IMF and Greece, the breakup

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The IMF has been on its way out of the Greek Rescue programme for a while now.

The band-of-bandits of Mr Tsipras is getting ready to celebrate ousting the IMF. Before you join in the dance in Syntagma Square, listen to my podcast on what the IMF is, what it does and what it did (and did not do) in Greece.

This is a February 2017 lecture on what the IMF is and what it does. The discussion on the role of the IMF in Greece is from 44’30” onwards.

Enjoy and feel free to comment using the discussion options in this post.

@iGlinavos

Who stands to win from #Trump and #Brexit?

One would say that both Trump and Brexit are the result of populism, complacency and … to be frank stupidity. But they have more things in common. They both benefit the financial industry. See my two recent articles on Newsweek exploring what this new order means for our banker friends.

What does a hard Brexit mean for the City of London? (read here)

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What does Trump deregulation herald for Wall Street? (read here)

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@iGlinavos

The consequences of Brexit

Since 2016 I have been writing on the potential consequences of Brexit. Before the referendum, the aim was to inform the public of the dangers ahead, were Leave to prevail. After the referendum, the aim is to steer policy away from a hard-Brexit.

After Theresa May confirmed she is after a Hard Brexit, I wrote an explanation of what this means for the City, and by consequence the country.

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The prospect of Brexit is already making every wage earner in Sterling poorer, as explained in my Marmitegate piece for The Conversation.

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While we knew of the potential effects of a Brexit vote on currencies, few people appreciate what a hard-Brexit (with no successor agreement) will mean for investment and trade. My article on opportunities for Eastern European investors in a hard-Brexit scenario should surprise many on the Leave side.

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My other published work on Brexit can be accessed via this link.

@iGlinavos

CJEU opens door to legal challenges to Euro-rescues in key decision

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A key reason for the inability of claimants to successfully challenge programme conditionality and the resulting austerity inherent in euro-area rescue deals, has been the barrier between the actions of EU institutions and the international bodies that carried out the bailouts. The recent decision of the CJEU in Ledra Advertising breaks down that barrier with unpredictable consequences.

Full case-note is available here, email i.glinavos@westminster.ac.uk for comments

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@iGlinavos

Waging war on the people

What would you think of a government that purposely pursues policies against the public interest?

How would you characterise a populist leader who seeks to take back control from foreign elites, who uses vague exprestions of the popular will to carry out whole scale reforms?

How would you feel if you were part of a minority held to ransom in an attempt to force foreign governments to wield concessions?

You must imagine that I am talking about Turkey and Erdogan’s attempt to crush Turkish dissent after the failed coup. I am not. I am talking about Theresa May and her brand new Brexit government.

Brexit is against the public interest. It will have unaccountable economic consequences. It is based on lies and false dichotomies (EU vs the world). It is fed by misconceptions, populism and racism.

May is using the advisory, narrowly won Brexit referendum as an excuse to rain down fire on the nation. The Tories have chosen to elevate this destructive farce to a democratic imperative. They made the choice.

The minority I am talking about are not Kurds or Christians in Turkey, they are Europeans in Britain.

It is aparent now that the right wing establishment wanted Brexit not because it could care less about Europe,  but because it wanted the chance to remake the country without any opposition. Do not be fooled by proclamations of May’s supposed interest for those left behind. Wolves may offer speeches on vegetarianism, but they do not intend to change their diet.

The Brexit Tories with their business friends and far right supporting lackies are out to demolish Britain as we know it. The sleeping leftists of Corbyn are not interested as they hope to man the barricades of symbolic resistance as the place burns down. They are not interested in preventing catastrophe, they wait for the historic inevitability of socialism as all their apocalypse loving fanatical mates across the Channel.

All this should be obvious to the 17 million who voted for their own destruction. Seeing as they refuse to accept it, one could take the view that they deserve to suffer the consequences of their choice.

What do you think?


@iGlinavos 

Stamp Duty Land Tax and foreign property

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The Budget announcement yesterday brought us a gift, a new stamp duty charge for second homes in the UK.

Those of you struggling to get on the property ladder (or stool in my case), may have come near a stroke when you heard about an extra charge for those who have second homes.

Yes, you heard it right, an extra 3% on top of existing rates for those having second homes. This means that if you try to buy a property at £550k (not much in London), and you own another property, your stamp duty will jump from £17.500 to £34.000 on April 1st. How is that for an April’s fool joke? Only it isn’t a joke.

Are you subject to the tax if you own a home in the village in Greece (inherited) or a small holiday flat in Spain?

There is a lot of contradictory information out there, HMRC says:

If, at the end of the day of the transaction, an individual owns 2 or more properties and has not replaced their main residence, the higher rates will apply.

There are however conditions

Condition C – the purchaser owns an interest in another dwelling which has a market value of £40,000 or more and is not subject to a lease which has more than 21 years to run at the date of purchase of the new dwelling; and

Conditions D – the dwelling being purchased is not replacing the purchaser’s only or main residence.

If you are permanently resident in the UK, in rental accommodation which is your permanent home and are trying to buy, it looks likely you will be caught by this.

Should you have that stroke then? Not just yet. Are you sure your Grandma’s flat is worth more than 40k? Perhaps not. How do you prove it? Will HMRC ask say the Greek tax office that works on property valuations from 10 years ago that are now 40% above market value? Or can you ask a local estate agent?

I have my team of lawyers looking at this and will let you know as soon as I hear anything useful. Look at the bright side, this change will ruin what is left of the buy-to-let market, which may bring prices down a notch.

Good house hunting!

@iGlinavos

Education, education, education and VAT

Nikos Filis is the minister of education. He is famous for responding to suggestions that VAT ought to be increased in pasta by asking 'who eats pasta anyway?'

Nikos Filis is the minister of education. He is famous for responding to suggestions that VAT ought to be increased for pasta by asking ‘who eats pasta anyway?’

In my previous post I discussed the insanity of having varied rates of tax for similar products and services and complicate this with a series of exemptions based on geography. The ‘best government of all time’ has built on this ‘success’ by adding another layer of tax increases in its usual unorthodox way, this time on education.

Before the September election, the ‘First Time Left’ government of Mr Tsipras announced the inclusion of education services in the VAT regime with a charge of 23%. VAT, on education, at 23%, think about it for a second.

What counts as private education in Greece? Due to the deficiencies of the public sector everyone, and I mean EVERYONE has to subsidise their kids education by paying for private add-ons. People pay for private tutors to help with math and grammar, pay for private schools for English and French, pay for tutors and/or after school classes to prepare for the university entrance exam. You have to, if you do  not, your kid will not know any foreign languages and will be accepted to study at the fish breeding academy in Igoumenitsa. Those with money also pay for piano lessons and ballet.

Parents with slightly higher incomes, or unlucky to be far from an operational public school have to pay for a private school so they avoid all the add-ons. People who do not live next to the grandparents have to pay for a lot of after school activities to allow them to finish work before picking up their kids.

This is the rich class which Mr Tsipras wanted to tax. This is the group of the population that does not vote for Syriza as a Minister said this week. Nice, considering that Tsipras himself sends his kids to a private school. Nice also considering that once a party is elected in power it usually pretends to represent the whole country, not just its voters.

Lets break this down for clarity. If you are playing 10 Euros per hour for your kid to study English in a Greek private establishment for say 4 hours a week (40 Euros) for 35 weeks in the year ( 1400 Euro). This is an additional 322 Euros in the year. In these conditions, this is not easy to bear. The ‘private establishment’ is usually a tiny ‘school’ run by a couple of people in a flat, with classes of 10-15 kids. Hardly capitalist excess.

This proposed increase was not mandated by the evil Troika, it was a gimmick by Tsipras right before the election to show how tough he will be on the ‘rich’. After the uproared that ensued, he promised to abolish this measure (that he brought himself).

The Greeks, impressed as they were by Tsipras honesty they granted him the government of ‘Defteri Fora Aristera’. Here is the result. VAT is being introduced in education at 23% initially, with the hope that countervailing measures will be found to allow the introduction of a multi-layered rate system.

In what is being lauded by the government as a great success (to come), VAT will be imposed on education services, as follows:

0% for kindergartens and nurseries

6% for foreign language schools, ‘frontistirio’ (tuition centers), dancing schools, music schools etc and vocational schools (IEK)

13% for private schools of primary and secondary education.

If the government ‘achieves’ this, guess what will happen next. Education providers will either mis-report their status to benefit from a lower rate, or will re-classify, or will keep receiving money under the table (as usually happened), or will go out of business as parents who cannot afford the higher rates pull their kids out.

Another win against the rich, another win for tax evasion and muddle. As Mr Filis said, why are we discussing about these peanuts?

For comparison see below for the education VAT regime in the UK.

No VAT for schools, higher or further education where tuition is being provided for a charge. Any ‘closely related’ goods or services provided are also exempt.

No VAT for private tuition which is provided by a sole proprietor or partner.

No VAT for tuition in English as a foreign language (EFL) which is supplied by a recognised commercial provider.

No VAT for vocational training which is provided for a charge.

Good luck to the next generation of Greek workers.

sxoleio

@iGlinavos

<updated 10.11.2015>