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Economists using data from Greek banks estimate the tax evasion in 2009 through unreported income at 28 billion euros. Using a tax rate of 40% 11.2 billion euros of taxes were evaded by Greek taxpayers. This is one third of the Greek deficit in 2009. The economists say doctors and engineers were prominent in the tax evasion list and find that these groups have large representation in Greece's parliament. Italy has taken steps under the Monti government to crackdown on tax evasion, but Greece is still to take action in this area, which is particularly glaring considering that the previous Greek government agreed to cut the minimum wage in Greece.

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During the Greek debt crisis in 2011 the ECB bought Greek bonds at a discount to face value to support the price of Greek bonds. It did so under the agreement that the bonds would be worth the full amount. Now as part of the negotiations between Greece and private bondholders (mostly French and German banks) about how much losses private bondholders will take- to make Greek debt serviceable as its economy shrinks and tax revenues decline- the ECB says it will take $11 billion in losses on these bonds as its contribution. The ECB will do this on the condition that Greece comes up with an agreement with private bondholders that makes debt serviceable. This could mean increasing private bondholder losses to 70%. from 50%. The central banks of EU countries hold $12 billion of Greek bonds. The ECB says this will not apply to these bonds. Negotiations are also underway between the EU and Greece for a 20% reduction in Greece's minimum wage and an additional 3 billion euros in government spending cuts, and pension cuts for retirees. The EU is asking for a written committment from the Greek government and from Antonio Samaras of the New Democracy party to the austerity program, as the measures are highly unpopular in Greece and are leading to continued street protests in Athens. ...

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The relationship from college years at Amherst College in the U.S. of Greek political leaders Antonis Samaras and George Papandreou. The efforts to setup a national unity government that failed. The increasing support for the opposition New Democracy Party led by Samaras- with 16% unemployment- and the prospect of new elections. Samaras supports spending cuts. He also favors tax cuts, and a flat tax rate of 15% on business. Greece has a long history of tax evasion and distrust of central authority going back to centuries of Turkish rule. Samaras believes that the lower tax rate of 15% would help change the Greek cultural trait of evading taxes becaue it would be on the honor of people to pay such a basic tax. EU leaders are skeptical that lower taxes are the right policy to reduce the deficit. This adds to the political uncertainty as the new government would have to implement the measures agreed to between the current Greek government and the EU leaders. A similiar situation existed in Portugal but the recent elections there, participation of the opposition party in talks, and the newly elected government conducting its own negotiations, has removed that element of uncertainty which exists in Greece. ...

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This report by Landon Thomas Jr. of the NYT describes what happened in the days before and the 48 hours before the referendum decision was announced by June 27, 2015. It shows talks progressing right up to Monday, June 22, 2015. By June 23 Greece received a paper marked in red from the IMF, EU and the ECB on their proposal of June 22. The Greek proposal of June 22 rejected pension cuts and removal of tax breaks for Greek islands, but proposing instead a series of tax increases and increase in pension contributions to be made by companies in Greece. The reply marked up disagreement areas on the paper which voiced objections to too many tax increases as hurting business growth, need to simplify value added taxes, and insisting on pension cuts and reforms. The two advisors Tsipras had used were a complete contrast to the new advisor and finance minister Mr. Tsakalotos he was to use in negotiations after July 7, 2015. Nikos Pappas is described here as an academic with a temper and Varoufakis as a person who would not hesitate to confront and lecture the creditors negotiators. Varoufakis who already had arguments and shouting matches with his counterparts on the other side, had a difficult relationship with the Dutch finance minister, Dijsselbloem, who was the chief of eurozone finance ministers. Dijseelbloem especially objected to Varoufakis lecturing on the need for a debt haircut. Varoufakis was removed from the discussions for a period of several weeks as a result and his reintroduction on June 25 was to have a negative effect on the EU and German negotiators. The same issue of debt came up again in discussions on June 25, 2015, and Varoufakis confronted the EU ministers by calling on the IMF's Christine Lagarde to state if the debt was sustainable. Before that Dijsselbloem had already told him flatly that any discussion on debt reduction would make a deal impossible. At one point German finance minister Schauble argued with EU official Pierre Muscovici of France about his favorable comments on the Greece proposal, saying he could not get the Greek proposal through the German parliament, and saying the ony solution now was capital controls. IMF's Christine Lagarde responded by saying that debt reduction needed to be considered. According to this report the Dutch finance mnister did not wait for Lagarde to explain- he told Varoufakis that it was take it or leave it....

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Zarkadakis points to modern Greece's burden of history since the struggle for freedom from the Turks in 1821. The resurgence of European interest in ancient Greece, he says, burdened modern Greece with a narrative of their identity based on romantic and idealistic notions of Europeans in other nations. It also burdened ordinary Greek people with learning three Greek languages, including the language of the ancient Greeks. Failure to live up to the expectations of the intellectual classes of Europe from their perceptions of a distant past led them to look down on the people of Greece- as evident in perceptions in the German media about Greeks as lazy (the Mediterrranean peoples and lifestyles not as hardworking as the Germans) and liars (the national accounts being largely fudged till a Dutchman at the IMF presented the correct picture in 2009), and cheats (extensive tax evasion). He says this ignores the national traits of Christian Orthodox (which would suggest "mercy" or significant forgiveness of debt when debt reaches a point of becoming uncollectable) the economic history of successive defaults in 1893 and 1932 (lack of economic maturity), a strong cultural trend that tends to circumvent the governing authority. The desire to modernize Greece of the intellectual classes and governing politicians in Greece, and the dependence on the European Union as the sole guarantor of such modernization, has he points out led to a sort of arrogance that ignores the anxieties and fears of the ordinary people of Greece. This was evident in the way efforts to get a referendum on the austerity plans imposed on Greece were quashed by EU officials and the Greek politicians. ...

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The warning light is again on for Greece in the beginning of 2012, as the rapidly deteriorating economy makes a 50% loss by private creditors insufficient to help it meet repayment or refinancing of bonds coming due in 2012. Additional funds will be needed from EU countries unwilling to do this. 14.5 billion euros in Greek bonds come due on March 20, 2012. Greece also faces a public increasingly resistant to austerity cuts. A vountary exchage of existing Greek bonds by private creditors for new bonds at 50% face value and maturing over a longer period will be done under English law. This will be harder to change in the future. Most of the existing bonds were issued under Greek law which can be altered by Greece's parliament.

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Unemployment in the eurozone drops to 7.7% in 2017. Unemployment in Spain drops to 17%.

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An internal IMF document that estimates Europe's banks are short of capital by $273 billion. IMF managing director, Christine Lagarde, tries to downplay the report by saying this is not from a stress test that the IMF conducts. In August, Lagarde, called for an "urgent recapitalization" of European banks. As France's finance minister, Lagarde, steadfastly insisted French banks were well capitalized. France worked hard to prevent requirements for significant capital reserves under the Basel III rules. The higher capital requirements were supported by the U.S.. Simon Johnson said in his blog, that as long as European banks had inadequate capital to act as a buffer against losses, European countries had no safe route for restructuring their debts.

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Kenneth Rogoff, Harvard University economist, author of the well researched book on the 2008 financial crisis, "This Time Is Different," gives his thoughts on the economic prospects for the U.S under the new Trump administration. He says 4% GDP growth and 3% inflation is possible temporarily for a while with stimulus policies, less regulation, and increased private investment. After 8 years of not investing in much needed infrastructure because of concerns about the deficit, the timing is right for such investments, especially as the economic effects of the crisis of 2008 gradually fade.  This is about taking advantage of ultra low interest rates to invest in infrastructure. He says it helps that Trump policies are pro-business. He sees drawbacks as the stimulus program adds a 25% increase with extra debt, adding $5 trillion over 10 years, but adds that for many years Nobel prize winning economist Krugman and others have said that there is good reason to increase borrowing to invest, and this is now being tried. Inflation remains an uncertainty- if there are large quantities of underutilized and unemployed resources it would raise prices less than its effect to increase output. The reverse would apply if the U.S. economy is closer to full capacity. One factor that would help- increasing confidence for business and increasing investment. Against this what he calls optimistic view or spin, is the idea of mistakes under a Trump administration, errors made and a degree of incompetence which he says is a real possibility. Overall his view is that some risks are appropriate now, and from his deep study of financial crises sees the slow growth of the last 8 years a result of a financial crisis that now begins to fade, creating the possibility of higher growth under prudent policies.  ...

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Patricia Kowsmann provides this picture of life in a town on Portugal's northern coast, Viana do Castelo, with a population of 87,000, as Portugal struggles to make a recovery. Viana do Castelo has shipyards and companies making metal bridges for highways. The money losing state owned shipyard was privatized and sold to Martifer SGPS SA to run till 2031. 600 workers at the shipyard were laid off. The new company plans to rehire 400 workers by 2016 but jobs will not be permanent. Companies making the bridges now sell to former Portuguese colonies of Angola, Mozambique, Brazil. 200,000 people have left the country to look for jobs or higer education, including the mayor's daughter in London. Exports are up and now make up 40% of Portugal's GDP, up from 27% in 2009. The economic growth is 0.9% in 2014, after declining 6% 2011-2013. Portugal accepted the last instalment of the bailout loan of 78 billion euros in 2014. It will auction 1.25 billion euros of bonds on July 22, 2015. Unemployment is now declining dropping to 14% from a high of 17%, and higher than the pre crisis level of 11%. Here in this coastal town the mayor Jose Maria Costa cut public employee salaries 15%, and also cut sports and cultural programs. Two food centers provide free lunch and dinner, and half of the 4000 children in school get subsidies for food and transport. A shipyard worker Antonio Gomes Barbosa 64, is one of the laid off workers. His son's architecture company closed and he left Portugal for Angola. Some of his co-workers now work at a shipyard in neighboring Spain....

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The IMF report on Italy in July 2012 says Italy faces another year of recession. Debt as a percentage of GDP is expected to reach 126% in 2013. One bright spot is that Italy is expected to post a primary surplus by 2013- that is government revenues will cover promised services, excluding interest payments on oustanding bonds of $2 trillion. Because of the recession small shocks could change the outlook says the IMF, and it emphasized the importance of the changes being made to the labor market and for improving competitiveness. These changes need to be implemented early because of elections expected in spring 2013. A key concern is borrowing rates which are near 7% for Italy and Spain. The European Stability Mechanism, the rescue fund, was authorized to make purchases of Italian and Spanish bonds in the June 2012 summit. The ESM becomes operational in the summer of 2012, after the German Constitutional Court makes its ruling about it being legal and after ratification by national governments....

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Philipp Rosler, head of the FDP party and Germany's Economy minister, says he opposes further involvement by German taxpayers or the ECB in the debt restructuring for Greece. He pointed out that the current negotiations between Greece and the bondholders (mostly French and German banks) were about private sector involvement. Tax payers of Germany and other European countries are already making a contribution he said. The IMF is pushing for the ECB to take a haircut or writedown on the $40 billion of Greek bonds it holds to supplement the haircut taken by bondholders of over 50%. Rosler said in an interview with the Journal that Athens should keep its side of the bargain by implementing reforms and not letting them just be on paper. On Germany or the EU directly taking responsibility over the Greek budget, Rosler said this should be the responsibility of the Greek parliament. At the same time he pointed out that its important to have a specific and rigorous montiroing process just to be fair to taxpayers in the EU....