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The Greek Exit?



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The next act of Greece’s financial tragedy looks like it’s coming. Whether or not Greece exits the euro zone immediately after its June 17 elections, most analysts now predict it’s only a matter of time until it does so.

Recriminations are being hurled in all directions with Greeks blaming the European Union for abandoning them while more and more EU officials say the Greeks should look in the mirror.

International Monetary Fund chief Christine Lagarde put it bluntly on Friday, telling Britain’s Guardian newspaper that Greece has to shape up, and she is more concerned about Africans in poverty than Greek citizens in financial peril:

“As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.”

Even more than she thinks about all those now struggling to survive without jobs or public services? “I think of them equally. And I think they should also help themselves collectively.” How? “By all paying their tax. Yeah.”

It sounds as if she’s essentially saying to the Greeks and others in Europe, you’ve had a nice time and now it’s payback time.

“That’s right.” [Lagarde] nods calmly. “Yeah.”

Her comments unleashed a torrent of anger not only from Greeks but from leftists in other countries. French left-wing politician Jean-Luc Mélenchon said Lagarde should resign. A spokesman for the new French Socialist government called her remarks “stereotypical.”

But just because they are stereotypical doesn’t make them untrue. Nick Dewhirst, a director at wealth management firm Integral Asset Management, told CNBC on Monday that much of Greek society was built on cheating and scheming, saying “everyone does it” but that other European nations were now fed up.

“The basic question is that a German has to increase working from 65 to 67 and that is to pay for Greeks retiring at 50. The 17th of June is the perfect opportunity to say either ‘we’ll behave’ or ‘we’ll carry on cheating,’” he said.

Harsh words, but they are confirmed by many Greeks I know. A Greek member of parliament told me recently that tax reform was “almost impossible” to achieve because “our tax system is run by the Mafia.” I laughed and said that many countries had people who thought of their tax collectors that way. “No, no,” the parliamentarian insisted. “I mean that organized crime really runs the tax agencies for their benefit, taking a cut of the reduction in taxes they give out to citizens. Every person appointed to reform the system has been pushed out. Respect for authority is nil.”

It increasingly looks as if Greece is on the verge of collapse, a sad condition for the nation that gave us democracy and so much of our civilized heritage 2,500 years ago. But the Greeks should have been warned. It was in the famous Greek tragedies that the concept of hubris was explored — the notion that excessive pride or defiance of the gods leads to disaster. How Greece recovers will depend in part on how much its people take that lesson to heart and start rebuilding.



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