Troika Dictates Greece Tax, Spending and Wages Changes in Next 6 Days
Politics / Eurozone Debt Crisis Feb 24, 2012 - 02:10 AM GMTBy: Mike_Shedlock
The hit parade of demands on Greece keeps right on marching. The Troika has 38 new demands in addition to 10 pages of prior demands that have not been met.
The ten-page list of prior demands need to be met by the end of the month. Fortunately this is leap year so Greece gets an extra day.
The Financial Times reports Athens told to change spending and taxes.
European creditor countries are demanding 38 specific changes in Greek tax, spending and wage policies by the end of this month and have laid out extra reforms that amount to micromanaging the country’s government for two years, according to documents obtained by the Financial Times.
The reforms, spelt out in three separate memoranda of a combined 90 pages, are the price that Greece has agreed to pay to obtain a €130bn second bail-out and avoid a sovereign default that the government feared would throw Greek society into turmoil.
They range from the sweeping – overhauling judicial procedures, centralising health insurance, completing an accurate land registry – to the mundane – buying a new computer system for tax collectors, changing the way drugs are prescribed and setting minimum crude oil stocks.
“The programme is much, much more ambitious than economic reform,” said Mujtaba Rahman, Europe analyst at the Eurasia Group risk consultancy. “This is state building, as typically understood in traditional low-income contexts.”
Most urgency is attached to a 10-page list of “prior actions” that must be completed by Wednesday in order for eurozone finance ministers to give a final sign-off to the new bail-out at an emergency meeting scheduled for Thursday.
Among the measures that must be completed in the next seven days are reducing state spending on pharmaceuticals by €1.1bn; completing 75 full-scale audits and 225 value added tax audits of large taxpayers; and liberalising professions such as beauty salons, tour guides and diet centres.Demands Designed to Fail
The Troika demands 75 full-scale audits and 225 valued added tax audits in 6 days! Is that going to happen?
This setup is without a doubt designed to fail and that should have been obvious ever since Germany asked to put a commission in charge of the Greek budget on Feb 7. Please see Greece to Cede Sovereignty to Eurozone "Budget Commissioner" for details.
These new demands are in addition to a requested a constitutional change that is impossible before 2013.
For details, please see Greece Needs New Constitutional Provision Imposed by the Troika; Slight Problem, Constitutionally It Can't Do it
It is possible some of the new demands need constitutional changes as well. I simply do not know.
Please also consider the Pact With the Devil Over Gold
As I have said repeatedly ...
Germany has put up roadblock after roadblock attempting to get Greece to scuttle the deal, only to have fools like Finance Minister Evangelos Venizelos agree to them.
It may be up to Germany to come up with still more ludicrous demands in hope that the Greek finance minister and Greek politicians finally get the message "it's not wise to make a pact with the Troika devil", especially one that requires Greece to relinquish its gold.
It's now 6 and counting.
By Mike "Mish" Shedlock
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Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
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