IMF chief Lagarde: Little sympathy for Greece

[tankie]

If I was to lend money to someone I knew could not pay it back , would I be a politician or a fkin lunatic , or maybe both :whome:

[snapper]

Speaking of tax evasion and Mrs Lagarde... you'll NEVER guess but "IMF boss who caused international outrage when she suggested that Greeks should pay their taxes earns a tax-free salary" Christine Lagarde, scourge of tax evaders, pays no tax | Business | guardian.co.uk Bit rich for her to be lecturing Greeks one might think.

[tankie]

Speaking of tax evasion and Mrs Lagarde... you'll NEVER guess but "IMF boss who caused international outrage when she suggested that Greeks should pay their taxes earns a tax-free salary" Christine Lagarde, scourge of tax evaders, pays no tax | Business | guardian.co.uk Bit rich for her to be lecturing Greeks one might think.

:slap: why am I not surprised

[troung]

If I was to lend money to someone I knew could not pay it back , would I be a politician or a fkin lunatic , or maybe both

It wasn't bright but Greece owes the money.

Talk to them dirty, them bitches

I'll proudly rail against Greeks, Persians, Italians and Canadians. Bring on the hookers.

Speaking of tax evasion and Mrs Lagarde... you'll NEVER guess but "IMF boss who caused international outrage when she suggested that Greeks should pay their taxes earns a tax-free salary" Christine Lagarde, scourge of tax evaders, pays no tax | Business | guardian.co.uk Bit rich for her to be lecturing Greeks one might think.

Pathetic attempt at deflection. It doesn't matter if she kept a midget lesbian sex slave - Greece fucked up. Her getting off tax free did not contribute to Greece being a basket case. You people drove yourselves off a damn cliff and stole money from hard working people in other nations to fund the good times. Grow up and accept that the way of life there is wrong. Basically shut up, pay up, and grow up.

The truth is unpalatable, but Christine Lagarde is right to tell Greeks to pay their taxes

By Ruth Sunderland

PUBLISHED: 09:28 EST, 28 May 2012 | UPDATED: 09:28 EST, 28 May 2012

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The German chancellor arrives at Athens airport. ‘Name?’ barks the border control guard. ‘Angela Merkel,’ she replies. ‘Occupation?’ asks the guard. ‘No, just visiting,’ replies Frau M.

This rather childish joke is doing the rounds of the City, but beneath the laughter it points to the seriously strained relationship between Greece and Germany.

Angela Merkel has, however, been supplanted over the weekend from her role as Greece’s most hated woman. That slot is now occupied by Christine Lagarde, the head of the IMF, due to her comments that Greeks should pay their taxes, and that it is now ‘payback time’ for the debt-addled nation.
Christine Lagarde
German Chancellor Angela Merkel

IMF boss Christine Lagarde, left, has replaced German Chancellor Angela Merkel, right, has Greece's most hated woman after telling them to pay their taxes

Lagarde has been reviled by Greek politicians and has received thousands of angry messages through Facebook and Twitter. Her plight is surely stirring gallant thoughts in the heart of Robert Peston, the smitten BBC commentator, who must be yearning to ride to her rescue if only he didn’t have to do the Today programme so early.

His foxy love interest is accused of heartlessness and of insulting the Greek people. But Pesto need not worry that his idol has feet of clay, for Lagarde is right: there was a culture of non-payment of tax in Greece.

A report late last year by the European Commission found that 60bn euros of tax went unpaid because of avoidance or non-compliance – equivalent to around 25 per cent of Greek gdp. As the report drily noted, unpaid tax on this level casts doubt over the fitness of the tax authorities.

It is true that many blameless citizens there will indeed have paid every penny of tax they owe. It is also true that many Greeks are suffering terrible hardships as a result of austerity.

Yet instead of insulting Mme Lagarde, voters might want to ask themselves shy on earth German and other Eurozone taxpayers should be expected to pick up their bailout bills, when some Greeks do their utmost to avoid taxpaying of any sort?

They want to have their cake and eat it: Protesters hold up a Greek flag outside parliament during a rally against austerity measures

The first inconclusive round of Greek elections earlier this month suggested that most voters want two things: to remain within the single currency, and to avoid austerity and paying more – or any - tax.


Lagarde, who has been painted by her detractors as a latter-day Marie Antoinette, has not, in fact, advised the Greeks to eat cake. But she is perfectly correct to imply they cannot have it and eat it.

If Greece wishes to remain in the euro, it will have to accept austerity and reform of its tax culture. The fresh ballot on June 17 will show whether their thinking is finally showing signs of realism on this score.

The IMF supremo was also lambasted for suggesting she was more sympathetic to poor children in sub-Saharan Africa than to the Greeks.

Is that really so outrageous a remark? Much of the developing world finds it hard to understand why IMF funds are going to the Eurozone, still a relatively rich region by global standards.

Greece should never have been allowed to join the Eurozone. It is appalling that ordinary, honest citizens are being made to pay such a bitter price for the failings of their so-called elite.

Unfortunately, there are no good options for that country. Either it leaves the euro of its own volition and faces the collapse of its banking system and huge economic pain, or it is pushed out by Germany and the others, or it muddles on for a time before option one or two takes effect.

Under any of these scenarios – and indeed under the unlikely one that Greece becomes highly competitive, gets its debts under control and becomes a valued member of a thriving single currency – a functional tax system is a must.

Lagarde, rightly, has refused to retract her uncomfortable remarks. Indeed, she might have extended them. Europe, including the UK, has no divine right to a generous social welfare system, indeed this is an obvious impossibility with no growth and widespread tax avoidance.

Individuals and companies should pay their fair share – and that goes for the likes of Google as well as Greece.

Unfortunately, she has fallen victim to the curse of the euro, where anyone who has the temerity to state the truth in plain terms is lambasted. That is because the truth is so unpalatable – but it doesn’t stop it being the truth.

Read more: Greece euro crisis: Christine Lagarde was right to tell country to pay its taxes | Mail Online

[snapper]

You simply refuse to see that system is wrong... is like trying to reason with a stone to move out of the way because there's a flood coming. They don't move I suspect but neither can you get money out of them.

But nvm enjoy the flood.

I have a NEW solution specialy created for my new blog thing that goes like this: "I further propose a European Carrot Tax. All European debts MUST be transferred into CARROTS within 10 years: All Banks shall cover their Governments and can redeem their carrots from the European Stability Carrot Fund. All accumulated 'bad carrots' will be dumped on Brussels where they can rot.The resulting European Compost Fund will mature in 10 years and be sold on the open market to fund the 'new carrot'." Problem solved!

[troung]

You simply refuse to see that system is wrong... is like trying to reason with a stone to move out of the way because there's a flood coming. They don't move I suspect but neither can you get money out of them.

You don't have a problem with whiny deadbeats running out on a legally contracted debt and leaving harder working nations to foot the bill. You don't seem to be able to grasp that Greece is in the wrong and instead try to blame shift.

Greece’s Lame Tax Attacks on IMF’s Lagarde

By Elizabeth MacDonald

Emac's Bottom Line

Published May 30, 2012

FOXBusiness

Christine Lagarde EU, IMF
REUTERS

Officials in Greece are blasting Christine Lagarde, head of the International Monetary Fund, over her zero income tax bill after her criticisms that Greece’s massive tax evasion are behind the country’s fiscal collapse.

Speaking last week to the Guardian newspaper about Greece’s fiscal problems, Lagarde, the former French finance minister, said: "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."

Since then, Lagarde’s Facebook page has been flooded with sharp, personal attacks because the IMF managing director does not have to pay income taxes on her net $551,700 in salary and allowances.

That’s got Greece and others up in arms.

"Greek people have suffered incredibly heavy sacrifices over the past few years and I think they deserve all due respect," retorted Dimitris Tsiodras, a government spokesman for Greece.

“If you do not pay any tax, you do not get to tell other people off for not paying tax," blusters the magazine the New Statesman in Great Britain.

Lost in the debate is the fact that there is a reason why Lagarde and other diplomats pay zero taxes on their IMF pay. It’s to avoid harassment and vendettas launched by other countries via their home country’s tax systems, as well as falling prey to bribery or kickbacks (the exact same corruption which, news flash, is what’s plaguing the tax system in Greece).

And the furious backlash is a distraction from the fact that Greece is running a dysfunctional economy where corruption and tax evasion are a national pasttime, where officials want to preserve a system built on vice and limitless debt in order to feed growing government power and a teetering, bankrupt entitlement state.

Greece is ranked as one of the worst countries in the world for tax evasion, worse than Italy, an intractable problem leaders of the European Union and even Greek officials have decried. Tax fraud is a “scourge” in Greece, a spokesman for the EU’s economics commissioner now says.

Government statistics estimate that one-third or more in taxes is not paid annually to the Greek government. This country of 11.3 million people owes an estimated $440 billion in government debt, or about 198% of its economy.

And tax evasion has gotten worse, as Greek citizens now refuse to pay their tax bills in anticipation of a possible exit from the eurozone.

The country’s cash flow is expected to turn negative within a few weeks amid a sharp fall in government tax revenues.

Greeks have a long history of borrowing money with no intention of paying it back, and the country was living beyond its means even before it joined the eurozone.

After it joined in 1999, public spending skyrocketed. Government wages soared 50% between 1999 and 2007 – much more rapidly than other countries in the EU, as the government waded heavily into the private markets buying hotels, casinos, and ski resorts, among others.

More than a third of Greeks work for the state and retire early. In 2004, Eurostat, a European Commission data agency, found Greece had understated its deficit.

The IMF as well as the United Nations reduce the pay for their workers and executives by the amount of the tax bills they owe, meaning, they get paid on a net basis. Workers at the IMF and the United Nations don’t pay national, regional or municipal taxes, says article 34 of the Vienna Convention on Diplomatic Relations, an international treaty signed by 187 countries in 1961.

Again, that article was enacted so diplomats do not face harassment, pressure or fall prey to corruption from other countries via their home country’s tax systems.

A spokesman says Lagarde does pay local taxes in the U.S. and France; in addition, Lagarde paid taxes for years up until her IMF posting.

Lagarde’s predecessor, Dominique Strauss-Kahn (ousted after a sex abuse scandal) also got the same tax deal. The laws are tricky here -- Treasury Secretary Timothy Geithner initially failed to pay payroll taxes on income he received from the IMF in 2001, and then repeated the error in three subsequent years. The IMF, like the UN, reimburses U.S. workers for half of their U.S. self-employment taxes.

So the IMF pays Lagarde’s tax bill for her, just as U.S. companies sometimes covered the tax bills for executives here in the U.S., in what were called "tax gross ups."

That corporate compensation practice was popularized during the merger mania of the 1980s, where companies like AT&T (T: 33.89, -0.05, -0.15%), Home Depot (HD: 49.25, -0.53, -1.06%) and Morgan Stanley (MS: 13.18, -0.46, -3.39%) lured leading executives away from other concerns with promises to pay their tax bills, a practice that drew heavy fire from corporate governance watchdogs.

But it was Lagarde’s characteristically blunt comments about Greece that got the diplomat in hot water. When asked about the impact of austerity measures in Greece, Lagarde replied: “No, I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education. I have them in my mind all the time. Because I think they need even more help than the people in Athens."

When asked if she thinks about them more than the people in Greece now struggling to survive without jobs or public services, Lagarde replied: “I think of them equally. And I think they should also help themselves collectively..by all paying their tax.”

After a backlash on her Facebook page, Lagarde put up this statement, indicating the IMF managing director is not backing down: “As I have said many times before, I am very sympathetic to the Greek people and the challenges they are facing. That's why the IMF is supporting Greece in its endeavor to overcome the current crisis and return to the path of economic growth, jobs and stability.”

Lagarde adds: “An important part of this effort is that everyone should carry their fair share of the burden, especially the most privileged and especially in terms of paying their taxes. That is the point I was emphasizing when I spoke to the Guardian newspaper as part of a broader interview some time ago.”

Read more: Greece

[snapper]

So the US is in the wrong for an undervalued yuan and the people who sold dodgy 'sub prime' mortgages were just fine? If I force loans onto someone who can't repay them it's their fault? Wierd sense of right you have but it doesn't solve the problem that they cannot repay the loans no matter how right or wrong it might be to do so.

[Mihais]

Ladies and gents,everybody is at fault.The Sirens for singing,the people for not plugging their ears to their deadly song.

[YellowFever]

The term, "Two hookers in church arguing who's more virtuous...." comes to mind......

[snapper]

"Mario Draghi (President of the ECB) said the central bank could not "fill the vacuum" left by member states' lack of action as it was claimed the zone is on the point of "disintegration"."

"Olli Rehn, the EU's top economic official, called for urgent action to "avoid a disintegration of the eurozone."" Eurozone is 'unsustainable' warns Mario Draghi - Telegraph

Anyone remember that not so long the Olli Rehns of this world and others were forbidding people to 'talk down' the euro? Doing so was 'dangerous' and 'unhelpful' they pseudo threatened. Now they appear to be do just what we weren't supposed to do then.

Seriously though if the ECB can't save the euro it is an 'ex parrot'. Spanish 10yr bonds hit 6.7% yesterday (down to around 6.5% today) and Bank of Spain data shows that a net of €66.2bn was sent abroad last month, the most since records began in 1990. Nobody has been short selling Spanish bonds though (betting they will increase) as everyone expected the ECB intervene. Mr Draghi appears to be 'washing his hands' so to speak when he says "It's not our duty, it's not in our mandate". Expect short sellers back on Spanish bonds...

The Spanish problem is similar to the Irish one. A massive property boom basicly funded by cheap credit. If you could cobble together around £250,000 or $300,000 on paper assets the banks would lend you upto 5 times that amount to buy or build new houses, of course if were a 'serious investor' and had a few £m the limit was almost open ended. All great as long a property prices keep rising as you can keep selling new houses at a profit, even if you sell them to people who only appear able to be able to buy them - after all you only appeared to have your credit value 'on paper'. Well of course when house prices start to fall the whole game is up. Say I started with £250,000 and the bank lent me another £1m to build houses in Spain. I build lots of cheap houses as fast as possible and sell them asap - I get some profit and can make the bank payments and my own share. My value goes up 'on paper'. Most likely the bank then says "Crickey Senorita snapper mucho bueno biznesso dudetto... We amo muchos tortilla you! Moreos euros for Senorita snapper?" etc etc... Now if I am 'wise' the moment that property prices started to fall I found some dimwit and unloaded the whole lot to him. If it was a registered company I sell my shares etc but I want out and as far away as possible double quick time. Wise snapper legs it and buys a big house in the English country side and a flat in Switzerland, for tax and skiing. Unwise snapper who doesn't get out fast enough goes bankrupt. Either way the banks do NOT get repayed.

But the Bank, who in the good times had 1000s of people like me on it's books, is 'too big to go broke'. If they do go broke all the normal Senors and Senoras who get their wages payed into the bank lose all their money (which the Bank has been lending to me). So the Government can't alow this... although the Government itself is in debt it has to do something, it can't be seen to 'ignore the problem' etc. In reality it turned out that Bankia, because it merged anyway from smaller 'bad banks' was always going to be the first one to need help but last month the Spanish Government called in EU auditors to audit all the Spanish banks for bad debt (notwithstanding that the EU aditors has been unable to sign off EU accounts for 18yrs).

We can get some idea of the Spanish banking problem from the Bankia case: Two weeks ago Bankia said it needed €4.5bn of emergency funding. The Government said ok - now we nationalise you, thus all Bankia debts become Spanish Government debts. This week it transpires that Bankia needs another €19bn... In the meantime Bankia profits were revised down from a profit of 41m euros to a loss of 3.3bn euros. How this is possible is quite beyond me - how do bankers, supposed 'experts' in this sort of thing, miss a loss of over 3bn euros or underestimate how much they need to stay afloat by 19bn euros? No wonder the Chairman of the Bank of Spain resigned saying he was not alowed to speak...

Anyway the problem with this that Spanish Government has to find another €19bn for Bankia nowish; remember this is but a 'first course' so to speak, the bad debt in other banks is likey to add an estimated 180bn euros for the 'main course' but we await the auditors report. So the good news is that Spain has a national bank lending fund already set up called the 'Fondo de Reestructuración Ordenada Bancaria' or FROB. The bad news is that it only has €5.4bn of which €1 is already promised under the earlier Bankia bailout. So effectively FROB has €4.4... €13.6bn short of immeadiate needs.

So the Spanish Government came up with a cunning plan! They would issue Government bonds to Bankia (for €19bn perhaps?) who could then in theory cash them in at the ECB. Money for nothing? It remains to be seen if the ECB will swallow this con trick as essentialy this amounts to the ECB funding the Spanish Government, albeit via an intermediary, and this the ECB is 'verbotten' to do. How can you cash a worthless €19bn cheque? Presumably the ECB might pay something for it but it is not likely to be the full value; for the €19bn you might €500m.

The Spanish Government could in theory borrow the €19bn on the markets but at 6.5% there is no telling how or when they can repay this as the economy is shrinking rapidly. Madame Lagarde denies that the IMF is making plans for a Spanish bailout "the IMF is not drawing up plans that involve financial assistance for Spain, nor has Spain requested any financial support from the IMF" says the IMF but if they are not panning for this evantuality then they are negligent.

Another plan was for ESM (the new european bailout fund although the EFSF is still around) to bailout the Spanish banks directly: "José Manuel Barroso, president of the European commission, has an idea to ease the Spanish banking crisis: use the eurozone's new €500bn (£440bn) European stability mechanism to inject capital into banks. Sound familiar? Yes, it's the same plan that has been considered in the past and rejected by Germany on the grounds that aid for banks should go through national governments. The proposal, then, is a non-starter if Germany won't budge." Spain banking crisis Currently the ESM is only alowed to lend to Governments as Governments can set budgets that promise some hope that the money will be repayed but with banks? Most likely is a Spanish bailout will be needed but it is unsure that this can be done as €500bn ESM fund itself is only promises, there is NO real money there, and the promises are only as strong as countries giving them but Spain itself is a promisee of the ESM, as is Greece etc.

See why Mr Draghi is washing his hands?

[Doktor]

It's getting worse in Greece.

The latest (unconfirmed) information is they no longer accept credit cards

A friend of mine went today for a weekend by the sea and just called me to send him more cash.

My guess is they actually do accept CCs and will offer huge discounts for paying in cash (after raising the price before that o/c).

Will know more after Monday when he will be back (if they don't close the border with strikes

[tbm3fan]

It's getting worse in Greece.

The latest (unconfirmed) information is they no longer accept credit cards

A friend of mine went today for a weekend by the sea and just called me to send him more cash.

My guess is they actually do accept CCs and will offer huge discounts for paying in cash (after raising the price before that o/c).

Will know more after Monday when he will be back (if they don't close the border with strikes

I could see merchants not wanting CCs now. Never mind the traditional discount rate for processing, but there is also the fact that the money is auto deposited in the bank 24-48 hours later. Seems like one would want to avoid the bank now. Also I don't know if the exchange rate is an issue, and if it was, it sure isn't in favor of Greece.

[Doktor]

I could see merchants not wanting CCs now. Never mind the traditional discount rate for processing, but there is also the fact that the money is auto deposited in the bank 24-48 hours later. Seems like one would want to avoid the bank now. Also I don't know if the exchange rate is an issue, and if it was, it sure isn't in favor of Greece.

Agree. I don't think the bank fee for card processing has anything to do with it, but 2 other reasons:

1. The fear they will wake up with the Dra(h)ma, devaluated o/c and with limits on withdrawals, and
2. The bank going bust.

As I said, I'll have more info after Monday when the friend will come back.

[snapper]

Ouch! Greek barman keeping a stash of euros under his mattress I suppose.

As for exchange rate... Dok's pal gets the same for his dinar in Greece as he would in Germany. That is the problem.

[Repatriated Canuck]

It is also fair and honest to keep in mind that the ordinary Greeks will pay for the corrupted ones and for the tax evaders among them.

If you go to Greece you will see almost every home with rebar sticking out the concrete roof. From what I was told an incomplete house does not pay property tax. I saw the majority of homes look like this everywhere I went.

If what I said is true given the amount I saw around it's a country of deadbeats.