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  1. #1
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    Default Greece to Make All Large Cash Transactions Illegal

    Greece to Make All Large Cash Transactions Illegal


    From Reuters:

    “From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards”


    Thoughts?

  2. #2
    Habitual Fi LineStepper JocktheMotie's Avatar
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    Hmm, not sure about their reasoning, though I know their economy is basically in the tank. I guess it's a way to increase tax revenue to help get cut into their deficit.



  3. #3
    Administrator highlander's Avatar
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    Maybe it is the former communist influence. Sounds a bit draconian.
    My guess is that it's good for tax revenue and companies in the payments chain (like banks).

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  4. #4
    Senior Member iamathousandapples's Avatar
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    Greece has a culture of evading taxes(such as never writing recipts, because that'll be taxed and only making doctors payments IN CASH), maybe it's a way to stop that and actually get taxes paid.

  5. #5
    Senior Member avolkiteshvara's Avatar
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    I think this is more political than economic.


    The average Greek is pissed off right now at the rich "corrupt" government officials and cronies.

  6. #6
    Senior Member matmos's Avatar
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    Traditionally currency restrictions are imposed to limit activity (read: ability to collect tax) in the black market.

    I'd assume Greece has a large black market that its government would like to bring to heal by creating impediments to the nudge-nudge way many of its citizens go about their business. Given the severity of Greece's fiscal pickle, that's like giving an asprin to a man with his leg hanging off.

    With a 12% budget deficit Greece will be unable to reduce that to 3% (as they are required to do) within the next few years, and the government does not look capable of carrying out the kind of cuts needed without risking the ire of a relatively militant workforce.

    Compounding the problem: many of the Med-Zone countries (particularly Spain) are in roughly the same boat. Greece only matters because it is the thin end of a peculiar fiscal wedge.

    This currency restriction looks nothing other than a desparate measure that comes nowhere near addressing the fundamental schism in the way Med-Zone and northern EU countries manage their economies.

    Either way, crooks will no doubt find ways around the problem.

    I suspect alot of Greek (and Spanish) economists curse joining the Euro and would be better joining the Merrylanders ouside of it.

  7. #7
    Senior Member Shimmy's Avatar
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    Greece is known for it's tax evasion. I reckon this is a measure to reduce that problem.

    Greece flat out lied about the state of their economy to the EU. While I think they should be helped by the rest of the EU MAJOR concessions have to be made by Greece at this moment. In the first place they'll have to work extremely hard to regain the trust from other nations. And more importantly they have to proof, without a shadow of a doubt, that they will be able to work out their finances as soon as possible, because otherwise every penny invested in Greece will be a penny wasted, and I, and every EU nation will agree with me on this one, will be damned if my tax money goes to saving a sinking ship.
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  8. #8
    Senior Member matmos's Avatar
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    The black market in Greece makes up about 30% of the economy. That's untaxed earnings. While Germany ends up forking out for the bail-out. The Greeks, with an aging population, cannot bear the idea of working to 63; the Germans propose to work to 67. My sympathies are with the Germans.

    Far from facing reality the Greeks decided as a nation to go on strike.

  9. #9
    Senior Member Gerbah's Avatar
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    I think it's a cash shortage problem to do with the financial crisis. The amount of money written on your bank statement is not money you actually own any more. Once you've deposited money in the bank, it is legally the bank's property and no longer yours. It is just a promise to pay when you demand it at some point in the future. The bank is not a storage holder. If the bank goes bust, they are not legally obliged to give it back to you. So when they prevent people from using cash, they are essentially refusing to convert what you gave them into currency. As long as your money is just digits in a computer, they don't have to make good on their debts to people. If there's a bank run, the bank will collapse because they don't have the cash to pay all their customers back.

    In these times, I would keep a good amount of cash at home in case banks suddenly close for a "holiday".
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  10. #10
    Senior Member JHBowden's Avatar
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    Thoughts?
    My ISTJ father, a huge Democrat, has always wanted to do this here in the States. Outlaw cash and just have government approved money cards, so everything gets officially taxed. He thinks all wealth belongs to the government for some reason.

    Funny, a country is actually trying something very close to this lunatic idea!

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