Europe not getting better anytime soon

May 7th, 2012 at 3:00 pm by David Farrar

AP reports:

Socialist Francois Hollande defeated conservative incumbent Nicolas Sarkozy to become ’s next president, heralding a change in how Europe tackles its debt crisis and how flexes its military and diplomatic muscle around the world.

I was never a big Sarkozy fan, but Hollande’s policies may have an impact well beyond France.

Hollande inherits an economy that’s a driver of the European Union but is deep in debt. He wants more government stimulus, and more government spending in general, despite concerns in the markets that France needs to urgently trim its huge debt.

Will France join the PIGS? And Greece votes also:

Greek voters enraged by economic hardship have (overnight NZ time) deserted traditional governing parties in droves at elections, putting the country’s future in the euro zone at risk, according to an early projection by the Interior Ministry.

The projection, confirming a pattern in earlier exit polls, showed the two parties supporting an /IMF bailout that is keeping from bankruptcy would struggle to form a workable coalition government.

To be blunt current Greek culture is very unhealthy, and they are architects of their own misfortune. While small incidents, the stories of a Kiwi traveller there are symbolic of their problems:

The next day I’m at the bus stop early to get back up to the top of Meteora but it doesn’t come. Like many things in Greece they have a real CBF attitude – and they wonder why their economy is rooted.

And:

The whole riot thing doesn’t really bother me though, as I’ve been informed most of it is just for the TV cameras and once they’re gone the rioters can be found a few blocks away drinking chi.

And:

I guess that’s hardly surprising, the Greeks do have a reputation for being lazy, but in a way it’s extraordinary given they were the ones to invent such things as democracy.

I first encounter this laziness when I visit the Archeology Museum primarily to see the Greek vase collection which takes up the entire first floor.

I’m ridiculously excited (nerdy I know) but ever since I studied them at high school I’ve been a little obsessed.

But when I get there I discover the collection is closed.

When I ask I’m told – “just because.”

So I ask someone else and they helpfully inform me that they didn’t feel like putting on enough staff to cover it today, even though it’s the weekend.

And while only a museum collection, it is symbolic of the country overall.

Back to Greeks being lazy… they have a equal CBF attitude when it comes to showcasing their most prized possession – the Acropolis.

Most days it closes at 3pm but somedays earlier – it just depends on how they feel.

I suspect that Greece will have to be thrown out of the Euro, and have their own currency devalue to very low levels, for Greece to realise the rest of the world won’t keep funding your lifestyle.

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69 Responses to “Europe not getting better anytime soon”

  1. tvb (4,324 comments) says:

    Europe will not get better until the euro gets restructured. Maybe Germany and adopt a new DM and the rest stick with the euro. It is Germany which is the problem as it always has been for the last 100 years.

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  2. Rick Rowling (825 comments) says:

    Can’t they just invade Thrace or Macedonia if the treasury has dried up?

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  3. UpandComer (528 comments) says:

    How is germany the problem? they seem to be the only solution. If Europe was more German, it would be a powerhouse, not a powderkeg. The countries not taking care of themselves like Greece should be expelled from the union.

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  4. metcalph (1,426 comments) says:

    I think Hollande’s capacity for screwing up the French economy is much more limited than Mitterand’s. To abandon austerity would require printing money but the French don’t have the ability to do it by themselves and they are not likely to get German consent before hell freezes over.

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  5. KiwiGreg (3,247 comments) says:

    The EU can’t “expel Greece”. Such decisions require unanimity. A country can leave (although I understand there is no formal mechanism) only of its own free will.

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  6. Mr_Blobby (164 comments) says:

    Watch this space closely.
    We are following along; with the same borrow to fund our lifestyle policies. Now we are looking to sell the family heirlooms to cover the shortfall. At some stage people will loose confidence in the system and it will collapse faster than a house of cards.

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  7. KiwiGreg (3,247 comments) says:

    @ tvb Germany has benefited so much from a devalued euro, they are in no rush to go to the DM which would be so strong it would cripple their export industries.

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  8. metcalph (1,426 comments) says:

    Greece can be expelled if it ceases to be a democracy ie military coup or golden dawn regime.

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  9. wreck1080 (3,866 comments) says:

    The euro is doomed unless the EU adopts common economic policies and workforce practices. Even then , it will be a challenge to survive .

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  10. RRM (9,774 comments) says:

    http://zedimi.com/wp-content/uploads/2011/12/793891_460s_v1.jpg

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  11. Jimbob (641 comments) says:

    The election result in France looks like another step in the slow European train wreck. This going to take years to sort out, with weak countries peeling off as they bring in more plans to solve their debt problems.
    As for New Zealand’s solutions to paying off debt, the partial sale of assets will need to be changed as the opposition to them is growing. Maybe twenty percent sell off or something similar, or just scrapping the whole thing. This idea was never a winner, as energy is going to be at a premium in decades to come. Polls say 75% are opposed to the sales, really deep down it is more like 99%. Message to the Government, you have to make it easier for businesses to grow in NZ, and spend more money on R&D.
    Middle class welfare is stangling NZ, and there is no way the masses want it to end. The Government is going to have to make some hard decisions in the near future, and asset sales is not the answer. Good luck.

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  12. campit (467 comments) says:

    This article caught my eye over the weekend:

    Even by the extravagant standards of Greek corruption, the scam uncovered by Stelios Bozikis is so brazen that it is hard to credit.

    Nearly 600 people on the Ionian island of Zakynthos – of which Mr Bozikis was recently elected mayor – managed to have themselves falsely declared blind, entitling them to fat monthly cheques from the state.

    The surprisingly high prevalence was the result of authorities on the island permitting fraudulent claims for more than a decade.

    “I realised when I became mayor that a lot of illegal things were taking place here,” said Mr Bozikis, a lawyer who was elected last year. “I promised myself that I would tackle them, irrespective of the political cost.”

    The fake blind were raking in monthly payments of at least €350, sometimes more depending on their age and family status. Those who supposedly needed carers received larger sums.

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  13. Rick Rowling (825 comments) says:

    If Europe was more German

    Didn’t someone try that already?

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  14. Mark (497 comments) says:

    Greece is the logical outcome of a welfare state, every one wants the benefits but nobody wants to pay for it.

    Scams like campit has highlighted are common and tax evasion is rampant in Greece, so even with sky high taxes, nobody pays them. Basically Greece wants other people to bail them out.

    Maggie Thatcher was right – eventually you run out of other people’s money.

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  15. F E Smith (3,324 comments) says:

    KiwiGreg & metcalph,

    DPF was talking about Greece leaving the Euro, not the EU.

    Just seemed you were confusing the two.

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  16. metcalph (1,426 comments) says:

    FES

    I haven’t confused the two. To be in the euro, one has to be a member of the EU in good standing (vatican city excepted). The easiest way to kick Greece out of the eurozone is for it not to be a member of the EU. That’s the military coup scenario which was raised earlier this year.

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  17. KiwiGreg (3,247 comments) says:

    @ FES thanks, yes I know; my post was responding to upandcomers “The countries not taking care of themselves like Greece should be expelled from the union.”

    I fear that Greece will in fact leave the euro either through inaction (like an inability to form a government which will do what it needed) or action (military coup or a government which elects to default). Will make Greece a cheap place to visit though!

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  18. PaulL (6,030 comments) says:

    The problem isn’t Germany nor is it Greece. The problem is having strong countries and weak countries sharing a currency and an interest rate. The weak countries can borrow far more cheaply than they should, so they go on a spending spree. They also fall behind in productivity due to weak political systems and incentives, but since they can’t devalue (a hidden pay cut for every Greek citizen) they instead have to do an explicit pay cut. Even worse, only labour gets the cut, not capital. This is incredibly hard politically.

    This would all be ok if the Germans would fund it all, but surprisingly they don’t want to pay higher taxes so that Greeks can retire earlier than Germans can. In short, the Euro is doomed. It’s hard to force Greece to leave (and why would they want to) but easy for Germany and similar minded countries to leave the rest to their mess

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  19. flipper (3,949 comments) says:

    In mid January The Outside the Wellington Beltway Group in their paper “Demolishing” wrote:

    : …,.. Half a world away, there is the implausibility of the notion underpinning the EU. There were, and still are, too many economic, linguistic and customary differences among the countries involved, at the very least. Then there is the question of sovereignty, which the British are at last starting to fret about, and who will likely suffer most from its loss. They’ve almost left it too late, and the model of public servants (in Brussels) taking on the role of governors while not entirely new, sits very uncomfortably with the British sense of nationhood. The British have, after all, fought many wars to protect their sovereignty and freedom!

    ” …. The idea of a united Europe which would no longer go to war has been around for a long time. Even Adolf Hitler espoused it, though there were, of course, the issues of his governance model and its associated policies. However, the contest for the leadership of Europe has not evaporated with the advent of the EU. On the contrary, the rivalry between France and Germany is alive and well, with Germany seeming to have the upper hand. But of greatest concern is the apparent imminent implosion of Europe.

    ” … There have been and still are nations within wider Europe that rely on cross-nation subsidies to maintain their flawed economies. But to attempt to successfully weld together so many nations with different cultures, political systems, and varying approaches to Government expenditure/deficits was always likely to fail. The defining issue, however, may be the EURO – a manufactured currency that makes business transactions simple in Europe. Its great defect is that it binds members of the euro zone into a single currency exchange rate, no matter what the nature and condition of each country’s economy Thus, one of the most effective levers of economic change is denied to euro zone members. That’s OK for Germany, but not OK for Greece.

    ” … (The debate over the political-economic problems of the Euro brings into sharp focus the adverse consequences that would flow from a joint Australian- New Zealand currency. The damage to the New Zealand primary sector would be catastrophic and New Zealand would be a backwater – behind even Tasmania.)”

    That pretty much says it all, does it not?

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  20. PaulL (6,030 comments) says:

    Yup. Whilst Australia is happy to subsidise Tasmania indefinitely (not entirely sure why, but I guess it gives the hippies somewhere to move to so as to avoid cluttering up Sydney and Melbourne), I doubt they’d be so keen to subsidise NZ. And I really can’t see why the Germans would want to subsidise the Greeks, at least NZ and Australia have a common heritage and values.

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  21. WineOh (629 comments) says:

    What is Hollande’s actual policy stance on the economy & debt crisis? Or are we just ready to line up & throw stones because its a socialist party?

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  22. RRM (9,774 comments) says:

    It sounds like the best solution to this, would be for Germany to annex Greece and install proper efficient German management… ;-)

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  23. kowtow (8,175 comments) says:

    UKIP got up to 14% of the vote in wards where it stood candidates in recent local govt elections.There is a growing frustration with the EU dictatorship and stories like this can’t help.

    http://www.express.co.uk/posts/view/318555/All-migrants-to-get-a-British-pension

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  24. tvb (4,324 comments) says:

    Britain has always been skeptical of the Germans and rightly so. I predict the France Germany pact under Hollands will weaken and Germany will remain isolated. The point is the Euro is like the old gold standard and without subvention payments the currency will eventually destroy all the weaker economies that are shackled to it. Another solution is for some countries to adopt the GBP. Ireland would be a good candidate.

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  25. RRM (9,774 comments) says:

    Actually on second thoughts, it sounds like Europe needs another 20th century to get itself out of this.

    Stage 1: Install a strong nationalistic leader who will militarize the economy.
    Stage 2: Round up and remove all the Gypsies, immigrants and International Arabry in general.
    Stage 3: Install good efficient German Government.

    I think I’d get quite a lot of laughs out of reading angry right-wing political websites… if it wasn’t so frightening.

    I think another atrocity in Europe is more likely than an Israeli / Iranian nuclear war (Or a Pakistani / Indian nuclear war.) They know what hardship, war and death look like in the East, so they know what is at stake if they start down that road. Europeans don’t, they will piss and moan in their safe, clean, orderly streets about all these foreigners coming here and taking their jobs, and then before they know it the breaking of glass will begin…

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  26. Other_Andy (2,572 comments) says:

    “Socialist Francois Hollande defeated conservative incumbent Nicolas Sarkozy….”

    Nicolas Sarkozy is a socialist. There are very few (if any) conservative-liberal parties in the EUSR (European Socialist Republics). At least Hollande will accelerate the economic train wreck that is Europe. Europe is a perfect example of the Cloward-Piven Strategy at work.

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  27. thedavincimode (6,612 comments) says:

    Nearly 600 people on the Ionian island of Zakynthos – of which Mr Bozikis was recently elected mayor – managed to have themselves falsely declared blind, entitling them to fat monthly cheques from the state.

    Thanks for that Campit. No need to give the lazy lying little bludger any ideas. I imagine he’s filling out the form right now.

    We’ll send you the bill.

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  28. Fentex (920 comments) says:

    I was in Greece a few years ago and I concur that it’s a run down lazy place where few things work and no one bothers to pick up the rubbish.

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  29. philu (13,393 comments) says:

    quite amazing how one of the most toxic/nastiest trolls here..(not) da vinci..for years has just spewed his bile in whatever thread..

    ..this has gone on for years..

    ..yet this troll has never received a demerit…not one..not ever…

    ..which kinds strengthens the claim from redbaiter that (not) da vinci is a member of keys’ inner-circle..a media adviser..

    ..eh..?

    ..and..ew..!..eh..?

    phillip ure@whoar.co.nz

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  30. wat dabney (3,758 comments) says:

    And Labour is fully aware that NZ will share Greece’s fate if they get to implement their policies here, yet that won’t stop them going ahead and buying the election with bribes and promises to their special-interest groups. Because by the time the chickens come home to roost here they’ll have had their years in power and will be comfortably retired on their gold-plated pensions.

    So fuck them.

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  31. philu (13,393 comments) says:

    wat..it is just a matter of re-arranging priorities..

    ..roll back the tax cuts for the richest…(no need to borrow

    (introduce a hollande-tax…75% rate on any income over $1 million..how does that sit..?)

    ..a tobin/hone heke tax on the banksters…

    ..tax the polluters..make the farmers pay for their polluting..(tax the bastards green..!..)

    ..nationalise our energy/alcohol/tobacco industries..legalise/tax pot..

    ..what’s not to love about all that..?

    ..andall eminently do-able..

    ..all that’s needed..is the political-will..

    phillip ure@whoar.co.nz

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  32. graham (2,329 comments) says:

    WineOh:

    This will give you some comparisons between Sarkozy and Hollande.

    http://www.bbc.co.uk/news/world-europe-17943386

    Hollande proposes financial help for small and medium-sized businesses, incentives for employers to hire young people, and has pledged to introduce a 75% income tax on earners of more than 1m euros per year (to which Sarkozy replied “You want fewer rich people, I want fewer poor people.”) and to balance the budget by 2017.

    Sarkozy wanted to reduce labour costs to stop companies from relocating, introduce plans for new training schemes for the unemployed, who would lose benefit entitlements if they refuse to take up the training or jobs offered. He vowed to balance the budget by 2016.

    Under Sarkozy, annual GDP growth was improving over the last two or three years. Remains to be seen if Hollande can keep the momentum going, especially if he does introduce the 75% tax and ends up driving the richest people out of France.

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  33. thedavincimode (6,612 comments) says:

    The lazy lying thieving bludger appears to have gone off-thread …

    Gotta be worth some demerits. 100 would be amusing.

    The inference that our host is corrupt is a goody. Do vegans eat their own feet?

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  34. cows4me (248 comments) says:

    “Tax the farmers,” you clown, if it wasn’t for the farmers you could kiss your DPB or whatever benefit you are on goodbye. Farmers make easy targets for townie wasters that would struggle to wipe their own arses. Fuck I don’t know what sort of world you live in but it is seriously fucked up. I would have more sympathy for you views if you could get your useless commie arse out of bed in the morning and actually did some work and this doesn’t mean trying to be some intellectual fruitcake that knows piss all about anything.

    The EU will only work if all the countries in the EU follow the same financial rules and taxes or one government. This of course is the wet dream of the bureaucrats in Brussels who would sell their souls for the advancement of the NWO. But isn’t going to happen so it’s all going to go tits up. I guess we shall be able to watch it all on glorious HD. Time to order the popcorn.

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  35. Harriet (4,777 comments) says:

    The problem in France, and for the most part in NZ too for that matter, is that the people who work for a living are outnumbered by those who vote for a living or part living.

    On the one hand we have France who by way of voting in a socialist government, are going to provide MORE socialism to fix the problems that socialism helped create. And on the otherhand, NZ voted Key back in to fix the problems by way of less socialism.

    Well, when it comes to what really counts – a rising economy on the back of taxing ‘rich pricks’ more and paying government workers and beneficieries more- NZ will be near full employment[94+%] with a rising housing market, lower personal debt, paying off public debt and riding the China wave long before France and that shmuck O’bama finish spelling that word “exceptionlism”.

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  36. burt (8,200 comments) says:

    I suspect that Greece will have to be thrown out of the Euro, and have their own currency devalue to very low levels, for Greece to realise the rest of the world won’t keep funding your lifestyle.

    A socialist nation realise that other peoples money won’t last forever… that happens about every 7 years then we forget and repeat the failed experiment. Next election I wouldn’t be surprised if in 2014 or 2017 NZ voted for higher taxes and more welfare again… We’ll be stunned when 6-9 years later it’s all turned to crap, the economy has stalled and the country is broke again….

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  37. tom hunter (4,695 comments) says:

    I can’t wait until the far-left take power in Greece. It’s a telling example of the Eurocrats that they actually thought the Greek nation would really accept all those budget cuts and hence worthy of yet another € 100 billion plus loan. Did they not realise that the Greek government would have said anything to get that money.

    Then there’s Mr Hollande: here’s hoping he gets his 75% income tax rate on the euro millionaires.

    I’m reminded of the following story.

    Time for more popcorn. Heh, heh, heh.

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  38. philu (13,393 comments) says:

    “…some intellectual fruitcake that knows piss all about anything…”

    that’s almost worthy of a t-shirt/chest to rest on..

    phillip ure@whoar.co.nz

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  39. Johnboy (15,903 comments) says:

    Never trust a Greek begging for gifts! :)

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  40. thedavincimode (6,612 comments) says:

    that’s almost worthy of a t-shirt/chest

    Hmmm. Less worthy than say: “the lazy lying thieving bludging little prick who knows piss all about anything and laughs as solo mothers head off to work while he stays at home sitting on his lazy arse enjoying the bludge”?

    Do you think? (oops, oxymoron alert)

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  41. graham (2,329 comments) says:

    I personally don’t have a problem with the basic premise that the more you earn, the more taxes you pay (and I’m speaking as someone who is on the top tax rate in NZ).

    But 75%? Seriously? I imagine there must be some sort of study that has been done which investigates how much you can tax people before they start saying, “Screw this” and start looking at tax dodges, offshore banks or just get the hell out of there. And once you’ve driven them out of the country … well, 75% of $0.00 is, um, $0.00.

    I mean, if I was smart enough or driven enough to be earning over a million, and Hollande said “Well done, graham. That’s 750,000 for me, and I’ll let you keep 250,000 cos I’m so nice”, I’d also be smart enough and driven enough to find a country that only taxed me at, say, 40%.

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  42. Johnboy (15,903 comments) says:

    Cows4Me has a vacancy for phil straight after duck shooting Leonardo! :)

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  43. wat dabney (3,758 comments) says:

    I personally don’t have a problem with the basic premise that the more you earn, the more taxes you pay

    Whereas I’m the reverse; marginal rates should be lower than base rates, and nobody should have to pay more in tax than, say, the average wage. So in NZ nobody would pay more than around 40-50k in tax or whatever it is.

    The idea that marginal rates should be higher than the base rate is simply perverse.

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  44. mikenmild (11,246 comments) says:

    That’s extreme graham. I assume that the proposed tax rate is 75% on earnings over 1 million, not 75% of your 1 million income.

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  45. mikenmild (11,246 comments) says:

    I see at the moment the top tax rate is 41% for incomes over 70,830 euros. I’m not sure if that is planned to rise as well, or what threshold changes there might be.

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  46. Other_Andy (2,572 comments) says:

    Why did Greece fail to get the latest instalment of EU/IMF aid?
    ……….Because no one in Greece works long enough to complete the application form.

    A Greek, an Irishman and a Portuguese go into a bar and order a drink. Who picks up the bill?
    ……….The German.

    For €400 you can adopt a Greek. He’ll stay at your place, sleep late, drink coffee, have lunch and then take a nap, so you can go to work.

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  47. Johnboy (15,903 comments) says:

    Any chance of a loan graham? :)

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  48. graham (2,329 comments) says:

    Yes, you’re probably correct mikenmild. So my example was just slightly wrong, but it sounds good :)

    Yep – just managed to find a link.

    http://www.bbc.co.uk/news/world-europe-17189739

    ‘”Above 1m euros [£847,000; $1.3m], the tax rate should be 75% because it’s not possible to have that level of income,” he said.’

    He also wants a new 45% tax band on people with annual incomes above 450,000; reduce the retirement age back to 60 for those who started working at 18 and have 41 years of contributions into the superannuation.

    Lots more information on the above link.

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  49. slijmbal (1,233 comments) says:

    @graham

    “But 75%? Seriously? I imagine there must be some sort of study that has been done which investigates how much you can tax people before they start saying, “Screw this” and start looking at tax dodges, offshore banks or just get the hell out of there. And once you’ve driven them out of the country … well, 75% of $0.00 is, um, $0.00.

    I mean, if I was smart enough or driven enough to be earning over a million, and Hollande said “Well done, graham. That’s 750,000 for me, and I’ll let you keep 250,000 cos I’m so nice”, I’d also be smart enough and driven enough to find a country that only taxed me at, say, 40%.”

    There is the so called Laffer Curve that implies that there is an optimal tax rate that maximises tax returns – increasing tax rates does not increase tax revenue is a reasonable conclusion – like many economic theories it is fluffy in terms of actual numbers as it probably depends on mobility of wealth and a bunch of other variables. Many US states have found that increasing state taxes never worked.

    was tried in UK in the 60s and caused emigration by highly qualified or wealthy people. It was called the brain drain at the time. It also greatly increased the number of residents of Jersey and the Isle of Man – both tax havens for Brits.

    Lived in Holland and got top tax rate of something ludicrous like 69% – spent enormous amounts of effort to reduce my taxable income – successfully. Effective tax rate was actually less than in NZ at the end.

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  50. Harriet (4,777 comments) says:

    Graham

    “…I personally don’t have a problem with the basic premise that the more you earn, the more taxes you pay (and I’m speaking as someone who is on the top tax rate in NZ)….I’d also be smart enough and driven enough to find a country that only taxed me at, say, 40%….”

    Nothing to see here…look over there…75%.

    Commie.

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  51. PaulL (6,030 comments) says:

    Well, on the upside, we’re about to have a very dramatic illustration of why policies like this are stupid. In 2 years time, I bet the number of people in France with an income greater than 1 million euro will be damn near none. They left, or they found a way to hide it.

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  52. tom hunter (4,695 comments) says:

    Of course the Yanks can no longer point at the Europeans when it comes to dependency. Found this very sad quote from this article:

    “As human beings, we are not really responsible for our own acts, and so we need government to control those who don’t care about others”

    The article reveals where that quote came from:

    The writer of those words was a member of a Valencia University economics class.

    It was from a class exercise – and it gets worse:

    The professor, Jack Chandliss, asked the class to write an essay on what the American dream means to them, and what they want the federal government to do to help them achieve that dream.

    Out of 180 students participating, only about 10% wanted the government to leave them alone and not tax them too much, but a whopping 80% wanted the government to provide pretty much the whole dream thing wrapped in a tidy bow – including free college tuition and health care, jobs, even the down payment on their future homes, money for retirement and hard cash, taken in the form of taxes from rich people.

    Why complain about politicians when the culture has this mindset.

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  53. slijmbal (1,233 comments) says:

    I think what many do not realise is that France is rather socialist and it has replaced what would be seen as a left wing government with a really left wing government. Even Mitterand was forced to do austerity measures during his mass nationalisation and socialisation exercise in the late 70s from memory because of the excesses of the socialist state spending. Got him voted out I think.

    Germany has more economic clout and France is more disliked than even Britain within the EEC so it should be really interesting to see what happens – I don’t think France will be allowed to do what it likes as Germans don’t want to have to pay for Greek/Spanish/French waste.

    The EEC is surprisingly robust considering the amount of in-fighting that goes on so I don’t expect this to cause a major fracturing. One also has to realise that there have been net contributors and benefactors forever in the EEC. It was/is a major cause of friction but as an organisation it is incredibly slow to change and somehow copes.

    In general France is f***d – huge immigration from North Africa that includes major islamic fractions that cause immense social issues, huge pension liabilities for public servants in particular and no way for youth to get on the employment ladder because of specific social policies. Last hammer in the coffin – wait for France to turn in to another basket case. It’s been working to that end for about 30 years.

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  54. Harriet (4,777 comments) says:

    slijmbal

    “…Many US states have found that increasing state taxes never worked…”

    True. California is a good example.The problem with high tax rates on individuals, as California found out, is because the tax revenue collected, is then mostly collected from ‘high wealth’ individuals, where their incomes have been made by investments in the markets.

    But when the markets get cut in half[gfc] California’s tax take then also took a 50% haircut.California is now as broke as the investors and cannot increase public spending to support any business activity in California because they don’t now have that ‘high wealth’ tax revenue to do so.

    By highly taxing individuals, the government is playing the likes of the stock market.

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  55. graham (2,329 comments) says:

    PaulL: Exactly what I said (well, tried to say) at 7:37.

    You can only screw so much tax out of people before they start saying, “Screw this” and start looking at tax dodges, offshore banks or just get the hell out of there. And once you’ve driven them out of the country … well, 75% of $0.00 is, um, $0.00.

    If they’re clever enough to make the money in the first place, you can bet they’re clever enough to keep it.

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  56. big bruv (13,702 comments) says:

    I suspect the UK economy will do quite well out of all the wealthy French moving to the UK.

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  57. PaulL (6,030 comments) says:

    A smart NZ govt would be marketing our relatively lower tax rates. And, of course, zero capital gains tax. Combine that with a great lifestyle, and a people who are so incredibly welcoming to the French (no Rainbow Warrior jokes coming here, surely) and you couldn’t see why the rich French wouldn’t flock here.

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  58. Johnboy (15,903 comments) says:

    And we have all those giant snails going to waste in the heart of good coal mining country too! :)

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  59. krazykiwi (9,189 comments) says:

    The euro is doomed unless the EU adopts common economic policies and workforce practices

    Then it’s doomed. Ununiform work practices pre-date the Euro by, what, 10 or 20 thousand years.

    It certainly looks like a meltdown in the making. I’ve been tracking this for 5+ years and it doesn’t get any rosier with each passing month. 

    An important question is how could NZ benefit from the inevitable? Trade of primary produce would be hit, but there should be increased demand from India and China. Hey, how about we become a tax haven for those fleeing countries where, as Hariett right observes 

    the people who work for a living are outnumbered by those who vote for a living or part living

    .

    Cap personal taxation on the first $NZ500k of income, change immigration laws, and watch the victims of state-sponsored economic persecution flood to make NZ their home and the place they choose to invest and spend. It would piss the Greenies and rabid socialists off, but that a risk I’m willing to take :)

    Edit: PaulL beat me to it!

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  60. mister nui (1,020 comments) says:

    So, lets put the drug addled fuckwits wetdream of a 75% tax rate to work in NZ and see what haapens;

    Based on 2008 figures, there were 13,130 people earning more than 250k p.a. So, I’m going to add 10% to that number and say we now have 14443 people earning more than 250k.

    Assuming that 10% (probably high) of those people earn >1million, with an average earn of 2 million, which again will be high, we have a total of 2.88 billion to tax. Of that 2.88B, the government is already taking 952 million off these people through tax now, leaving only 1.93B to tax. The marginal tax rate already incurred on this income is >32.9%, so we’ll call it 33% for simplicity. The gummint will then apply the drug addled fuckwits wetdream extra 42% tax on this 1.93B of income and only get back 813 million. That’s before everybody starts leaving the country in droves and implementing tax minimisation strategies.

    So based on my very generous assumptions, the drug addled fuckwits wetdream tax will cover just over 3 weeks of current gummint borrowings. Great solution and great way to fuck the economy.

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  61. V (716 comments) says:

    Somewhat ironic an ex-public servant lamenting on her blog about some of these things, don’t you think?

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  62. graham (2,329 comments) says:

    big bruv at 9:19 pm:
    I love Britain, but I very much doubt that it would be the first choice for wealthy French looking for somewhere to take their business.

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  63. tom hunter (4,695 comments) says:

    I doubt it too, but according to The Financial Times ….

    The “soak the rich” rhetoric that has punctuated the presidential campaign has prompted a sharp rise in the numbers weighing a move across the Channel, according to London-based wealth managers, lawyers and property agents specialising in French clients.

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  64. mikenmild (11,246 comments) says:

    mister nui is right. It would be much simpler to just reverse the most recent tax cuts to eliminate current borrowings.

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  65. graham (2,329 comments) says:

    tom: That surprises me.

    I shall watch with interest. I have family in Britain, so no doubt will hear of any influx of wealthy French families.

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  66. tom hunter (4,695 comments) says:

    Just so mm, because the current borrowings are the result of too little revenue for our poor government – rather than too much government spending. Just like France!

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  67. Paulus (2,598 comments) says:

    Who holds most of Greece’s debts – FRANCE.
    France’s banks will certainly collapse – now more certain.
    Most Franch banks have moved strategically to London already.
    Not good news for anybody – particularly when Hollande cannot do what he pledged before the election.
    France is set to become an even greater bucket case not helped by Greece.

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  68. tom hunter (4,695 comments) says:

    It will be interesting (to say the least) to see what the socialists propose in France, but they already appear to be confused. Hollande has talked a lot about increased government spending and the need to spur economic growth, but then also said things like this:

    “It is absolutely essential to generate growth but this can only be accomplished by supply-side measures and is no longer possible through state spending programmes,” the Hollande team told the German diplomats.

    Supply-side measures? Jack Kemp is reborn in France, with all the tax cuts that implies?

    Mind you, all those Reagan-era tax cuts in the US have massively increased the proportion of the income tax burden on “the rich”, especially in relation to their share of the national income, so perhaps the Hollande team knew what they were saying.

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  69. graham (2,329 comments) says:

    Rich set to flee Francois Hollande’s France.

    http://www.theaustralian.com.au/news/world/rich-set-to-flee-francois-hollandes-france/story-fnb64oi6-1226338252996

    This was written before the election, and considered what might happen under Hollande.

    ‘Belgium and Switzerland are the two main havens expecting an influx of exiles after Mr Hollande and President Nicolas Sarkozy tried to outdo one another in the election campaign with pledges to squeeze the wealthy. Brussels, the favourite destination for well-heeled French families, has been dubbed “the 21st arrondissement of Paris”‘

    ‘… in 1981, Francois Mitterrand, the previous Socialist president … created the wealth tax … That led to convoys of cars crossing the Alps loaded with savings and jewellery.’

    The story goes on to report that real estate agents and lawyers in London are experiencing an increase in enquiries about up-market apartments in exclusive areas. And a Brussels tax lawyer reports: “In the last few months I have had about three times the usual requests from French citizens wondering about the possibility of setting up in Belgium. Some have already made their decision and others are thinking about it. In my opinion, it is just the beginning.”

    Francois Hollande made clear his intentions when he announced a couple of years ago: “I do not like the rich.

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