If You Brexit, You Own It

Forget all the attention on Trump and trade and China and Trump smashing china and China dealing a trump and all that. It is possible that the most salient event of the next few years will be the breakup, or least dramatic restructuring, of the European Union. Now that British PM Theresa May has pronounced that Britain proceed to a “clean break” or “hard Brexit,” attention will begin to shift to the other weak members such as Italy, etc.

Or perhaps we’ll revive the Greek financial crisis, which has never really gone away. There was a stunning little detail in a story about Greece in the Wall Street Journal last Friday, in particular how Greeks are slowly depleting what little savings they have trying to keep up with a sinking ship of state:

Financial strains extend even to the wealthier suburbs of Athens. Retirees Ioanna and Petros Kokkalis never had debts, nor feared losing their home. But now the 87-year-old former economist and his 81-year-old wife are unable to repay the property tax imposed on their 70-year old house, a family inheritance. The annual tax is around ‎€33,000, but Mr. Kokkalis’s pension—already cut by half—is €28,000 a year.

The couple borrowed money when the tax was imposed, initially as a temporary austerity measure in 2011. But they are already behind on nearly €200,000 of tax payments and can’t borrow more. Mr. Kokkalis says the state is calculating tax based on outdated property prices that have since collapsed, and that if he tried to sell the house now, nobody would be interested. “They impose taxes on an imaginary value,” Mr. Kokkalis says. “This is confiscation.”

€33,000 a year in property taxes? In most states in the U.S. that would surely be a house with a value between $3 and $4 million. I’m sure there are such houses in Greece, but as this story hints, the amount is likely something like a surtax imposed as a “temporary” measure in 2011. This can’t possibly work, and won’t be paid. At some point, the finance ministers of the other EU countries that imposed austerity on Greece will notice that the revenues aren’t coming in, and the Greek bond market will collapse again, and Greece will ponder withdrawing from the EU, and Germany won’t want to bail them out this time, especially with the Euro-peso sinking on currency markets.

Maybe time for someone to come along in Athens with the slogan, “Make Greece great again!”

Reminder:

Merkel ruins continent

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