Greeks overwhelmingly rejected conditions of a rescue package from creditors on Sunday. Results showed 61% voted “NO” compared with 38% for “YES” with 97% of the vote counted. Thousands of jubilant government supporters celebrated in Syntagma Square in front of Parliament, waving Greek flags and chanting “No, No, No!”

It was a sweet victory for Prime Minister Alexis Tsipras, who had gambled the future of his 5-month-old coalition government, in a game of brinkmanship with Greece’s creditors from other European countries that use the euro currency, the International Monetary Fund (IMF) and the European Central Bank (ECB).

 

Amusingly, opinion polls Friday showed that 74% or more want their country to remain in the euro. So, what the Greeks want is pretty simple. They have defaulted on their debt because they can’t and won’t pay. On top of that, they want more bailout money – in Euro – to be pumped into Greece, without any obligation to pay back.

Essentially, the Greeks are calling European Union’s bluff, betting that the EU won’t kick Greece out and would instead stroke their backs with more free money to keep Greece economy going. Does this prove the concept of euro zone actually cannot fit all? It doesn’t matter to the Greeks, as long as they can squeeze every single drop of money from the EU.

 

But why was Prime Minister Alexis Tsipras so damn sure IMF and the ECB would bend over in this poker game? Because if the EU does not solve the problem by agreeing to pump more money, or at least write-off some of Greece’s debt, a prolong crisis would affect the stability of euro zone. Without paying their Euro debt, Greece can still hop to Russia and China for help.

The next big deadline in this crisis markets will focus on is July 20, when Greece is due to repay 3.5 billion euros to the ECB. And the bet is on the table that Tsipras administration would default again. There’s only one solution for EU on this – kicks Greece out of EU – no matter how painful it may be.

 

Even if the Greeks have had voted “YES”, Greece can continues to default without major haircut. And seeing how their buddy Greece is being given rounds and round of free flows of money without punishments, the Portuguese, Spanish and the Italians may follow. After all, why should they pay their debt when it’s perfectly alright not to do so?

Not everyone support the European project in the first place. At least, tonnes of British have been calling the exit of U.K. from the EU for as long as one can remember. Britain Prime Minister David Cameron has committed to call by end 2017 on whether Britain should stay in the EU.

 

The EU and euro were perceived to be a failure, as a handful of elites lead the 500 million Europeans into economic stagnation and failed to protect workers from globalization, immigration and decline. But the mess that Greece has gotten itself into was primarily due to its own government and people.

According to Washington Post, only 2.3% Germans do not pay their taxes whereas a staggering 89.5% Greeks do not pay their taxes promptly. At the end of 2014, Greeks owed their government about €76 billion (US$84 billion; RM320 billion) in unpaid taxes accrued over decades. In case you didn’t know, Greeks were particularly proud of not paying taxes.

 

Here’s why. During the country’s centuries long occupation by the Ottomans, avoiding taxes was a sign of patriotism. Greeks generally consider taxes as theft, what more with their own government which they see as corrupt, inefficient and unreliable. That was how PM Alexis Tsipras’ leftist party Syriza won big – they campaigned against the tax increases championed by the previous government.

While Greece’s unemployment was bad enough at 25.6% (March 2015), the unemployment of its youth between the age of 15 to 24 was worse – closing to 60% of the total unemployment. But the last straw that broke the camel’s back – the Greece’s pension system where currently only 4 working people for every 3 pensioners.

 

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July 6th, 2015 by financetwitter

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