Greece has been 'repaired' with an application of yet another plaster to a gaping shark wound.
ECB hiked ELA once again, this time, reportedly, by 'just under' EUR1bn.
The terms of 'repairs' are sketchy for now, but for the economy that shrunk 23% since pre-crisis peak in real terms, we have novel - nay, breakthrough novel - measures to support growth included in the deal:
- Corporate tax is rising from rather un-competitive 26% to highly uncompetitive 29%
- Corporate profits in excess of EUR500K/pa are hit with 'solidarity' levy of 12%
- Personal taxes are up, VAT is up, pensions levies are up, property taxes are up
- Debt relief is not on the cards, as per Angela Merkel, the 180% GDP debt mountain "...is not an urgent question".
Summary of key financials on the 'deal' is here:
In short, we have an equivalent of economic idiocy here: an economy chocked by too much debt is being given a green light to get more debt. In exchange for this debt, the economy will be chocked some more (by some 2.7% of GDP on full year basis), so that more debt given to it can be rolled over with a pretence of sustainability.
As European leaders celebrate this crowning achievement of statism by replaying the same song for the 5th time whilst hoping for a different result. One has to wonder if there is something fundamentally, deeply, inexplicably wrong with the EU logic.
Or may be, just may be, the Greek 'reforms' are a herald of things to come under the Juncker-proposed, ECB et al approved, new Federalismo 2.0 plan? Why, check the leaks on that one:
