A few weeks ago, Alexis Tsipras was just another “small time” politician. Now, Mr Tsipras is Da man in Greece. The rest of Europe is watching Tsipras conquer more votes by the day, bringing Greece’s exit closer. The 37 year old is making the rest of Europe tremble. From the must read TIME report.
TIME: Are you willing to make the necessary structural reforms in Greece to revive the economy?
ALEXIS TSIPRAS: It is obvious that Greece — and the Greek economy — has its own particularities that played a role in making this economic crisis deeper and longer. Indeed, we must make structural reforms which will the public sector more reliable, create an effective and fair taxation system, and fight the black economy which has been like a kind of gangrene on the Greek economy. As far as I know, the underground economy represents 30% of the GDP.
At the same time, we will try to restore faith in the law and convince people that the state is equitable and effective. We will destroy corruption and the interconnection of political and economic power from its roots. Without the contribution of the citizens, these reforms cannot take place. But in order to contribute, the citizens want to know that these reforms will not be implemented only to those who have low incomes but those who have high incomes and come from the upper class. There is a Greek saying: “The fish always stinks from its head,” (which means, roughly, corruption starts at the top). So if we don’t fight the problem at its roots, then we won’t be able to establish positive morale that can encourage all Greeks to also fight against it.
But you need a long time to make such reforms…
Some things need time, but some other can change quickly. For instance, I can’t understand why the last two and half years we are chasing our tail when it comes to taxation. We taxed poor people again and again, but no one talked about what we really needed, which is an assets register by which every Greek will be obliged to register their properties, their bank accounts in Greece or abroad, as well as their mobile assets, such as the shares of a company they possibly have. Only in this way, we will be able to tax everyone according to their real capability of paying taxes and we will create a system which will share the responsibilities in a fair way. Of course, for these policies to be effective, we should also create a high-penalty system for those who break the law. Whoever makes a false statement about his assets should be punished by having a bit part of these assets confiscated. There is no magical way out of the crisis. However, there are for sure solutions, tough but fair, in order to share in a just way the responsibilities, establish a positive morale and give a boost to the Greek economy.
Full interview here.
Grant Williams brings us the must read report of the weekend. With the Gold price surge we saw yesterday, you better read the report. On Gold, debt, the Euromezz and much more.
Gold stocks offer tremendous value and, while it is perfectly possible that they could get even cheaper in the next few months if fear leads to panic which in turn leads to indiscriminate sell- ing, at some point they will be appreciated for the value they offer and, if like everything else in the last few years, that realization dawns on
June’s meeting) the price of gold (and with it, the price of mining shares) will head for new highs once again.
Count on it.
But I will leave you this week with the words of a gentleman for whom I have a tremendous amount of admiration, Raoul Pal.
In a recent presentation entitled The End Game, Mr. Pal had the following to say about the next stage of the crisis:
We don’t know exactly what is to come, but we can all join the very few dots from where we are now, to the collapse of the first major bank…
With very limited room for government bail- outs, we can very easily join the next dots from the first bank closure to the collapse of the whole European banking system, and then to the bankruptcy of the governments themselves.
There are almost no brakes in the system to stop this, and almost no-one realises the seri- ousness of the situation.
Got Gold miners?
Guest post by Doug Short.
The Q Ratio is a popular method of estimating the fair value of the stock market developed by Nobel Laureate James Tobin. It’s a fairly simple concept, but laborious to calculate. The Q Ratio is the total price of the market divided by the replacement cost of all its companies. Fortunately, the government does the work of accumulating the data for the calculation. The numbers are supplied in the Federal Reserve Z.1 Flow of Funds Accounts of the United States, which is released quarterly.
The first chart shows Q Ratio from 1900 to the present. I’ve calculated the ratio since the latest Fed data (through 2011 Q4) based on a subjective process of extrapolating the Z.1 data itself and factoring in the monthly averages of daily closes for the Vanguard Total Market ETF (VTI).