Blog: The myth of a stable Greek economy

Former Wem man Colin Dodd writes about life on his new home, the Greek island of Kefalonia.

Blog: Greece is in a mess. The ruling party, Pasok, is under heavy pressure to call an early election, which they WILL lose.

The many measures they have introduced to stem the tide of tax avoidance are not working. I have said before that tax dodging is a way of life for the Greeks, and they are in no hurry to change this. Corruption is widespread, and it goes right to the top. Many businesses are still working the cash with no receipt system, and there seems to be no way of preventing this. The popular way is to issue receipts for about 40 per cent of transactions. This is plainly crippling the economy, but the businesses do not seem to care; they are only interested in more back pocket cash.

A quote from Wolfgang Schaeuble, the German finance minister: "Athens is unable to meet its debt servicing and fiscal reform obligations. We want private bondholders to participate in a voluntary rescheduling of Greek debt. Such a result can best be reached through a bond swap leading to a prolongation of the outstanding Greek sovereign bonds by seven years, at the same time giving Greece the necessary time to fully implement the the necessary reforms and regain market confidence."

So, a quick fix is NOT on the cards, and the next step is for yet another bailout package. This reminds me of an advertisement once seen in America for a finance company - "Now you can borrow enough to get yourself completely out of debt." Yeah, right.

Germany is insisting on the appointment of a foreign-run agency to administer the privatisation of Greek state assets and a foreign "savings commissioner" to supervise the daily running of the Greek economy.

That says it all. The Greeks know that Pasok is not up to the job, and so do the the Germans.

This will not be a popular move in Greece. Friends in high places has long been a very useful asset for Greek businesses, but with foreigners overseeing things, well, things will be very different. This is a necessary move. To continue to leave the Greeks to their own devices is nothing less than disastrous. They will have to concede that the bubble has finally burst.

Many items are moving up the tax ladder to 23 per cent. There is a move afoot to reduce the tax free earnings allowance, currently 12,000 euros per year. Tax officials will be targeting people who APPEAR to be living above their means. Pensions and benefits, such as they are, will be reduced. Plainly, all these measures hit the lower paid, hence the massive protest in Syntagma Square on June 5th.

But, after all the doom and gloom, life on Kefalonia proceeds more or less as normal. Some things have gone up in price, notably fuel and tobacco products, but I can still buy 25 cigarettes for three-and-a-half euros, about three pounds sterling - much cheaper than UK prices.

I was chatting to a local restaurant owner last night, and he has NOT increased his prices for two years now. Neither has he reduced the size of his meals, he just has to shop around more, saving a few cents per kilo here and there, and in this way he can maintain his profit level and stay in business. He is doing very well this year too: 40 tables full every night. Maybe we should put him in charge of the country.

The health care system here is still good. Last week I was in hospital for an operation to remove a lump from my right breast. I had an ECG, X-ray, U/s scan, mammogram, operation and a biopsy. The total cost to me was 20 euros. No long waiting list, no hassle just good prompt treatment, I can't fault it.

So, once again, goodbye from Kefalonia. Wherever you take your holiday, I hope you have a great time. I am.

Best wishes,

Colin