THE GREEK FINANCIAL CRISIS
The detailed figures are not always that easy to come by, but we otherwise read that the total Greek debt comes to about 300 billion euros. With a population of about 10 million, that would come out to about 30,000 euros per individual. Hopefully, relatively less of this is sovereign debt, and so most of it would be private debt; and, as has happened in many, many countries around the world in just the past few years, most of this would probably be new mortgages for new houses and condos in Athens and in the provinces, and at noticeably inflated prices at that. The other major Greek problem, maybe at least partly due to an ongoing hangover from the Olympic Games, would be a sudden, sharp increase in the government annual budget deficit.
Now, the financial authorities of Brussels and Frankfurt are talking the way the IMF does, and they are requiring the burden to fall upon the Greek government civil servants. They are saying that many civil servants must be terminated, causing the Greek public to suffer, and they are saying that the remaining civil servants must have their salaries significantly cut. Are there alternatives? Here are two possible better ways:
If we look at the left hand side of the balance sheets of the major Greek commercial banks, here we see the recent, overinflated mortgage assets of the banks. Now, what about the right hand side? The press rarely gets into this, but this could largely be, as had been said, the foreign investors, or, perhaps one could also say, the cosmopolitan investors. So, in just the past few years, the cosmopolitan investors were pleased to, in effect, lend mortgage money at quite inflated real estate prices. Now, instead of talking about commercial bank failures, perhaps one could reword this by referring to this as commercial bank reorganizations instead. The FDIC of the United States shows the way on this, and, during a national emergency, the Greek government could declare a partial jubilee for all of the recent property buyers in Greece. Then, on the right hand side of the commercial bank balance sheets, the first two hundred thousand euros or so per account would be insured. The rest, well as they say, sometimes there are gambling losses. Sometimes, even the cosmopolitan investors might lose.
Now, what to do about the sizeable Greek government annual budget deficit? Most people don't know about this, but I do. We can go all the way back to about one hundred years ago, and at that time the poverty in the Greek provinces, especially in the many, many mountain villages became unbearable; and so this was the time when there was almost a mass exodus of Greeks to the United States, everyone at that time going through Ellis Island. Even those who stayed behind would then often send their children over there to stay with relatives already there. America, America. So, today, we have all of these villages with many, many abandoned houses actually crumbling away. Each Greek family at that time also owned considerable hectares of farming land almost always close to the villages. More recently, after Greece was admitted during the 1970's to the Brussels family, all of these property values have, in fact, sharply increased.
The unusual problem is that, unlike, let us say, the United States, it is almost impossible to bring down the titles; and, in fact, the many, many Recorder of the Deeds offices throughout Greece still have these ancient deeds from one hundred years ago still in their books. The situation is such that the Greek notaries are willing to recognize wills, if there are any, but they are extremely loath to bring down the titles by operation of law, in other words, by natural inheritance. For some strange reason, this is something that almost never happens.
Sometimes it is said that Greeks don't want to bring down the title, either by will or operation of law, but that is not correct. It is then said Greeks give their house to their children while still living in order to save on taxes, but that is not correct either. Of course, Greece does have gift taxes that amply cover deeds of gift as well. What Greeks have actually done for a long time is to give the house, while still living, to their children, with the proviso in the deed that the children cannot put the parents out of the house as long as they are alive; and the reason Greeks have always done this is because they know that the Greek notaries, for some unusual reason, do not want to do the operation of law type of deed.
Now, the situation becomes really strange. Of course, as in any country, Greek law does provide for vacant succession, and so after a period of time, not really all that long, all of these abandoned houses and all of these abandoned hectares of land can become the property of the state; and today, there is lots and lots of value out there. So, why doesn't the Greek government do this? Putting the question another way, why doesn't the "mainstream" media tell us about this?
Thus, more recently, there are indeed wealthy Greeks in Athens who are now looking over all of these little mountain villages throughout the provinces, and they are at least putting up relatively elegant summer homes a very short distance outside the villages, on whatever land they can somehow work with, under the circumstances. Sometimes, rarely, they even manage to acquire title to abandoned houses in the villages themselves, and then they raze them, and put up new houses instead.
The attached photograph (pending) shows my grandfather's house in our mountain village. The bit of the house that you see at the extreme right is a typical, abandoned, crumbling house. At the left, a well to do person from Athens was actually able to acquire title to this property, and he then put up a new house. I myself was born and raised in Chicago, and yes, my grandfather's deed from one hundred years ago is still in the Recorder of Deeds office in the nearest sizeable town, Leonidio.
All of this means that the Greek government has to stop being strange about this, and they should undertake a major campaign to properly and legally take title to all of this otherwise vast, frozen property throughout Greece. Next, they can declare a 90% or so tax amnesty for all wealthy Greeks with bank accounts in Switzerland, etc; but only if they buy all of this newly unfrozen real estate from the Greek government, and at closely watched, fair prices. If the Greek government really wants additional revenue, here is where it is.
Yes, there are ways to solve the Greek financial crisis, if everyone really wants to be honest about this.