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Greek Economy Loses 122B Euros

Buddy, can you spare 1,627,650,000,000,000 dimes for Greece?
Buddy, can you spare 1,627,650,000,000,000 dimes to help out Greece?

The era of austerity – brought on by generations of overspending – has caused Greece to lose nearly 50 percent of its Gross Domestic Product and cost 122 billion euros ($162.75 billion) in cuts to pay and social services, tax hikes, liquidity losses and withdrawals suffered by banks, according to Finance Ministry data.
The devastating data showed just how bad the lingering Greek recession is even as the government said a side effect of big pay cuts, tax hikes, slashed pensions, reduction in the minimum wage, phasing out of workers rights and the coming firing of scores of thousands of public workers means it’s within sight of a primary surplus and a return to recovery as soon as next year, an assessment disputed by many analysts.
Budget data for the period between 2009 and 2013 put the total amount of salary cuts in the public sector at 9.3 billion euros – as spending on public sector salaries fell from 31 billion to 22.1 billion euros, and is projected to fall further to 21.7 billion in 2014. Spending on pensions, health and benefits, shrank from 49 billion in 2009 to 39.1 billion euros in 2013 and are projected at 38.5 billion next year. Public consumption and operating expenses have fallen by 11.2 billion euros, from 20.8 billion to 9.6 billion at the end of 2014.
Besides the cuts to public sector salaries and pensions, there were big losses for businesses and households in higher taxes that combined to cut disposable income by more than 46 percent. While public and private sector salaries have sustained average losses of around 30 percent, direct taxation revenues have shown a marginal decline of just 5 percent over the last four years.
Indirect taxes, revenues from VAT and special consumption taxes fell 8 percent despite an increase in the rate from 13 to 23 percent while total private consumption shrank by 53 percent, driving down overall expected tax revenues as Greeks slowed spending almost to a standstill, leading to 110,000 businesses shuttering since 2009.
Businesses and households have also been hit hard by the lack of liquidity in the market, as banks won’t issue new loans and are hounding people to pay even if they can’t afford it because of salary and pension losses. Since 2009, lending to the economy as a whole fell by 34 billion euros, while deposits declined by 75 billion – with a lot of the money heading for secret overseas accounts to avoid being taxed. About one-third of this sum is estimated to have been spent on current consumption requirements and the payment of taxes.
Despite the evidence that austerity has been too damaging, the coalition government of Prime Minister and New Democracy Conservative leader Antonis Samaras and his parter, PASOK Socialist leader Evangelos Venizelos, said they will not let up with more of the same, demanded by international lenders who are putting up $319 billion in two bailouts.
The government still owes 6.8 billion euros in rebates to businesses, hasn’t paid pharmacies and other creditors in full nor has returned tax refunds to many Greeks who are due them but is demanding taxes, including a doubled property tax that was supposed to be for one year when instituted three years ago but is continuing, to be paid promptly or in an installment plan.

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