Grexit

Amado Lorenzo         The auditor point of view                                                             July  2015

An once again  .....  another crisis in Greece and the media informing of an agreement to initiate the “third rescue” of the Greek economy .... . The news resembles the announcement of an ex English prime minister, many years ago, claiming that he had obtained a permanent peace agreement with the “der fuehrer” of 1939.

Ángela Merker, the EU “der fuhrer” and Germany´s prime minister, ex citizen of Germany democratic republic, declared at the German parliament that it was the “best possible solution” .

HOWEVER

The German minister of economy, Mr. Schauble and the ex minister of economy of Greece, Yanis Varoufakis, although from different political sectors, do have the best information on the current situation and perspective of the Greek economy, agree with my proposals (see http://www.pva-1308.blogspot.com , search “amadolorenzo” in www.youtube.com and the annex ).

That the current agreement is only a temporary patch to avoid affecting the patrimony of the creditors, mainly … the German banks?   .... though theoretically, the new obligations are guaranteed by identified assets (¿a mortgage?, as I suggested for Greece, Spain and Portugal two years ago. ).

It looks that the politicians do not know and  are not interests, either, to know the accounting and auditing procedures and prefer to maintain the deferred debts in the balance sheets of the creditors, disregarding that their current value is questionable, instead of deciding on other measures.

The current value of deferred debts - interest rates differential of 5%-    =   34% of the debt 

WHY?

Because the current Greek situation will not permit them to increase high level employment and exports, to reduce the debt and maintain a minimum welfare state.

When, what I call the IV Reich, proposed new memberships to the European Union based on political decisions, against the opinion of the technicians, that suggested to prepare these countries first, to meet the EU requirements, Germany chose to disarm their productive capacity and to convert then into mere consumers and providers of services with little value added ....  waiters, craftsmen, worker not qualified, etc.

This was the first mistake, and the second, even worst, to approve the incorporation of the “PIGS countries” (Portugal, Ireland, Greece and Spain) to the Euro,  based on “accounting engineering” of the "book values" of real estate and other assets, that permitted the politicians, with low or none management capacity, but higher ability for corruption, to use the new currency and its low interest in their  benefit, increasing the public debt with useless projects (Olympic games, useless airports, empty highways, “magnificent buildings”, excess of non profitable high speed trains), too many of them in our kingdom, and the responsible politicians will never go to jail.

Executives at the EU, the European bank and the IMF (the current and the two previous chairmen  have been indicted, but nothing will happen) are responsible of the disaster, since they have not exercised their obligation of monitoring what the politicians were making with the funds and credits provided to them. 

Now, these countries have become "financial colonies" of the IV Reich, originally the "triangle" London-Paris-Bonn, then Paris - Berlin and now only Berlin.

CONSECUENCES

As it happened in Germany after World War I due to the Versalles agreement, as the cause for the raise of radical right fascist movements (nazis, the Italian fascism and the Spanish “falange”) and  left fascism (communist dictatorships “Stalin”), protests started as a result of a simple manifest of only 18 pages (!Indigne vous! of Stéphane Hessel) that was used as flag to protest against the IV Reich by groups of young communist, pro-Castro and chavistas university professors, as well as the groups of extreme right from France, Greek, and other countries, even in the USA.

These groups have already affected the “two parties Spanish system”, that due to the low democratic level of the voters have tolerated corruption in all the institutions ( the royal family, the politicians, the unions, the church, the media and many other ).

Exist unanimity among the economists of the danger that the situation of Greece, the rest of the countries called “PIGS”, and also others of the UE, get worse, reducing the quality employment,  and generating more debt.

THE BALANCE SHEETS OF THE OWNERS OF “PIGS COUNTRIES DEBT"

The deferred debts of countries with high interest, have the same accounting “current value” that "forgiven part of the debts", affecting their official accounts, therefore it is a fraud not to consider it and they incur in the same offences of those which they accused of “having altered the official accounting"- in Greece, Spain and other.

Will they dare to show the current value of the debt in their balance sheets?

ARE THERE OTHER SOLUTIONS ?

The “der fuhrer” Merkel thinks that there are not  .... and is logical, since the solution would mean a better distribution of the quality employment, higher investments in I + D and the possibility of exporting products and highly technological services by those countries ...  and it would not be accepted by the political team that currently directs Angela, neither the politicians of the “PIGS” countries would dare to contradict her and much less after her behaviour with Greece.

A SOLUTION

Would consist of reassigning to the "colonies"  part of the quality employment they have lost. The necessary investments could be obtained selling some key assets and renting other as - The Alhambra, Cordoba´s Mosque, museums that have cost us large amounts in spite of having a lot of paintings kept in warehouses and recover others donated to institutions.

(see solutions in http://www.pva -1308.blogspot.com and www.youtube.com search “amadolorenzo")

In the case of Spain it is absolutely necessary, at least during the next "thirty years" to centralised again the management control  of activities that have been abused  ...  as the social security, the functions and personnel duplicity for the same activity  ..  and do not forget the "political advisors",  pensions plans to ex politicians and those foundations that receive uncontrolled public funds and are used for private activities.

WE PRAY TO THE GREEK GODS, ROMANS, JEWS, ISLAMIC, AFRICAN, CHRISTIAN, CHRISTIAN - ROMAN (CATHOLIC) AND EVEN SCANDINAVIANS so that our children and grandchildren could, peacefully, obtain a better distribution of quality jobs and wealth from the European Union, better salaries and quality standard of living.

References:

http://www.pva -1308.blogspot.com

!Indigne vous! of Stéphane Hessel

www.youtube.com conferences of "amadolorenzo"

Annex :  Recommendations included in http:/www.pva -1308.blogspot.com

The Financing of the political parties

A subject that is repeated in our kingdom, as it is not a secret, the existence of a corruption that affects most of our institutions.

The ERE case in Andalusia (governed by the PSOE) whose fraud is too high and difficult to assimilate. This fraud has benefited entrepreneurs, politicians, unions and even religious institutions.

Other cases like Gurtel (PP), the Noos institute and Corina ( Royal family), Barcenas (PP), the Pujol and Mas family (CIU), IU(ERE) and even the new political party “Podemos” demonstrate what many citizens think, that all the political parties do the same.

Grexit                                                                             Amado Lorenzo                                                                          -4-

Is a solution to reduce salaries 10% to create employment?

Someone, Who? at the IMF has declared that a solution for Spain and other countries in difficulties would be to reduce salaries. A 10% in the case of our kingdom.

The countries that joint the Euro using accounting engineering without being prepared and used the low interest of the "deutsche mark", whose model uses the European currency, to create real-estate bubbles, corruption, unnecessary buildings and installations (“obras faraonicas”), highways and airports that are not used, with the result of a debt that will be impossible to pay.

Many economists of the academic environments and entrepreneurial (very different each one concerning experience and capacity to recommend real solutions) have advised the politicians of the drastic solutions they should implement, but have not receive any positive reply as they hesitate to correct their wrong management.

Now they speak of salaries reduction, but nobody has explained what it really means. If they suggest reducing the salaries of new employees, it would create differences so serious between the current employees the new ones that would provoke social problems.

If they refer to reduce the salaries of the government employees another 10%, but to maintain the high salaries of the officials of the FMI, the UE and new companies as the “bad bank”, etc. this would be another mistake.

The post graduate students knows that it is a measure to increase the competitiveness, simulating a "devaluation" because getting out of the Euro would affect French and German banks, sovereign funds and other debt owners.

The students have arrived at the conclusion that reducing salaries alone is not the solution, especially if these reductions only affect new employees, local employees and minimum salaries.

Instead of implementing new salaries reductions it would be better to implement some improvements:

* To reduce immediately the current government structures (duplication of employees and politicians),  90% of the advisors, the salaries and fringe benefits of the EU officers, ex presidents of our CCAA,  etc. with retroactive effect.

* To reduce the maximum pensions, not the small ones, limit the pensions that the politicians have established to themselves to the scales and ages of the Social Security.

* To reduce the debt through a negotiation with the debtors, offering buildings, “obras faranicas”, renting monuments (the “Alhambra”, the Mosque of Córdoba, the “Valle de los Caídos” and others) to the sovereign funds who owns our debt, to reduce the interest payment  "interest differential" which is in fact a German fraud.

There are many other ways to reduce cost, like a better utilisation of embassies, consulates and commercial offices, both inside and outside of the EU. Installations to be used by all EU members would save billions of dollars and increase efficiency, but nobody dares to recommend it.

Too many journalists and even “economists?” make comments in the media about salary reduction but do not know the real impact,  but “talk about the subject”. 

CONCLUSION 

The Kingdom of Spain is in a very difficult economic situation, but there are solutions.

However, the politicians refuse to cancel their fringe benefits delays the recovery. We refer to the  politicians at the central government, the “CCAA”, with their thousands of personnel with duplicate functions, hundreds of ex presidents with illegal pensions, the excessive cost of the European Union.

An idea to reduce the cost of the royal family in Spain

A tax to be paid by each one of the owners of a “titulo nobiliario”. From 5000 Euros for “condes”, to thirty thousand for “marqueses”, dukes and more additional for the titles with greatness of the kingdom (“Grandes de España”.

Additionally we could create each year new titles to be offered to entrepreneurs that create employment, according to the financial needs, at a price between ten and fifty thousand Euros.

Those titles that remained free due to unpaid fees by theirs prior owner would be offered in auction, as long as the new noble comply with some minimal ethical conditions.

Draft  Nº 3 - 23jul2015