First corrections of troika imposed economic policy and the magic number 7: Partly absurd and demagogic

We have seen a lot of the new Greek government and its negotiation with the rest of the Eurozone. However, ultimately, it is what it does in the country that will determine its success or not. And I am amazed at how dividing and demagogic these are. And prior to awaiting a deal with the eurogroup, in a silly - to say the least - attempt to create a fait accompli. If I were any Eurogroup Finance Minister, I would request smacking Greece on these as a precondition for any deal. Using the protestant ethic on Varoufakis is at least not productive and builds nationalistic support for him; pointing out and correcting demagogic attempts within the country can be much more effective and correct; but, ironically, this is also against the troika's previous advice...

In detail:

1. Proposal for protecting the main residence from bank seizures and auctions

http://www.kathimerini.gr/804345/article/oikonomia/ellhnikh-oikonomia/ka8olikh-prostasia-apo-pleisthriasmoys

Anyone with an economics education seeking to provide a social protection for cases where people have been unable to pay their debt service for their house knows that the first criterion is to connect income, cash at hand and potential cash at hand (sources of repayment) to debt service. Is this what they are doing? 

They have actually identified the abovementioned sources of repayment. But are they linked to debt service??? NO: Instead of being used to check the ability to pay, these, with the use of the magic number 7 (70,000 income, 700,000 real estate, 70,000 deposits) are only used to safeguard actual and potential voters of Syriza. And coupled with a total "objective value"of 400.000 for the value of the primary residence  - one more 700,000 would include some who will never vote for them -, all those who are clearly anti-Syriza are excluded from benefiting from this.

So a non typical household where both husband and wife still have a job, can decide to not pay the bank even if it is able to pay debt service of say 10,000 a year; they can simply wait and see without doing anything! How is this healthy for the banking sector or the economy or for debtor behavior? Moral hazard at its maximum!!!

2.Tax settlement and forgiveness

Here details remain a bit unclear as it seems to still be cooking, but the aim is clear: make the burden much much lighter, even forgive principal, for 3.5 million voters. 

It is clear that it was impossible to go on as before: new taxes were imposed with a troika approved stupidity of estimating the ability to pay of these taxes at levels of 70%! i.e. a tax was imposed where it was already known that 30% of the people could not pay it. It is clear that this was going to, sooner or later, require correction, and to a large extent is what is happening. Yet the way this is being done is not through a link with the ability to pay, but on absolute terms, just like the primary residence protection above. It is also "marketed" as a present to existing and potential voters, rather than a correction. With all the moral hazard effects once again. And, of course, excludes the tax of the right wing supporters who had large real estate holdings...

3. Domestic Debt Prisons: When democracy collapses...

And of course the first near complete turnaround on debtor prisons comes along, at the same time the country is negotiating a release from its own debt prison! Greece is one of the few countries where to owe to the state is legally worse than tax evading! Today if you owe 5.000 euros you can be arrested at any random police check and taken to prison! If you tax evade, you wait for a court decision ad infinitum though your assets may be seized in the meanwhile... And of course you may owe without prior notification or a chance to appeal legally - you can only appeal once you pay 50% of the tax, even if you do not have to pay it or it can destroy your business!!! Many people have been driving happily with their families and have suddenly been dragged out of their cars to prison without knowing the reason, a complete and total offense to any sense of decency! And of course such collapse of reason and due process only leads to people wanting to avoid investing in Greece while Greeks want to keep their money outside the country, outside the reach of the Greek authorities against whom there is no protection of law.

Instead of fixing, as a priority, this complete breakdown of the basics of democratic principles (troika imposed also) which they have promised to eventually do (let's see, when money is missing, things change), they are simply raising the limit to  go to debt prison to 50,000. Maybe... still unclear. Yet they had promised to stop this thing altogether, properly acknowledging prior to elections that if you put somebody in prison while he cannot pay you or when he has been unable to appeal to justice,  society sort of does not work well. Just like Greece and its bailout funds...