We all want to be optimistic about matters that affect us, or our fellow men, but one wonders where the breaking point is in Greece. Witness this from ekathimerini, and please note the last, bolded, line:
All categories of state revenues headed south in the first 11 months of the year, with the biggest problem regarding revenues from income tax, followed by value-added tax and customs.
This effectively renders it impossible for the state to achieve the target of collecting a total of 7.5 billion euros in December, January and February and leads to three key conclusions: first, that the real economy has reached a critical point as any new tax imposed to increase revenues can only have the opposite effect; second, that the target for the budget deficit to drop to 9 percent is not going to be attained, more likely ending at 10 percent; and thirdly, that unless the government finds a way to contain tax evasion, there is no prospect for any improvement in state revenues…
Alternate Finance Minister Filippos Sachinidis issued a circular to all state bodies responsible for the administration of public finances, dictating that they should not spend a single euro beyond what the budget has provided for.
It says clearly that state bodies should not even take for granted the funds provided by the budget, as “the inclusion of credit to them in the budget does not necessarily entail their payment.”
State bodies will therefore have to make their own plans for their funding if the state money does not suffice.
There is, of course, more. See Doctors to strike over reforms, and note the bold area within it (also from ekathimerini):
Doctors at Greece’s main social security fund, IKA, are to go on strike from Monday until Thursday next week and have called on private doctors to do the same in response to changes in the way insured patients are treated.
Pharmacists have also said they will strike on January 2 and 3 over changes to their profit margins and the money they are owed by social security funds.
Referring to the first article above, tax receipts are down because of a combination of declining economic activity and the rational view that the money will be wasted, stolen or send abroad, I presume. Re the second one, strikes are only strikes, and workers have to eat. But doctors and probably pharmacists can leave the country. Is there going to be a flood of Greek professional/entrepreneur class to other countries? Who and what will remain in that case?
Back in the U.S., we have another low-volume but anomalous day in the markets. Stocks are up in price, but so are Treasurys. Gold is down. One can’t make much of trading trends this week, but for what it’s worth, this looks somewhat like a “somewhat bullish on the USA” set of correlated trades. Looking at what’s going on in Europe, with Greece as the most extreme example, provides ample reason to take that point of view.
Have a happy one. See you next year.
