Dennis Gartman, hedge fund manager and author of The Gartman Letter, has detailed the 30 or so measures the Greek Parliament will be taking in privatization, taxation, public sector cuts, defense and benefits.
Here are 10 of the most backbreaking with comments from the peanut gallery:
- Taxes will increase by 2.32 billion euros this year and 3.38 billion, 152 million and 699 million in the three subsequent years. There will be higher property taxes and an increase in the value-added tax (VAT) from 19 percent to 23 percent. The Greeks are now about to show the world how to squeeze water out of a rock.
- Luxury levies will be introduced on yachts, pools and cars and there will be special levies on profitable firms, high-value properties and people with high incomes. Actually, we could use something like this idea in the U.S.
- Excise taxes on fuel, cigarettes and alcohol will rise by one-third. Not bad unless you want to get cancer, get drunk, and then drive yourself to your own funeral.
- Public sector wages will be cut by 15 percent. See #1. They're going to cut wages and then tax what's left?
- Defense spending will be cut by 200 million euros in 2012 and 333 million each year from 2013 to 2015. Not so bad. There won't be anything left in Greece to defend anyway.
- Education spending will be cut by closing or merging 1,976 schools. Bad idea on both options to kill off your future by raising dumb kids. I know - we did it in the U.S.
- Social Security will be cut by 1.09 billion euros this year, 1.28 billion in 2012, 1.03 billion in 2013, 1.01 billion in 2014 and 700 million in 2015. There also will be means testing, and the statutory retirement age will be raised to 65 from 61. A shadow of things to come. I expect the same to happen in the U.S. soon.
- The government will privatize a number of its enterprises, including the OPAP gambling monopoly, the Hellenic Postbank, several port operations, Hellenic Telecom and will sell its stake in Athens Water, Hellenic Petroleum, PPC electric utility and lender ATEank, as well as ports, airports, motorway concessions, state land and mining rights. Somebody is going to make a lot of money with this measure. You can bet it won't be the Greek people.
- Only one in 10 civil servants retiring this year will be replaced and one in five in coming years. See #4. Who's going to want a civil service job with lower wages, higher taxes and fewer benefits? They're probably only going to be able to replace one in ten retirees.
- Health spending will be cut by 310 million euros this year and 1.81 billion euros from 2012 to 2015. If you let the aged and the sick die off by not providing health care, then there won't be as many mouths to feed and things should get better for everyone.
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