as an extension of himself and never will?

Contributed To HellasFrappe
By Sandy Kyroglou Rekes

How do we define loss?

        noun
        "detriment, disadvantage, or deprivation from failure to keep, have, or get".

When a parent loses a child they are at a disadvantage. They are deprived of the happiness that only a child can give. The loss of a child is detrimental to a parents wellbeing just as the loss of a parent is detrimental to a child's wellbeing.

Greece is a parent. For many years and because of external factors she has lost hundreds of thousands of her children and continues to lose them today. How long can a mother survive this injustice?

How is she to bare the pain of continually losing her pride and joy; Her youth; and as a consequence, her future?

I am a mother and a Hellene and I feel her pain.

Making Time These Holidays To Enjoy The True Meaning Of The Season

christmas 2007 (credit: paparutzi)

Contributed To HellasFrappe
By Sandy Kyroglou Rekes

During the Christmas and the New Year holidays, people experience a 'quickening'. There isn't enough time. There are presents to buy, Christmas and New Year's Eve parties to prepare for and Holidays to plan. We dread the family get together, when we will be reunited with family members we don't really like but tolerate for one day.

If we are blessed with young ones, Christmas through their eyes is a real joy.

If we are alone then Christmas can be depressing.

Whatever our circumstances, lets not forget those less fortunate then us. Lets take the time to visit with our lonely neighbor and share a cup of tea with them. Lets take the time to visit a hospital and spend an hour reading to a sick child or an elderly person with sight impairment.

Lets not buy another party dress but instead buy a hamper for the needy family in our street.

Most of all lets stay in touch with our spiritual beliefs and remember that Christmas is a celebration of the life of Jesus Christ. Everything else is in excess.

Happy Holidays to all

The "Up"Coming Greece

Contributed To HellasFrappe By Maria Hatzigeorgiadou
www.greekproductsabroad.wordpress.com

Don't worry, the title is totally correct.

A few weeks ago, I had the luck to receive a message on Facebook from an old classmate. I hardly remember her name, actually I was hardly remember my age of 12 in general (I just now realized that we are talking about for more than 20 years ago!) Well, at that age we were only flirting and pretending we were good students, nothing special to remember ( especially after all these years! )

The Family

After recovering from the flashback we set a date to meet again. Today she is married and happy with the cutest girl I‘ve ever seen and I m single unable to decide what to think: “thank God I don’t have kids to raise with this crisis” or “will I ever be able to have a family with all this pressure?” Well, this meeting totally changed me.

For my surprise I saw my friend calm, happy and fulfilled talking about her dream to move out of Athens, reside in Ikaria and start her own business in handmade silver/ gold jewelry!

After a while her husband joined the discussion and we couldn’t do without get into “the crisis” subject. I had in front of me a very loving couple, standing united, very matured and very optimistic.

The Values

Suddenly her husband said “We‘ve been spoiled most of us, as kids, so now it is difficult to change our lives. Unlike my daughter who will be raised with the most needed but she already knows, even though she is only 3 years old, to respect the environment, to respect life and consider humanity united in peace. These elements are helping her to become more creative day by day. And you know something?” he continued “we can’t leave ALL from Greece. People of Science, Medicine, Arts etc must stay here along with the working class, we can’t leave ALL!”

The Dream

Most of the Greeks are well educated and informed. The previous conversation helped me to realize and see that day by day dozens of success stories are born in Greece. Blogs, farms, artists, products, technology, ideas, thoughts, smiles! Dozens of these!

Greeks are residing to the villages bringing new ideas from the cities or going back to their parents saving money in order to create a small working room at the backyard but they are still creating, still inventing, they are still dreaming and looking forward. They are still investing in Greece. Still promoting their work, still looking for new partnerships, working alone or in small groups, helping each other, with or without money, they fight back the crisis.

They (still) have a dream.

This is the upcoming Greece.

The new generation of Greeks bringing a totally respected attitude and culture.

A Day Of Remembrance: Lest We Forget

English: A remembrance poppy from Canada. Poppies are worn to commemorate soldiers who have died in war. (Photo credit: Wikipedia)

"None who have always been free can understand the terrible fascinating
power of the hope of freedom to those who are not free.” - Pearl S. Buck -

Note: The text below (sorry, it's a little long!) is from a Remembrance Day blog post I wrote in 2009. I decided to share it once again, and include some photos from the local cemetery where Canadian soldiers are buried, and from a memorial that we visited on a trip we took to Washington, D.C. in 2008.)

Contributed to HellasFrappe By Martha Ploussos
Plowing Through Life

I am fortunate enough to have spent my entire life in a peaceful, free society. I have never experienced war personally. I have never witnessed it with my own eyes. I’ve never had to worry about surviving another day, about whether my father would be whisked away in the middle of the night by ‘the enemy’. Of bombs landing in my city and killing someone I love. Of having my home invaded by enemy soldiers. Of losing my freedom, my home, my life. I have, thankfully, lived a happy, secure life that I try to remind myself each day to never take for granted.

Row upon row of soldiers. - Credit - Plowing Through Life

My parents, on the other hand, experienced quite a different world in their early years; they lived in the midst of World War II, a war that engaged the majority of the world’s nations, including the most powerful of them. Approximately 60 million people perished during those years, 40 million of which were civilians that mostly died from diseases, starvation, massacres, bombings and genocide. Although both my mother and father spent most of their adult years in the safety of Canada, having arrived here in the late 50s from Greece as young adults, some of their earliest memories were built in a war-torn, economically and emotionally bankrupt country that was ravaged by a world war and a subsequent civil war.

My father was 11 years old when the Italian army invaded Greece on the 28th day of October in 1940, which forced the country to enter World War II. My mother was only 5. Despite having a much smaller (but obviously determined) army, Greece defeated Mussolini’s forces and drove the invading army back into Albania where it originated from. However, despite the courage and tenacity of the Greek army, it did not spare the country from being occupied, because in April of 1941, Hitler sent some of his own troops to join forces with Italy and overcome Greece. These two armies were joined by the Bulgarian army, a brutal occupier whose policy was that of extermination or expulsion. They tried to forcibly Bulgarize as many Greeks as possible; the ones they did not succeed with were either expelled or killed.

Until its liberation in October 1944, the country was devastated by the war, its economy and infrastructure ruined; its people hungry and disillusioned. More than 300,000 Greeks lost their lives during this period, and the country’s long-established Jewish population had been almost completely wiped out. In addition to all that, as soon as World War II ended, a civil war broke out in Greece, which would last until 1949 and leave the country in shambles. It took years for Greece to rebuild itself but in the meantime there were no jobs. There was no food. There was no hope. There was no future. So, in December of 1957, my mother boarded a ship with two of her sisters, leaving behind four other siblings, their parents, uncles, aunts, cousins, nieces, nephews, townsfolk and all their childhood friends, and headed for Canada. For a better life. They were, she said, filled with fear as they headed for the unknown. But they were also filled with hope for the future.

So terribly young... - Credit - Plowing Through Life

In my younger years, despite having learned about World War II in school, I failed to associate my parent’s childhood years with that period. Having been born – and having lived my entire life - in Canada, as far as I was concerned our lives had always been here, including my parents. It was only when I became a young adult that I took a sincere interest in hearing about their experiences in what they always referred to as the most difficult years of their lives.

I began to ask questions, encouraging them to share some of their memories during World War II. They told me about the sounds of gunfire they heard from soldiers battling nearby. They told me about Italian, German and Bulgarian soldiers walking through towns, searching for the local men who would run off to hide in the fields after a designated lookout standing on top of a tower sounded a bell to warn of incoming ‘enemy’ soldiers. My mother recalled her own father disappearing into the forest as German troops approached to avoid being picked up by them and face God knew what fate. She spoke about the young German soldier that stopped to give her candy as he marched by her home one day; perhaps the sight of her playing brought to mind a daughter of his own back home. My father told me of the time he ran like the wind down some mountain trails, desperate to get away from the gunfire nearby that he was certain was closing in on him. He remembered having to share a small plate of food with a sibling, and eating as quickly as possible to get his fair share. There was never enough food on these shared plates and fights broke out between siblings if one of them ate faster than the other; one of his brothers, he said, got stabbed by a fork for eating too fast. He talked about the constant hunger, the perpetual despair, the young men in his town that fought in the war and never returned, the women who lost their husbands, the children that lost their parents and the diseases that claimed lives. It was, they both said, a terrible time.

But of all the stories I’d ever been told, nothing has touched my soul (or rocked my world) like the one my mother recounted of her cousin’s experience in a neighboring small town. Members of a communist movement raided this cousin’s community, slaughtering every resident, including women, children and the elderly. The bodies were callously tossed into the well, one of them being my mother’s cousin, who miraculously survived the massacre. When he was sure the ‘butchers’ had left, my mother’s cousin used the bodies as a ladder, climbing over friends, family members and townsfolk to get to the top of the well. Needless to say that this young man was never the same after this experience.

Listening to the elderly, especially those who have lived through and witnessed World War II, share such remarkable stories, is an amazing experience. I’ve had my fair share of such opportunities because most of the adults that I knew as a child came from different areas of Europe after the war, all with fascinating and distressing memories. A woman I worked with years ago, whose parents had immigrated from Poland, told me about her father having to dig a grave while being held at gunpoint by German soldiers that ordered him to prepare his grave because ‘today, you die’, only to be told after he finished that they were joking. He experienced this horror twice, something he never recovered from psychologically.

As unfortunate as it may be wars - with all their atrocities and with all the grief that they cause - have been a part of this world as long as man has existed. And as much as I hate to say it, they will almost certainly be a part of this world for a long time to come. During these periods, there have always been brave individuals who have joined forces to put an end to these conflicts, to stop the spread of evil, to liberate occupied countries, to help the weak, to fight for freedom. Brave individuals that have sacrificed, and continue to sacrifice, their lives and their futures so that people like me, and my children, and my children’s children, can live in peace.

Today is remembrance day, a day to commemorate the men and women who have made, and continue to make, these sacrifices on behalf of all of us.

To all these courageous people I say: “Thank you. I am living the life I have today because of you”

Some of the photos above are from the Cataraqui Cemetery, which is located in my city, Kingston, Ontario. The two photos below are from the Vietnam Veterans Memorial, which is located in Washington, D.C. The reflections belong to my two daughters and my husband. - Martha Ploussos

Health care Greek austerity style

(Photo credit: roberthuffstutter)

Contributed To HellasFrappe By Janet Darbey
janetdarbey.thoughts.com

The little old lady in front of me leans against the metal rails and sighs deeply. Her coat is pulled around her shoulders and held in her arthritic hands against the cold and rain. She tells me in village Greek that she has already been here for an hour when I arrive at quarter to eight in the morning. We are standing in a crowd of around fifty people outside the IKA clinic in Corfu ,waiting for the security man to open up and let us in.

The rain is hammering down by the time he arrives and the rush for the steps begins...not fifty people now but more like eighty or so....many of them elderly and all needing to get to the front of the stream of people rushing in. We all bustle up the two flights of stairs to the office that deals with making appointments and stand in the queue with our health books hoping to be one of the lucky twenty that gets an appointment. That's right, twenty available appointments for all those people. This is only one of the many queues that you are expected to join for medical attention of any kind.

The phone on the side is ringing but no one is answering it or paying it any attention. I know that on the other end of that call is someone trying to book an appointment, but the staff do not answer the phone so you can make one. I wonder if the person ringing is disabled and unable to come and stand in the cold and rain in the queue to make the appointment. What are they going to do now? The ladies in the office are taking off their coats, sorting out their paperwork, drinking coffee or just generally trying to look busy and failing.

My doctor sent me here to make an appointment for a blood test to be done. It is urgent but it does not look like I am going to get one anytime soon. I am already too far back to be one of the lucky twenty today. I will have to do the same thing tomorrow and keep trying till I manage to get to the front. Perhaps I should come at six in the morning to be on the safe side?

I return at six the next morning and somehow manage to be number seventeen in the queue. I get a slip of paper and have to take it to another office to be stamped. Another queue to wait in. I wait and get the stamp after getting a disdainful glare from the official who sits giving stamps on papers all day. I then take it to the section that takes blood samples and get an appointment in five weeks time. But then they notice my blood tests will cover thyroid and they no longer do them in order to save money. I have to get them done privately if I want them done . I pay 40 euros and get them done the same day and collect the results within hours.

Meanwhile I return to my doctor and he tells me there have been some changes to the system. I can no longer make appointments by telephone to the clinic ( I never could do it that way anyway as they did not answer the phones) but I have to ring a premium rate number to get an appointment as it is all one system now. I take a note of the number but do not have much faith in the future for it.

He also tells me that he will give me  a prescription but since the Pharmacies are refusing to give EOPPY (the health insurance system) any more credit, I will have to pay in full for the medicine and try to claim it back from IKA. To do that I have to go and stand in the long queue in the clinic to get the forms stamped by the official who sits there all day stamping them (who incidentally, is a doctor). Then I have to submit them along with my bank account  details, and it might be paid in a few months. But I will only receive a small amount of it back.

The good news is that since he is also taking protest action I must pay for this appointment myself out of my own money even though I am covered by the Health scheme of IKA. Great!

After I leave his surgery I get to thinking about the health schemes in Greece. People who work here are paying in contributions that are usually between 250 and 900 euros a month. This includes the self employed in TEBE or the employed in IKA. There are other smaller schemes as well, all taking contributions year round. What is happening to all this money?

It certainly isn't being spent on the patients, who have to wait months for an appointment, then pay for their prescriptions in full because the pharmacists can't supply them under the scheme. The money hasn't gone to the hospitals, clinics, pharmacists or doctors either.....they are all owed billions of euros by the health schemes.

I tried to find statistics on the contributions taken each month and how much money  people are owed when they have been paying for medicines themselves and I cannot find any statistics anywhere. Does anyone in the health schemes keep the statistics and publish them?

What about all the contributions people are paying that they are getting no benefit from? Where is all the money going  that foreign countries pay for health cover for their citizens living in Greece?

And the final and most important question  is who cares about the patients?

US Dollar Proposal for Greece

This is a $5 Federal Reserve Note, Series of 1928. Note the numerical Federal Reserve Seal. (Photo credit: Wikipedia)

Georgios Gialtouridis

Dover, MA
Guest Author To HellasFrappe 


On Dec. 7, 2010, in a joint press conference at the Maximos Mansion in Athens, Greece with former Prime Minister George Papandreou staring silently, former IMF chief Dominique Strauss-Kahn in authoritarian style offered the following advice to the Greek people:  "So don't fight against the doctor. Sometimes the doctor gives you medicine you don't like; but even if you don't like the medicine, the doctor is there to try to help you."  Strauss-Kahn was referring to the reforms being introduced in Greece in order to bring the economy back on "the good track," as he claimed.

The 'medicine' is the brutal pulverization of Greece's economic landscape where in the name of productivity and competitiveness a relentless series of fiscal austerity measures is being forced upon the Greek people.  Through a combination of deep cuts in salaries and retirement benefits, longer workweeks and increased retirement ages an attempt is being made to 'depreciate' productivity costs so that Greece may become more competitive. This tactic is known as internal depreciation.  To help ease the pain, a controlled default and credit event utilizing PSI (Private Sector Involvement) was carried out and now there's talk of yet another credit event targeting OSI (Official Sector Involvement).

Two years, one IMF chief and three Greek Prime Ministers later, the Greek economy having been subjected to fiscal atrophy now resembles, in Strauss-Kahn's terms, a malnourished patient in the intensive care unit on respiratory support, intravenous therapy and feeding tubes with German and other European politicians portraying family members standing over the unfortunate soul determined to pull the plug.

On November 1, 2011 I had proposed to the United States Federal Reserve a plan for Greece to exit the Eurozone and adopt the US Dollar as its de facto currency for a five-year transition period before the country officially returns to the drachma as a way out of this economic depression.

http://www.phantis.com/blogs/georgios-gialtouridis/proposal-greece-return-economic-stability

In case of a Grexit, such a move is not only fiscally and economically feasible but it is also necessary in order to prevent financial chaos and possible civil unrest within Greece.  As a member state's exit from the currency union is not addressed in either the Maastricht or the Lisbon treaties, a disorderly default by Greece followed by the country's abrupt exit from the Eurozone and immediate return to the drachma will most certainly create issues in the country's financial sector not seen since WWII.  As per various analyses, the immediate depreciation of the drachma would exceed 50 per cent followed by additional corrections.  Speculators, hedge funds and credit rating agencies will prevent Greece from accessing the capital markets using its own currency as the country will be forced to meet any short- and/or long-term borrowing needs by tapping hard currency at unfavorable interest rates.  For years the sellers of private property in Greece will demand that purchases be made in euros, dollars, pounds sterling, etc. due to the drachma's depreciation.  As such sales will include significant hard currency cash payments 'on the side' or 'under the table' it will add to the country's already out-of-control and untaxed underground economy.  For a while Greece's financial sector will go back to the 40's and 50's as such will be the effects of a disorderly Grexit.

A Grexit is also detrimental to the welfare of the Eurozone.  Many analysts agree that in case a member state exits the currency union the Eurozone will collapse like a house of cards.  No member state would exit the currency union under normal circumstances.  Only under excruciating conditions would an exit be even considered as speculation of contagion will act as a catalyst to the turmoil.

Structured on the Maastricht and Lisbon treaties, an attempt was made to create a currency union by violating the fundamental principles of fiscal integration.  There is no political union or fiscal union in place.  Missing these foundations which are necessary for any successful monetary integration, countries with trade surpluses and robust industrial output were joined in a currency union with consumer economies lagging in industrial prowess relying heavily on tourism and public expenditures.

An attempt at economic synergy is now being made by having Greece increase its competitiveness within the Eurozone by slashing wages to levels seen only in some former Soviet-bloc economies and most third-world countries.  This is an ill-fated attempt to mold the Greek economy according to Germany's specifications through wage cuts, extended workweeks and increased retirement ages.  A Eurozone is taking shape where the North will solidify its dominant capital-intensive industrial base but in order for this synergy to be effective and successfully compete with the emerging BRICs the labor-intensive South must align with labor market conditions.

The dynamics of this internal depreciation are trapping Greece in a vicious economic cycle with spiraling unemployment.  There is also collateral damage in the form of migration of the local element seeking safer and greener pastures in the diaspora.  Most of these Greeks who are able to migrate are young and educated and whose participation is critical for Greece's economic recovery.   Hopes for such a recovery are now pushed further into the distance as this 'brain drain' helps prolong the vicious cycle which is eclipsing the economic landscape.  Not only are most of these young inhabitants displaced forever from their roots but they are now being replaced by an uncontrolled influx of impoverished illegal immigrants, most of whom are confined to the untaxed underground economy while benefiting from the taxpayer-funded welfare programs thus further burdening the state.

The next few months are crucial for Greece's future as a developed economy.  The Oct. 18-19 EU Summit will decide whether Greece's financial sector gets the liquidity boost it needs to survive.  Whether or not Greece meets the conditions set in the upcoming quarterly review, there is no more room for any additional cuts.  As nationwide unemployment approaches 25 percent, the well has run dry.  In addition, any privatizations under current market conditions will liquidate prime assets at fire-sale prices.  The latest planned austerity package of 11,5 billion euros is not possible unless Greece gives away the family silver. Also, as per Article 28 par. 2 of Greece's Constitution, 180 votes are needed to pass such measures.  The current government coalition holds only 179 seats.

A second Greek debt restructuring is being discussed with the Official Sector being set as the primary target.  This drastic haircut on the external debt held by the Official Sector, i.e., ECB, IMF and EU must be executed.  This will follow the 70 percent haircut on Greece's internal debt when March's debt restructuring was implemented on the Private Sector and excluded the ECB-held Greek bonds previously bought in the secondary market.  This debt restructuring strategy should be the last step before Greece exits the Eurozone.  Without major foreign investments on the horizon to spur growth any time extension on the austerity program targets, which is also under discussion, will prove counterproductive as the government will simply be sweeping the issue under the rug and prolong the vicious cycle.

On Sept. 12, Germany's Federal Constitutional Court would rule on the legality of the European Stability Mechanism (ESM), the planned successor to the Eurozone's current emergency lender, the European Financial Stability Facility (EFSF).  The ECB plans to use the ESM as a liquidity mechanism, or in other words, as a permanent bailout fund.  The German court's decision will most probably include demands for certain amendments to be put in place in order for Germany's President to sign the ESM Treaty, a measure which will most certainly tailor the ESM to Germany's specifications.

Incidentally, less than a week ahead of the Sept. 12 court ruling the ECB announced a plan to make unlimited purchases of government bonds in the secondary market as needs arise, without any impact on the Eurozone money supply.  ECB President Mario Draghi claimed that such measures will provide "a fully effective backstop" against market volatility.  This plan echoes my proposal in May 2010 for Greece to enter the secondary market at the time and purchase Greek debt in order to control bond prices and yields.

http://kassios.wordpress.com/2010/05/12/


This ECB program called "Outright Monetary Transactions" will target government bonds of remaining maturities between one and three years from countries which sign-up to the ESM for aid, provided that a country meets the conditions it agrees to when it signs up for the aid. This tug-o-war with hints of nationalistic fervor between the ECB's Mario Draghi and Germany's Bundesbank which opposes such bond purchases will become more tense over time as the two sides will not be able to reach common ground, proving once again that fiscal integration has unlimited obstacles.

German economist Hans-Werner Sinn has appeared in the aforementioned court proceedings and made his case doubting the ESM's legality. In his reply to my US Dollar proposal, the outspoken critic of Eurozone bailouts wrote:  By contrast, if Greece stays in (the Eurozone) and depreciates in real terms by cutting its wages and prices, its firms will largely go bankrupt, as their bank debt will remain while their asset values will decline. Moreover, the unions will be all in the street. To carry out the necessary real depreciation in the Eurozone is simply impossible. We calculate that Greek's [sic] prices have to come down by 44% to be in par with Turkey. This is twice the real depreciation of Germany from 1929 to 1933. You know what happened. Greece would be driven to the brink of a civil war, at best.

If Dr. Sinn's projections are correct, the impact of the current economic policies in the troika's relentless attempts to make Greece more competitive will most certainly polarize Greek society.

In November's proposal I detailed some of the benefits to Greece in case of a Grexit and adoption of the US Dollar for a five-year transition period before the country officially returns to the drachma.  Using the Dollar Liquidity Swap Lines in coordination with the United States Federal Reserve, Greece's economy will immediately obtain the liquidity and confidence necessary to entice growth.  Agreements on trade and tourism along with exclusivity on military contracts will enhance the two countries' strategic alliance.  But the main concern I have encountered regarding my proposal is:  How does it benefit the United States?

A disorderly default by Greece followed by the country's abrupt exit from the Eurozone and immediate return to the drachma will most definitely create shockwaves across the Atlantic.  Preventive measures such as the US Dollar proposal will contain the damage while the US Dollar will enhance its position as the world's safe haven currency.

At the end of 2011 the share of US dollar-denominated assets in global foreign exchange reserves remained almost stable at 62.1%, down from 62.2% at end-2010 (at constant end-2011 exchange rates).   The euro's share in global foreign exchange reserves decreased slightly to stand at 25.0% at the end of 2011 when adjusted for exchange rate effects (down from 25.4% at end-2010, at constant end-2011 exchange rates).

http://www.ecb.europa.eu/pub/pdf/other/euro-international-role201207en.pdf

With the prospects of additional Quantitative Easing (QE III) having been discussed at the recent economic conference in Jackson Hole, Wyoming, the Federal Reserve needs the US Dollar to maintain its position in global foreign exchange reserves in order to help neutralize inflationary pressures.  The US Dollar also needs to hold this position as the world's leading currency for reasons of global financial stability.  The US Dollar proposal for Greece will reinforce the confidence placed on the American currency.

There is also the geopolitical perspective.  The United Nations Convention on the Law of the Sea gives Greece the opportunity to exploit its offshore natural resources as much-needed revenues from the sales of its mineral wealth can help offset the country's debt burden.  The hydrocarbon exploration within Greece's Exclusive Economic Zone (EEZ) can be used as a platform to boost Greece's strategic alliance with the United States by licensing offshore exploration blocks to US interests which will in turn solidify the United States' footing in the turbulent region in order to protect those interests. At a time when major infrastructure projects are being planned in the eastern Mediterranean region and the Caucasus in order to meet the world's growing energy needs Greece has the opportunity to define its Exclusive Economic Zone and join Cyprus, Israel and the United States in a mutually beneficial long-term energy alliance and at the same time silence any hostile neighbors.

After two and a half years under continued tutelage from the IMF, the ECB and the EC there is no end in sight as the Greeks' hopes and dreams disappear, all for the sake of a flawed fiscal integration vision.  Greece now has the opportunity to unbind itself from the seemingly endless constraints and sacrifices planned not for Greece's own salvation but for the Eurozone's itself.