Friday, February 17, 2012

Greece - One Thought

(As it is a parlor game among wonkish people about what would you do address the Greece situation, here is my entry in that game.)

The second bailout package is 130 Billion Euros. Germany and rest of the Europe are still not convinced that Greek Politicians have any gumption to do necessary changes. When your leading politician is saying that 'elect me and I will renegotiate the deal after election in April' (wink-wink let us dupe Europeans one more time) you have every reason to doubt these Greek Politicians.

Granted that 11.3 million Greek population is getting crushed under naive, one-half measure at a time, gutless politicians - both within the country and outside the country. So here is one deal - the second bailout is coming around 11,500 Euros per person in Greece. Let Europe lend that money as a personal loan to individual Greek so as to survive through raging recession in lieu of Greek Government undertaking complete Labor Reforms, full Liberalization of Economy and tax transparency in one shot. Forget about austerity in the Greek Government budget when you would have already hallowed that budget.

A Greek citizen will have to first pay this bailout money - ahead of Greek Taxes up to certain %. If a Greek citizen migrates anywhere in Europe,  she would be still on the hook. If a Greek citizen migrates outside of Europe, Greek Government takes the tab and be liable. A Greek citizen can surely choose to skip taking of this loan or only partial loan based on her projected incoming capacity. This European loan at much lower rate will be disbursed over a period of 3 years (around 4,000 Euros per person per year, so you are talking 16,000 per year for a family of 4) provided tax returns of past years are submitted (with some leeway for poor folks). Let few Greek or European Banks manage these special accounts at some nominal fees.

Idea is if you do not trust Greek Politicians, go to Greek People; that is what a political union would mean. This way Greek Politicians would find it easy to undertake reforms as well as Europeans would not have to work with incompetent Greek Politicians for their money to get back. On the other hand with this direct hand-out, Greek Public will be ready to accept pains of reforms rather burning historic buildings.

(Nah, if that kind of imagination was there with these European Politicians; we would not have been at this stage.)

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