Greece owes more than 72 billion Euros (90 billion dollars) to European banks and more than 300 billion Euros to Eurozone authorities. It also owns some of the most valuable land and buildings on earth. Greece is not broke; it’s cash tight and paying too much interest for its debts.
Were Greece a business, they would declare chapter 11 and reorganize while being protected from creditors. Germany should promote such a plan. Reorganization allows companies sweeping powers to break bad contracts and divest assets. Greece needs to revise its unsustainable social welfare programs in favor of a more financially responsible safety net.
The Greek government owns in excess of 75,000 properties. Estimates of their value are as high as 50,000,000 Euros. Does the Greek government really need to own an old unused airport in Heraklion or a casino in Athens? Out of over 220 islands, only 78 have a population over 100. Currently, a tiny 2.5 acre island is selling for 1.5 million Euros. If they sold 50 larger islands to the private market, that could probably raise at least another 10 billion Euros, it would promote development on those private islands and be a future source of tax revenues.
Though the government has cut pensions and salaries where they can, under reorganization, they could raise the retirement age to 65 and require citizens to have higher co-pays and premiums for medical services. No vote necessary if their courts recognize the reorganization.
Also, Greeks avoid paying taxes to a greater degree than their allies in the Euro. An admittedly regressive consumption tax could be considered, but at the risk of creating an even healthier black market. A more creative idea might be to require Greeks to show a copy of their filed tax return with any job application, for a driver’s license and to vote.
Just these steps would reduce the deficit to a manageable level substantially below their GDP of around 300 billion Euros and reduce their interest rate of borrowing. And Greece could ask for 10% debt forgiveness from the French and German banks they owe. These banks should be glad to take a write-down rather than a write-off.
In addition to selling assets, the Greeks need to gear their economy to providing better hospitality services. The island nation is already a living museum of the history of western culture. They just need some new resorts, better transportation and better-trained personnel. Given new incentives and fewer operating rules, foreign investors would flock to Greece to build resorts and associated enterprises. Where does the average European want to spend his holiday? On Santorini or Dubai?
So, to review. The Greeks should sell assets to lower the debt below GDP. Renegotiate their interest rate with the banks and get a 10% write-off. They should rewrite their entitlements, eliminate impediments to foreign investment and make an effort to at least pretend they give a shit about their visitors.
I have spent time in Greece and understand how differently they view life from the Germans. Germans care about prosperity; Greeks care about lunch. Can these vastly different people share the same currency without sharing some values? Greeks must learn to work a little harder and a little longer. Germans must learn that since the climate in their country sucks, they should spend less time making VW’s and more time on the beaches and in the cafes in Greece.
Some say we should adopt these policies in the United States. I would be for that if we had what the Greeks already take for granted: guaranteed pensions, four weeks paid vacations, and universal health care.
