If you could rely on anything in the past couple of years, it is that Greece is always going broke. Now it turns out that Greece is going broke faster than almost anybody expected.
The Greek government is struggling to collect enough tax revenue to cover its immediate bills, the New York Times reported on Wednesday, leaving it about 1.7 billion euros shy of its budget goals. It may soon need to freeze government salaries and pensions, temporarily halt imports of food, fuel and medicine, or dip into cash intended to help Greece's gutted banks, the Times writes.
This comes less than three months after Greece received the first installment of a new, 130 billion-euro bailout package in March. The hard-fought bailout agreement with Greece's European rescuers involved excruciating belt-tightening that has helped make the country's deep recession even worse. That tends to have a dampening effect on tax revenue, as the U.S. government can attest.
Austerity, in other words, is self-defeating, which is one reason the rest of the world is dragging Europe's biggest austerity fan, Germany, toward policies that favor economic growth instead.
Austerity is also deeply unpopular politically, in Greece and elsewhere. That has ultimately led to Greek parliamentary elections on June 17, and those elections are curbing tax revenue, Bloomberg writes:
Tax evasion increases by an average 0.2 percent of annual gross domestic product in periods around Greek elections, as the bureaucracy that relies heavily on day-to-day control by politicians slows and tax collectors perform fewer audits, according to a study published last year by Spyros Skouras and Nicos Christodoulakis, a former finance minister, from the Athens University of Economics and Business.
Worries about a possible exit from the euro zone and a return to the drachma have also dissuaded Greeks from giving money to the tax man, Bloomberg writes.
When tax collectors actually do venture forth to do their business in the famously tax-averse nation, the Times writes, they are countered with bullwhips, as in the case of a gas-station owner on the island of Santorini, or a radio station broadcasting their license-plate number as a warning.
The world has recently grown weary of caring about Greece's money problems and has instead turned its attention to the money problems of Spain, which yesterday warned it was at risk of being shut out of the bond market and that its banks needed a multi-billion-euro bailout.
The European Central Bank this morning stood pat on taking any more action to help Europe right now, in what might be an effort to force European politicians to make some hard choices and hammer out a long-term solution. Greece, which will likely need more bailout money or risk falling out of the euro zone, may be back on the agenda sooner than policy makers think.