The Nest Of The Hellenic Mind!
FROM A CLASSICAL SPLENDOR
TO A MODERN TRAGEDY!
-A look from the Inside!-
By: Costas Miliotis
Greece has been the front flag bearer in the Olympic Games.
Now, Greece is the flag bearer to a gloomy economic upheaval.
Its economy has been a hot topic the last
couple of years.
Indeed, the Country is in a serious crisis. Despair may be a more appropriate description.
How did this beautiful and historical Mediterranean Country get there and what will it require to get her back
on its feet? This topic will be examined in an effort to edify and attempt to alleviate the multitude and depth of
Greece is mostly an agricultural and a service oriented nation. The service sector contributes 79% of GDP,
the industry 18% and agriculture 3%.The Tourism is a major segment of its national budget and it does have
some extractives including oil, gas, and minerals. Greek flag flying merchant marine ranks first in the world.
Lacking significant industry and technology, Greece has become a net importer. Its balance of payments has
been grossly unfavorable, and as matters stand, it has acquired a heavy amount of loans. To be more exact,
Greece had a debt approximating 150% of GDP. An accord was reached very recently after difficult
bargaining where the European bankers took a 50% loss (haircut.) The severe reduction would bring Greek
debt down by 2020 to 120 percent of its gross domestic product, a figure still enormous.
Greece has become the guinea pig-prototype. It has been said that the guinea pig usually dies in the lab.
How did Greece get to this point? Loans and more loans! Greece came out of WW II in total ruins. Germany
left Greece with huge human loss and its infrastructure totally destroyed. This was a holocaust-plus! Did
Germany ever compensate Greece for the catastrophe perpetrated? Nope!
A civil war followed for the next
four years. Did the allies rebuild
Greece’s infrastructure? Negative!
Moreover, during the last several
decades, a combination of labor
union strong tactics,
along side incompetent and corrupt governments,
and a desire to become a developed Country (more European,) led Greece to borrow heavily from banks.
The majority of the loans came from German, French, and US banks. These banks were sitting on vast cash
reserves and sought clients to lend at hefty interest rates. One can say that they were exploiting Greece,
while they had means of knowing about the collectability of these loans.
Profusely widespread corruptive practices catapulted Greece to a point of no return. Governments kept on
public payrolls by promising and delivering “theses” or jobs for votes. Theft of large magnitude was
perpetrated by Government officials from the left and the right.
There has been no single politician
arrested and put behind bars.
This infuriates the Greeks and
offers them a justification
for cheating left and right
and unwilling to pay taxes.
Taxation has been an anathema to the Greeks. Problem is that from about 180 BC when Greeks became
enslaved to Rome and subsequently to the Byzantine and Ottoman Empires, Greeks felt it necessary to
conceal incomes by any means. This allowed them to pay a lower sum of the brutal taxation required by their
Thus, there have been 110 generations of training
Greeks the avoidance of taxes. Add to this the many
entitlements and early retirements. Many Greeks in
their upper forties and fifties are on retirement pay.
Here’s a specific case of tax collection corruption. A high school friend who had become a very successful
entrepreneur was being audited by the tax authorities. He befriended the two auditors by buying them lunch
and giving them substantial discounts towards the purchase of a TV and a stereo system.
At the end of the audit, he was given their report which required him to pay 600,000 Euros in taxes. He took
the report and visited the tax director in his office. He carried with him a brown 8 ½ by 11 envelope (fakelara.) In it
he had placed 40,000 Euros in cash. He then returned and gave in respective envelopes 5,000 Euros for each of
the two auditors.
He was issued a directive to pay 200,000 Euros
in taxes to the Government. Greece
was defrauded by 350,000 Euros.
This they called “team work.”
Aside from the horrendous ills of corruption throughout the nation, most national Institutions have proven
defunct. The Judiciary, the Prosecutorial, the police and fundamental law enforcement have been deemed
On a personal note, we lost three valuable properties inherited from our parents. We hired Attorneys in
Athens, Patras and Cephalonia. All Attorneys demanded and received prepayment for their services. Despite
proof of ownership, our court battles failed us due to corruption. More precisely, our Attorneys were paid from
us and bribed by the defense Attorneys, as were the judges. One of our Attorneys admitted to such practice
in tears, after he lost one of our cases.
On a more serious observation, on a recent visit to Greece, just five of the forty stores which I shopped
provided me with a sales receipt. In Volos, I shopped in a clothing store with none other than Chinese imports.
The store is run by non-Greek speaking Chinese. They short changed me by fifty Euros and gave no receipt.
The short change was settled easily, but I was refused a receipt. Since I had time available, I went looking for
the tax office to file a report. After having gone to a number of government offices, I finally got to the revenue
offices. There were eleven employees reading the newspaper, or on the phone or chatting with each other.
I was told that they have no one
available to assign to my request.
They did give me some forms to
fill out and sign! The rest is history!
The receipt is proof of sale and the vendor must pay the sales tax to the Government. Such sales taxes range
from 8% to 28% of purchases. This practice is rampant and it is a form of theft from the Government. A locksmith
offered me two prices for repairing a lock. He said: “100 Euros with a receipt and 50 Euros without a receipt.”
Add to these ills the lack of enforcement in the Tax collectors, the Customs,
the Legal and Notary professionals. Additionally, the medical world with the
cursed “fakelakia [bribing envelopes],” turned to be a corruptively sad aspect.
Taxis, pharmacies, and numerous other businesses sought earnings with deceit.
On a recent trip to Athens, I took a cab,
the change given me from a 100 Euros
were Mexican pesos. Due to
jet lag, I only read the numbers on the
not the language, far after I left the taxi.
Taking a pulse of the people’s attitudes, the impact felt varied.
There is a segment of the society which has
been immune to the overall adversity due
to business or professional linkage.
For example, Architects,
Medical professional, Attorneys, Farmers,
Entrepreneurs who have performed well during the “good” years
have sufficient holdings and are not affected.
Many of them have sent their money into foreign banks.
While the EU and Greece are attempting to identify those funds,
the holders are counter attempting to transfer
these funds to other countries.
There is a cat and mouse approach whose aim
is tax avoidance or tax evasion.
Interviews with entrepreneurs revealed a substantial loss of business.
A window glass repairer has lost 60% of his business and released
seven of his ten employees. Restaurants have lost 30-40%.
An accountant had his salary reduced by 40 %.
Seniors see reduction in their retired pay at 25%.
The unemployment lines grow by
the minute. Now, comes the Troika and demands
that Greece fires 50,000 public employees.
Twenty percent of the labor force is a Government employee.
In a meeting held with working youth in their early to mid-twenties, serious psychological revelations were
made. It was evident that they felt devastated. Here are adjectives they used to describe their perception of
their world and future: “disappointment, painful, sorrow, melancholic, humiliating-towards the system-,
confusing. As for their future, they felt: “insecure, insignificant, harrowing, and dark.”
The psychological impact is immeasurable. It has affected most of the population. It seems that realization of
the depth of the economic collapse is not yet within their grasp. Denials, justifications, anger are permeating
Greeks. They don’t seem to have a sense of solution. The game of blaming everyone around them is the
easy sport. A psychiatrist, said that she was seeing more patients in her private practice, but that they paid
her less. “Mostly panic disorders,” she said. “In the last two years I’ve seen children and adults. They have no
hope for the future. They wait and wait; this is the most difficult part. They don’t know what’s going to happen.”
This is culminated by the political disdain and partisan wars. New Democracy, which contributed substantially
to this calamity, maintains that it can do better than the opposition party; PASOK. In a time of historical
disaster they find room for discord!
So, what does the future hold for the Greeks? Is there a way out?
Greece will be unable to recover in our life time. Simply, they cannot adequately produce to meet their needs.
Thus, they will continue to depend on imports. Conversely, If the Greeks were to default on their debt and return
to the drachma, the results would be the same. The inability of Greece to sustain a viable economy on its own will
be impossible. Greece imports the majority of its products and the drachma will not be accepted.
After a default, credit will not be given to Greece by foreign exporting nations. No matter how much the
drachma will be devalued, the people will have to work harder to produce more units of work for the same or
lesser units of pay.
This translates into a meager living.
While Greece is in the fore front, most of Europe is facing an unpredictable financial collapse. Greece’s
economy is merely a 5% of that of Europe. However, there are numerous other Eurozone countries with
similar woes. Portugal, Ireland, Spain and Italy are ripe for collapse. England, France, Belgium and even
Germany operate on heavy loans. No one can estimate the overall outcome. Assuredly, there must be
frugality, cost containment, tightening of the belt. Here, in the US, we are facing serious financial pains. Cost
cutting has been the motto. Look at “The Occupy Wall Street protest movement.” Globally, people are being
squeezed by corrupt politician and opportunistic investors. Can central banks keep on printing more money
without fears of inflation?
So, what is the solution? Can the Greeks see a “bright” day in the horizon any time soon? Here are some
scenarios which, in the long run, can produce some alleviation to the current situation:
1. 15% to 20% of the skilled and educated population will have to immigrate. This will be tougher today,
because there is worldwide recession.
2. 15% to 20% of the unskilled workers should join the merchant marine. The wages are very low to the
tune of 200 to 500 Euros per month. But, low wages are better than no wages and no self-accomplishment
and lack of self-esteem.
3. Another 15% to 20% will have to return to the farms. The land needs to be cultivated to produce food
for domestic consumption.
4. Greece is nowhere near out of the woods and won’t be for years to come. There is a lot that it must do
for itself to regenerate growth — including liberalizing labor markets, spreading tax burdens more fairly,
decreasing the size and increasing the efficiency of the state bureaucracy and selectively privatizing state-
5. Most importantly, Greeks will have to return to their roots; virtue, values, faith. The fact that Greece
maintains that 90% are Greek Orthodox, only about 25 % are practicing. Sunday Church attendance is
estimated that of 15% of the population, and this has been delegated to seniors. The Greek Church will have
to assume a decisive, leading role. Greece needs the Church today more than ever before. Historically,
Greece has overcome adversity by knowing its enemy. Today’s war is different and very broad.
6. Lastly, Great Britain can offer the Greek economy a boost by energizing its people. This could be
accomplished by returning the collection of classical Greek marble (frieze) sculptures by Phidias, also known
as the Elgin Marbles. These statues are from the Parthenon and were stolen (bought) by Lord Elgin.
Consensus has it that if Greece left the Union, the suffrage would be more.
For one thing, Greeks would try to pull their Euros out of the banks because the conversion into drachma would
give them less value or purchasing power. Also, stock holders in the Athens Stock Exchange would try to sell. The
loss of deposits and markets plunge, the banks would collapse. This will force the Government (God forbid
whatever government!) to close the banks in order to limit the euro drain. Furthermore, the Government may
prevent people from moving Euros out of the Country.
Greek Companies that owe money in Euros (which they do) will see their debts grow upon conversion. This will
lead to wholesale bankruptcy.
There is a positive side that may develop out of this. Greek exports will increase because of the "cheap" or low
value of the drachma. As the Greek products become cheaper, they will become more competitive. This will
become a beginning of a growing economy.
Also, Companies outside Greece and this will include Corporate raiders, might find the labor cheap and
encourage them to move their manufacturing facilities there. Of course, Greek labor will suffer for a long time with
low wages and low earnings. An additional advantage might be an increase in tourism. The cost of a room in the
islands would cost less due to the devaluation of the drachma.
As for contagion, yes there are fears. But, the strong European Countries, e.g., Germany and France have
already made plans so that they can absorb Greece's exit. After all, Greece is only a meager 5% of the European
Post Scriptum: In April of 2012, there was a breakthrough in law enforcement vis a vis corruption. The Greek
prosecutorial authorities brought criminal charges and arrested Akis Tsahatzopoulos, ( pictured above, right) a
former Secretary of Defense. He is in prison, awaiting trial for corruption and tax evasion.