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There’s no light at the end of the tunnel for Greece

As economic and social conditions in Greece continue to deteriorate the country remains politically paralysed, trapped in its Euro nightmare.

Alexander Mercouris

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Almost exactly a year after my previous visit to Greece, urgent business obliged me to return there for a flying visit at the end of August.

In August 2015, when I was last there, Greeks were still trying to come to terms with the Tsipras government’s abrupt capitulation to the EU’s terms for the country’s third bailout.  These terms were actually harsher than those originally offered, which the Greek people had rejected in a referendum just a few weeks before.

The Tsipras government’s abrupt reversal of position, accepting even harsher terms than those it and the Greek people had previously rejected, left many Greeks confused.  I repeatedly heard confident claims that in return for accepting the EU’s terms Tsipras  “must have” obtained private assurances of a haircut on Greece’s debt, which for “political reasons” could not be announced publicly. 

The fact that the IMF was known to be unhappy with the deal and was known to want a haircut was seized on by many people as “proof” that such private assurances had been given.

I repeatedly pointed out that this was definitely wrong and that far from having obtained any “private assurances” of a future haircut, the Memorandum of Understanding the Tsipras government signed last year expressly excluded it.  I encountered general incomprehension, and even some criticism.

A year later and all talk of a haircut has gone.  The economic situation, which looked grim in August 2015, in August 2016 if possible looked even grimmer.  In the part of Athens where I stayed – the wealthy suburb of Kolonaki – more shops and businesses had closed, more shop and business premises were empty, none of the shop and business premises that I saw empty a year before appeared to have been relet or sold and all of them were still empty, and there were visibly even more beggars around. 

Alarmingly many of these beggars seemed to be either high or low on various drugs, with a drugs scene proliferating and becoming increasingly and publicly visible.

The cause of the economic distress was not difficult to see.  The country is being strangled by taxes.  Though one of the major memes in the European media is that Greece got itself into its mess because of widespread tax evasion, the effect of the bailout has been to increase tax evasion even more. 

As I was told repeatedly, people feel they have no choice because taxes have become so unsupportably high.  One businessman told me that he has to pay 78% of any income he declares in taxes, which if he traded honestly, declared all his income and paid all his taxes would mean he would soon be out of business. 

The result has been to increase exponentially the “under-the-counter” cash economy beyond anything which had existed before – which is saying something – with honest hardworking middle class people now forced against their will to engage in a practice they abhor.

Moreover since the universal perception is that the taxes are being used to pay the debt rather than to invest in Greece – with social, education and health spending all being cut and public salaries regularly left unpaid – there is anyway a major disincentive to pay the taxes.

The result is that the economy is struggling as people avoid using bank transfers – despite the continuing restrictions on cash withdrawals – and struggle to work with and conceal their cash, whilst despite the massive tax burden, the government finds itself perennially short of money.

August is a quiet time in Greece, with much of the population of Athens on holiday in the country.  However it was difficult to miss the signs of disaffection.  The nature of my visit meant that I was obliged to travel a lot by taxi. 

During each and every one of these taxi rides I had to listen to a stream of complaints about the situation from the drivers.  In fact it was impossible to meet anyone in Greece without the subject of the crisis coming up.

The one thing I did not get however was the slightest indication that this stream of disaffection is translating into political action.  If anything the protest mood seemed more subdued than it was last year, with all illusions gone and a feeling that the country is caught in a trap it cannot escape.   

Confidence in Tsipras appears to have completely collapsed – indeed I couldn’t find anyone who takes him seriously – but there is no obvious alternative to him.  If an election were held tomorrow the likely winners would be the centre-right establishment New Democracy party led by the political dynast Kyriakos Mitsotakis, but this would be a victory by default since there is a complete lack of enthusiasm for them or him. 

I heard alarming suggestions of a big vote for the neo-Nazi Golden Dawn party, with some even predicting that it might come second (ahead of Tsipras and the Left) – in which case it would be the official opposition – but in the very short time I was there I have to say that I saw no visible sign of this. 

As for the various anti-Euro left wing splinter groups that broke away from Syriza last summer led by such people as Panagiotis Lafazanis and Zoe Konstantopoulou, they appear to be making no impact, having descended into typically Greek factional infighting and personal feuding.   

The traditional party of the Greek Left, the Communist KKE, meanwhile is still there, but aside from its sterile Stalinist dogmatism (off-putting to many Greeks) it seems more motivated to block the emergence of left wing alternatives to itself than to offer anything constructive.

One important change is that belief in the EU – once almost universal in Greece and moreover passionately held – appears to be draining away.  I am no longer sure that in a genuinely free vote a majority of Greeks would vote to keep the Euro. 

Perhaps the tipping point in the popular mood on this issue has not yet quite been reached, but Greece does seem to be approaching it. 

However even if that tipping point is reached, given the Greek establishment’s determination to hold on to the Euro at any cost, and the lack of an alternative, it does not follow that a Grexit would happen.  In the absence of any political force able or willing to argue for a Grexit effectively, it is difficult to see how it can happen.

The unhappy truth is that despite a situation in Greece that for many people has become completely intolerable, and despite all the indications pointing to the economy being once again in recession, I heard people talking of leaving the country and making their lives elsewhere, not of them protesting or fighting to change the situation. 

Quite simply, the people I spoke to did not believe that protesting or fighting – or indeed voting – would change anything.  In saying this I of course accept that the sample of people I spoke to may not be representative.

Having said this, in my opinion Greece’s deliverance from its Euro nightmare is not going to come from political or popular opposition within Greece itself. 

If it comes at all it will come if or rather when the EU leadership and the EU public – especially the public in Germany – finally recognises that the policy structure the EU has imposed on Greece has failed, and realises that more money thrown at Greece to sustain an unworkable policy is simply money thrown away. 

At that point economically rational policies – which may include Grexit – will at last become possible.  Judging from the way the mood in Germany is going sour, we may be closer to that point than many think.  For the sake of Greece I hope so.

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Donald Trump open to lifting Russian sanctions

Comments in interview with Reuters indicate that the doors are not entirely slammed shut between the US and Russia regarding sanctions.

Seraphim Hanisch

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On Wednesday August 22, the latest sanctions set against Russia by the US go into effect. These sanctions have already exacted a toll on the Ruble sending it into the high sixties against the dollar last week. At the time of this writing the ruble has only slightly improved from the worst level since the announcement, and this round of sanctions is the most painful since the Ruble hit a crippling level of 83 to the dollar in late 2015.

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However, US President Trump indicated once again that the US is open to working with Russia and to making a deal which would ease sanctions in place.

This report, by both RIA Novosti and TASS offer some detail:

President of the United States Donald Trump would be ready to consider the possibility of lifting the US sanctions on Russia if Moscow begins taking joint steps with Washington, including on Syria and Ukraine, he said this on Monday in an interview with Reuters.

Trump said that the question of lifting US sanctions on Russia was not brought up during his recent meeting with Vladimir Putin, however, he stated a condition for its possible withdrawal. “I would consider it if they do something that would be good for us. But I wouldn’t consider it without that,” he said.

Trump added that at the meeting the parties talked about Israel, Syria, Ukraine, Crimea, and the Nord Stream 2 pipeline project.

The United States began imposing extensive sanctions against Russia in 2014 after the reunification of Crimea with Russia. Restrictions were subsequently expanded and updated many times, they concern both individuals and legal entities. In the following years, Washington found many other reasons for imposing sanctions against Moscow, including alleged interference in the presidential election of 2016, alleged involvement of Russian officials in violation of human rights. So far, there has been no substantive discussion on the removal of restrictions from Russia.

The Reuters interview had more to say about this:

ON HIS RECENT MEETING WITH RUSSIA’S PUTIN

“It was only Fake News that criticized. … We had a very good, I guess, close to two-hour meeting. We had another good meeting with a lot of our representatives there. We talked about Israel, we talked about insecurity for Israel, we talked about Syria, we talked about Ukraine.”

“I mentioned Crimea, sure. I always mention Crimea whenever I mention Ukraine. Putin and I had a very good discussion. It was a very — I think it was a very good discussion for both parties. I mentioned the gas pipeline going to Germany.”

ON WHETHER PUTIN ASKED TRUMP TO LIFT U.S. SANCTIONS ON RUSSIA

“No, he did not. He never brought it up.”

ON WHETHER HE WOULD CONSIDER LIFTING SANCTIONS ON RUSSIA

“No. I haven’t thought about it. But no, I’m not considering it at all. No. I would consider it if they do something that would be good for us. But I wouldn’t consider it without that. In other words, I wouldn’t consider it, even for a moment, unless something was go — we have a lot of things in common. We have a lot of things we can do good for each other. You have Syria. You have Ukraine. You have many other things. I think they would like economic development. And that’s a big thing for them.”

This interview was held the day before the new sanctions were to go into effect. President Trump actually made no direct reference to the new sanctions, but this series of statements brings up an interesting thought.

President Putin has been silent on the matter of sanctions, even though the lower level government officials have spoken out about the injustice that is a fact, given the nature and cause of the sanctions. But an anonymous observer offered the interesting thought that, contrary to appearances, the American president may be trying to project the image of “strength against Russia” that is vital for him to pass through the midterm elections without losing the House.

If he loses the House to the Democrat Party, the new House leadership would almost certainly bring impeachment proceedings against the President. While this, like Russiagate, would be an absolute farce, it would have the effect of severely impairing the President’s agenda. While the House remains in GOP hands, this at least will not happen. The source mentioned that with such a strategy in place, if the midterms went the GOP’s way then Trump would be able to lift the sanctions later.

While this seems to be a very speculative thought, it is interesting that it was suggested only hours before the Reuters interview became publicly known. It would seem possible that this was a very gentle signal of willingness on the part of the American President to continue seeking better relations with Russia.

One thing is certain: a lot of policy is riding on the outcome of the midterms. How they go will shape US policy and foreign policy very strongly. This is truly a critical election approaching – for the US and for the world.

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Denmark As A Model For American Socialists?

In Denmark, everyone pays at least the 25% value-added tax (VAT) on all purchases. Income tax rates are high.

The Duran

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Authored by Lars Hedegard via The Gatestone Institute:


Here are some facts to consider before American “democratic socialists” look to Denmark for guidance, as Senator Bernie Sanders did during the 2016 presidential campaign.

First of all, Danes actually pay for their brand of socialism through heavy taxation. In Denmark, everyone pays at least the 25% value-added tax (VAT) on all purchases. Income tax rates are high. If you receive public support and are of working age and healthy enough to work, the state will require that you look for a job or it will force a job on you.

The willingness of all the Danes to pay high taxes is predicated on the country’s high degree of homogeneity and level of citizens’ trust in each other, what sociologists call “social capital.” By and large, Danes do not mind paying into the welfare state because they know that the money will go to other Danes like themselves, who share their values and because they can easily imagine themselves to be in need of help — as most of them, from time to time, will be.

Whenever politicians propose tax cuts, they are met with vehement opposition: So, you want to cut taxes? What part of the welfare state are you willing to amputate? And that ends the debate.

Danes, in contrast to American socialists gaining ground in the Democratic Party, are increasingly aware that the welfare state cannot be sustained in conditions of open immigration. A political party agitating for “no borders” could never win a Danish election. Danes do not suffer from historical guilt: they have not attacked any other country for more than two centuries and have never committed a genocide.

Moreover, there is an even deeper truth to ponder: Denmark is not really socialist but constitutes a sui generis fusion of free-market capitalism and some socialist elements. Denmark has no minimum wage mandated by law. Wages, benefits and working conditions are determined through negotiations between employers and trade unions. 67% of Danish wage-earners are members of a union, compared to 19% in Germany and 8% in France. Strikes and lockouts are common, and the government will usually stay out of labor conflicts unless the parties are unable to agree.

It is uncomplicated for enterprises to fire workers, which gives them great flexibility to adapt to shifting market conditions. To alleviate the pain, the state has in place a number of arrangements such as generous unemployment benefits and programs to retrain and upgrade redundant workers.

Danish companies must make ends meet or perish. They generally will not get handouts from the government.

Denmark is more free-market oriented than the US. According to the Heritage Foundation’s 2018 Index of Economic Freedom, Denmark is number 12, ahead of the United States (number 18). Venezuela is at the bottom, one place ahead of number 180, North Korea.

Mads Lundby Hansen, chief economist of Denmark’s respected pro-free-market think tank CEPOS, comments:

“Very high taxes and the vast public sector clearly detract in the capitalism index and reduce economic freedom. But Denmark compensates by protecting property rights, by low corruption, relatively little regulation of private enterprise, open foreign trade, healthy public finances and more. This high degree of economic freedom is among the reasons for Denmark’s relatively high affluence.”
Trish Regan recently claimed on Fox Business that Danes pay a “federal tax rate” of 56% on their income. This is misleading. The 55.8% is the levied on the marginaltax for the top income bracket, only on the part of their income above DKK 498,900 ($76,500). Any income under DKK 498,900 is taxed at lower rates. And the 55.8% marginal rate does not represent a “federal” or “national” rate. It represents the total of all taxes on income: national tax, regional tax, municipal tax and labor market tax. It does not, however, include Denmark’s 25% value-added tax (VAT), paid on all purchases.

Regan also claimed that Danes pay a 180% tax on cars. While it is true that there was once a maximum tax of 180% on care in Denmark, the vehicle tax rates have been lowered in recent years. Today, the first DKK 185,100 ($28,400) of the price of a gas- or diesel-powered car is taxed at 85%, and if the car’s price is above DKK 185,100, the remaining amount is taxed at 150% — which is of course bad enough.

Denmark’s total tax burden amounts to 45.9% of GDP, the highest of all countries in the Organisation for Economic Co-operation and Development (OECD).

As pointed out in the Fox Business segment, all education for Danes is tuition-free, all the way through to a Ph.D. Not only that; the state will, within certain time constraints, pay students to study. For students at university level no longer living with their parents, the monthly cash grant comes to almost $1,000 per month. No fewer than 325,000 students out of a total population of 5.6 million benefit from this generous arrangement setting the state back to the tune of DKK 20.9 billion or 1% of GDP (latest 2018 figures just in and supplied by Mads Lundby Hansen). Denmark even pays student support to 20,000 foreign students.

Attempts by fiscal conservatives to cut down on payments to students have been successfully resisted by the vociferous and influential student organizations; at present it would appear impossible to muster anything like a parliamentary majority to limit the student handouts.

Fox Business is right that a great many Danes are on public transfer payments. Government figures from 2017 indicate that 712,300 Danes of working age (16-64) — not including recipients of student benefits — get public financial support. But Regan’s claim that most Danes do not work is ludicrous. According to Statistics Denmark, 69.9% of Danes aged 16-64 are active in the labor market.

How can Denmark pay for its comprehensive welfare state, which includes free medical care regardless of the severity of your condition? Regan claims that Denmark is “heavily in debt.” Not so. As it turns out, Denmark is among the least indebted countries in the world, even when compared to other Western countries. The Danish government’s gross debt stands at 35.9% of GDP. Compare that to, e.g., The United Kingdom (86.3 %), The United States (108%), Belgium (101%), Canada (86.6%), France (96.3%), Germany (59.8%), The Netherlands (53.5%), Italy (129.7%), Spain (96.7%) and even Switzerland (41.9%).

Comparing Denmark to the US, Madsen notes that the latter has a problem with fiscal sustainability that may necessitate tax increases. Denmark enjoys what he labels fiscal “oversustainability” (“overholdbarhed”).

At a time when socialism appears to be popular among certain sections of the American population, its proponents would do well not to cite Denmark as a model. The Danish fusion of free-market capitalism and a comprehensive welfare state has worked because Denmark is a small country with a very homogeneous population. This economic and social model rests on more than 150 years of political, social and economic compromises between peasants and landowners, business-owners and workers, and right- and left-leaning political parties. This has led to a measure of social and political stability that would be hard to emulate in much larger and more diverse counties such as the United States.


Lars Hedegaard, President of the Danish Free Speech Society, is based in Denmark.

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Ron Paul: Protectionism Abroad and Socialism at Home

One of the most insidious ways politicians expand government is by creating new programs to “solve” problems created by politicians.

Ron Paul

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Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity:


One of the most insidious ways politicians expand government is by creating new programs to “solve” problems created by politicians. For example, government interference in health care increased health care costs, making it difficult or even impossible for many to obtain affordable, quality care. The effects of these prior interventions were used to justify Obamacare.

Now, the failures of Obamacare are being used to justify further government intervention in health care. This does not just include the renewed push for socialized medicine. It also includes supporting new laws mandating price transparency. The lack of transparency in health care pricing is a direct result of government policies encouraging overreliance on third-party payers.

This phenomenon is also observed in foreign policy. American military interventions result in blowback that is used to justify more military intervention. The result is an ever-expanding warfare state and curtailments on our liberty in the name of security.

Another example of this is related to the reaction to President Trump’s tariffs. Many of America’s leading trading partners have imposed “retaliatory” tariffs on US goods. Many of these tariffs target agriculture exports. These tariffs could be devastating for American farmers, since exports compose as much as 20 percent of the average farmer’s income.

President Trump has responded to the hardships imposed on farmers by these retaliatory tariffs with a 12 billion dollars farm bailout program. The program has three elements: direct payments to farmers, use of federal funds to buy surplus crops and distribute them to food banks and nutrition programs, and a new federal effort to promote American agriculture overseas.

This program will not fix the problems caused by Tramp’s tariffs. For one thing, the payments are unlikely to equal the money farmers will lose from this trade war. Also, government marketing programs benefit large agribusiness but do nothing to help small farmers. In fact, by giving another advantage to large agribusiness, the program may make it more difficult for small farmers to compete in the global marketplace.

Distributing surplus food to programs serving the needy may seem like a worthwhile use of government funds. However, the federal government has neither constitutional nor moral authority to use money taken by force from taxpayers for charitable purposes. Government-funded welfare programs also crowd out much more effective and compassionate private efforts. Of course, if government regulations such as the minimum wage and occupational licensing did not destroy job opportunities, government farm programs did not increase food prices, and the Federal Reserve’s inflationary policies did not continuously erode purchasing power, the demand for food aid would be much less. By increasing spending and debt, the agriculture bailout will do much more to create poverty than to help the needy.

Agriculture is hardly the only industry suffering from the new trade war. Industries — such as automobile manufacturing — that depend on imports for affordable materials are suffering along with American exporters. AFL-CIO President Richard Trumka (who supports tariffs) has called for bailouts of industries negatively impacted by tariffs. He is likely to be joined in his advocacy by crony capitalists seeking another government handout.

More bailouts will only add to the trade war’s economic damage by increasing government spending and hastening the welfare–warfare state’s collapse and the rejection of the dollar’s world reserve currency status. Instead of trying to fix tariffs-caused damage through more corporate welfare, President Trump and Congress should pursue a policy of free markets and free trade for all and bailouts for none.

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