Despite the numerous bailouts, the Troika wants even more and implies additional taxation on Greeks with low to no income
12 February 2016
Greeks have had a love-hate relationship with housing that is closely tied to their turbulent history. They have been displaced, bombed, evicted and robbed so many times in the last few centuries, that housing, takes on a very high importance in Greek consciousness, and stands next to family. Since the 2007/8 Wall Street crash, housing has become a central topic after unemployment in all discussions in Greece, and with it, all related subject matter: mortgages, ENFIA (property tax), evictions, homelessness, electricity and water cutoffs, squats and migrants.
The 1950-60’s Property Boom
After the decade of war, a triple occupation and a civil war (1939-49) Greeks started to try to rebuild their lives. Athens went through the Karamanlis ‘property boom’ which was closely linked to hard-fought battles by the builders union and associated trade unions (plumbers, electricians etc.) Athens had an LA style redevelopment, growing from a city of 300,000 to 5,000,000 m people in an ad hoc manner. First plots of land were divided up and sold, then property was built on it step by step, floor by floor, over generations. Most properties were originally single story high, with a small back garden and sometimes a well, and a basement - which was either rented out or used as a hideout from German bombs in WW2. Sewage and water pipes didn’t really exist as septic tanks were dug out, and companies with lorries were paid privately to empty them, and other companies were used to sell water and ice, the most famous being Power - a German company in the pre-war era.
Building was basic using sand and mortar to create cement, and marble was crushed to create floors. All scaffolding was wooden and the hog carriers used their body. Machinery was very limited and often non-existent. Roads, town squares, street lighting and sewage came after enough building were erected in any area. Town planning was an alien concept. It was a free for all. Most roads were created in early 20th century for horse and carts and were narrow. Many of the older boroughs of Athens are still the same. Height was limited to 3-4 stories at the most. The only real benefit, of course, was that one owned the house, there was no mortgage, and it was paid for through hard graft. Hence, Athens has limited green spaces, at most 3% overall, and the only outlets are the mountains and the sea coast (which is being hived off and closed for poor people.)
In a nutshell, that is how around 70% of Greek housing was built, after World War Two. Renting was to be avoided at all costs unless one was to be relocated to another city for professional reasons. Owning property was there to gain some stability and many families just ended up building upwards where their kids and grandkids would eventually reside.
Social housing didn’t exist much. It came into existence with the government assigning land for the one million displaced after the failed invasion of Turkey at the behest of Anglo-French imperialism at the end of WW1. Post war they built a few apartment blocks which belonged to the Organisation of Workers Residence (OEK) for which you had to jump so many hurdles that it was easier to become an Olympic 100m hurdle jumper. During the Olympic games, many properties were handed over to Albanian migrants, displacing Greeks from this right as well. Now all these organisations have been shut out.
Troika and the Property Tax
Despite all Greeks banks receiving over Euro 200 billion, new property taxes on top of existing ones were introduced in 2008, based on the square metres of each property and its value during the height of the market.
There are 6.3m housing units in Greece, 45% of which are flats, and around 35sqm is the average space assigned to each citizen, with 3 bed flats being the largest (2.5m units) and 1 - 2 bed flats being the second most popular (1.5m units).
The high levels of home ownership and the low levels of indebtedness in relation to housing and mortgages, meant the economic sparks of the IMF had to come up with come up with a policy to generate income for the appetites of insatiable banksters (who have no issues claiming $500m yearly salaries) and this became the infamousharatsi (word originates from the taxes imposed on land by the Ottoman Empire) to the tune of around Euro 2.5b a year.
So having paid off their houses on the whole in full, Greeks now had to pay rent to live in them to the Troika. In work, out of work, disabled or not, money had to be paid. There were no exceptions. Initially, the tax was provisional, then it became… permanent. One politician after another (Samaras, Tsipras etc.) would abolish it or not pay it. Then it became under Syriza a patriotic duty to pay up, after standing on a pre-electoral platform that it would be abolished.
Taxing people with no source of income was the new fashion as they invented taxable criteria based on what is owned by abolishing minimum (un)taxed thresholds. From progressive taxation we went the full hog to regressive taxation, so if someone happened to have been given a village home from the parents but had never lived in it, or even kept it up to a minimum standard, the mere fact of ownership entailed a tax which was calculated on the absurd notion of assigning fictional values to ownership. So for instance, owning a one bed flat and a car meant that the taxable income could be (1 bed tax = Euro 4k x 10% = 400 per annum, and for the car it was 1.6cc engine Euro 2000 x 10% = Euro 200 per annum) liable to Euro 600 per annum, just for living in Greece. This would be separate to any income earned, which would be taxed separately irrespective if one was unemployed, or severely disabled and could not physically earn a living.
The tax was introduced initially via electricity bills (the way Greek taxes were collected for the local council, the property was in and the state owned broadcaster ERT). Failure to pay meant cut offs. Committees of Non-Payment were created, and many only paid their electricity bill. The government gave the green light to private debt committees to collect taxes, and they would go round with lists of people, and if they didn’t pay up they would cut them off the electricity grid. Countless are the stories of diabetic patients or patients on life support machines being cut off and dying soon thereafter. Then committees (most famous being Can’t Pay - Won’t Pay) sprang up going round re-connecting poor households. Then the electricity union broke into the headquarters of the electricity supplier and shed light on all. Around 50% of people hadn’t paid a penny to this tax. Once this became known, the Troika informed its politicians in Athens to transfer this tax onto the tax office. Avoiding the tax via the tax office would lead to automatic deductions from the tax office and automatic penalties.
The war on property is due to the fact that it is immobile and cannot be hidden. But having empty properties or empty business premises and being taxed, whilst in general business foreclosures alongside unemployment and wage reductions went through the roof, one gets the general impression that this is a hit-and-run mission. No one has ever heard of being taxed for half built properties or being taxed just because one owns land irrespective of whether it provides a source of income. Where logic ends, the Troika begins…
Hotspots: The new illegal immigrant terror threat
During 2009, the Thrace and Macedonia regions in Northern Greece were discussed as being areas of creating special economic zones based on the maquila model from Central and Latin America. Mass immigration has as its aim driving wages down to below Chinese levels, but the issue remains that if the cost of living is greater than that - how could one live and survive? By essentially reducing the levels, to countries like Bangladesh, where you live in shacks and work all hours under the sun for a bowl of rice, they are trying to lower peoples expectations so they never expect anything from anyone. Hence the sellout by Syriza is all the more important, as it is generating the idea that all politics by its very nature is corrupt, and the Left in particular is the most corrupt of all, as going from a programme which was to inaugurate a minimum subsistence level (unemployment pay and a rent subsidy), we are now going full steam ahead for mass evictions, and the parking of hundreds of thousands of illegals to create the usual divide and rule diversions so as to be able to bring the police back into motion to lord over the scavengers, Greek and illegals, trying to eke out a living in the same geographical space.
Parking 400,000-1,000,000 people on Greek islands without the agreement of the locals will put massive pressure on non-existent resources under a situation where the IMF has already imposed a scorched earth policy in most areas of social welfare, and will create the conditions for a social tinderbox. When Defence Minister Kammenos as a loyal lapdog of the EU landed by military helicopter in Kos, he couldn’t go to the town, and landed on a field which he said would now belong to the state to house tens of thousands of alleged refugees, when in reality their agenda is a fast track approach for a new reserve army to replace in totality recalcitrant Greeks. The use of riot police to crack heads open in Kos… and then that Syriza MPs labelled them ‘nazis’ does not bode well for what is yet to come.
Homelessness and Repossessions
Everyone realises that people in their mid-50’s have absolutely zero chance of finding another job. If one is made unemployed then, and one doesn’t own a flat or have an extended family, it is easy to find oneself on the street. Thousands became homeless, the centre of Athens was full of people sleeping rough. Most landlords held out for anything between 6-12 months to see if anything can be done in terms of rent. Countless are the stories of adverts in the media where landlords rent out flats for free as long as the haratsi is paid. Endless are the stories of unemployed children who subsequently got married, had children, etc. and had to move back in with their parents - if they are still alive of course. As a consequence of this economic war against people on behalf of banks, we are led to the ludicrous scenario of banks’ ‘bad’ debts being paid back via bailouts (over Euro 250 billion paid by taxpayer), and then the same banks inaugurate a programme of mass repossessions.
There are around 1.2m mortgages still outstanding, of which around 400,000 are in the red, of which 800,000 are for housing (the others are for businesses) - out of a total of 6.3m houses. A section of these mortgages are linked to hotels and the tourist industry, which had exclusive funding once the Euro was introduced into Greece. Some of these are commercially viable, but due to the inability to re-finance, the banks obviously want the properties, as they can make a killing by buying them up at auction. As everyone knows, auctions are essentially ‘inside jobs’ for the best properties. In total therefore the amount of houses that are in the red are 6% out of a total of 6.3m homes, a very small amount. In Greece, the war on housing couldn’t exist directly, but only indirectly via taxation - which is where the property tax haratsicame in. They engineered so that all would pay rent to the Troika for just happening to live in Greece.
The remaining properties which are peoples’ housing are of course under threat, but due to their specific nature (a majority are apartments in blocks), and due to the massive collapse in prices, many of them are commercially worthless. There is no logic in buying them even at auction. A cursory glance at the website Xrises Efkeries(Golden Chances – local version of Ebay), shows tens of thousands of properties for sale in the major cities, ranging from Euro 3,000 to Euro 50,000 when 8 years before the cheapest would have been around Euro 50,000. Around 200,000 are currently on the market. Adding thousands more via auctions will depress the market even further down.
A rapid glance of the repossession procedure shows that it costs money to process and takes time: around 3-4 months (and a minimum of Euro 3,000.) Then the banks would be liable for the haratsi. Unlike Detroit, it is impossible to blow up the houses or burn them to the ground and evade the property tax, as they are in apartment blocks. The court systems to process 400,000 repossessions would take approximately six decades, and that would imply they don’t ever have any strikes in courts that delay the process. The banks do not essentially want the properties, as they would be liable for them, and for that they went bust for in the first place and were bailed out, so they could do that again and again.
How could the banks not go bust when the government pushed through wage and pension cuts of 50%? People had commitments on wages and pensions and this meant their budgets were totally devastated. But even if repossessions occurred on a grand scale, another area which the banks don’t talk about is what would happen if flats were brought to auction, say at Euro 30k, and there were no bids? That would imply the depressed value of the flats was even more depressed as expressed in the non-sale at auction. Hence, even from a banksters point of view, getting rid of bad debt doesn’t help, as this may drag the other parts of the banks portfolio into the sewer.
As was noted by the President of the Bank of Piraeus,
If all the tens of thousands of properties fall into the banks hands their value will go to zero then we will have the cost of maintaining, security etc. The beginning of auctioning off peoples homes is against the banks.
Syriza came up with another plan: provide a housing subsidy to ‘problematic’ households, as well as subsidise 20k rents for illegal migrants. This sounds good on paper. But anyone who has ever had dealings with the Greek state knows that an agreement isn’t worth the paper it’s written on. People could end up housing migrants and then not get paid, and get taxed on income not earned (this won’t be the first time this occurs, as it’s become a feature of Troikanomics). But none of the above has been implemented, it’s just waffle of trying to save the banks indirectly once more, as any income they get from whatever source saves them for a bit longer.
The growth of homelessness in the thousands has led to a massive growth in food kitchens as well, which are run by the Greek Church and other solidarity organisations (both from the Left and the Right). In certain boroughs canteen food has been brought in for pensioners (not only) at Euro 2.5 a meal for those who have no electricity at home, or don’t have the time to cook. The community canteens are being run by a big corporate businessman (Salas), as well as by a movement by farmers who try to miss out the middlemen (by selling directly to the consumer), but many buyers been overpriced. This is all that has occurred in the crisis.
The editor of Avgi (Syriza’s paper) alleges that solidarity organisations against the repossessions are essentially saving hotel owners and people with large houses, when in reality most of the small scale repossessions that go through are those of vulnerable little people - as an easy way of frightening the majority to pay up. What is illuminating is that after all the Syriza waffle (‘leftist radical nature’ etc.) has dissipated, a vacuum has been created, and people are self-organising. Hundreds are turning up at courts when repossessions are supposed to go through and they are blocking them. It’s difficult for Syriza to push through US/Spanish style repossessions and throw families on the streets or to use riot police in court and tear gas people away, but it’s not for want of trying. They are provisionally in a social/class stalemate.
Uprooting farmers from their land and repossessing peoples’ homes in order to satisfy the corporate bloodlust of decaying capitalism sounds good on paper, the problems develop when you have to deal with real people, with real lives, who no longer want to put up with the situation with their back constantly against the wall. The struggle for decent homes with decent jobs, and to permanently evict the fear of homelessness and unemployment continues. It’s no coincidence that Dr. Death (Schäuble) recently rekindled the spectre of Grexit with a new caveat: the creation of a Euro army. Beyond everything they realise that only a direct foreign occupation can break the Greeks and even that, as history has shown, never usually has any guarantee of success. It’s no wonder Germany’s satellite states, like Austria, have now made noises about sending in armies to allegedly stop the migrant flows, but as withFrontex arriving in Greece, it will be geared towards reducing Greece’s sovereignty, imposing the will of the supranational dictatorial union, and very possibly ordered to take things a step further by putting down recalcitrant Greeks.