Quote:
Originally Posted by roly
From what i've read 30% of greek GDP is the black market and hence no tax is paid. if the tax that was due was collected, their problems would be sorted.
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The Greek debt is +- 170% of their GDP, so even if they taxed everyone at a 100% tax rate they still wouldn't be able to pay of their debt.
The problem isn't that people haven't been paying taxes. The problem is that the government has been constantly taking out new loans to pay for its own operation and to pay off older loans. The result is that the Greek government is now so deep in debt that they will never be able to pay off that debt and that it has become impossible to hide this fact and that no one is willing to give Greece any new loans because by now everyone can see that lending money to Greece means that you'll never see your money again.
Statists have been calling this a "market failure". They're screaming that "the market has clearly failed because the market no longer wants to lend money to Greece". Well, the market hasn't failed, the market is giving correct information. If no one is willing to lend money to Greece, that is the market's way of telling Greece "We know you would never be able to repay us if we gave you a loan".
It has been clear for a long time that this would happen and still a lot of banks gave out new loans to Greece. These banks are now in big trouble. And that is why the top EU leaders have been taxing the inhabitants of the other EU countries. They are raising new taxes (officially called 'a solidarity fund') so they can give money to Greece, so Greece can pay the (mostly French and UK) banks.