Peter Tenebrarum writes:  The privatization of the port of Piraeus, which Syriza had previously reportedly opposed is about to go forward after all, and is expected to bring in proceeds of around € 500 m. Pressure on the Greek government has recently increased, not only due to the fact that it is expected to run out of money soon, but also as a result of a downgrade of its credit rating by Fitch late last week to a lowly CCC rating. .

In a recent editorial in the FT, entitled “Greece versus the Baltics is not an argument for a heartless state”, John Dizard compares the successes achieved by the Baltic nations to the ongoing malaise in Greece.  The Baltic countries lacked faith in state-directed investment or in policies to maintain demand through accommodative monetary policy and fiscal stimulus. So they collectively decided they would have to pay themselves less, but in real money — what was called “internal devaluation”, or “austerity”.  Latvia had the sharpest fall in output, losing 24 per cent in two years, while sustaining a fiscal adjustment of 14.7 per cent. Over the same period, Greece’s fiscal adjustment was 6.6 per cent of GDP, even though its budget deficit and debt levels were far higher.

There were virtually no dismissals from the Greek civil service over this period. Salaries were cut, but public sector staffing was reduced with lay-offs of temporary contract workers and early retirements. This had the effect of reducing already low service levels and transferring costs from payrolls to pension obligations. Latvia fired one-third of its civil servants.

Even though EU money was made available to the Greek government for reducing the public’s compliance burden through the application of IT, resistance by public sector unions and the bureaucracy have left the public shuffling through even longer lines than before. The tax burden on salaried workers, compliant domestic businesses and property owners was substantially increased. In contrast, the Baltic states have fairly flat and relatively low tax rates, and are moving most of their compliance procedures online.”

David Stockman has written:  “Today’s raging crisis in Greece was hidden from view for many years in the run-up to its first EU bailout in 2010 because the denominator of its reported leverage ratio—national income or GDP—–was artificially inflated by the debt fueled boom underway in its economy.

Looking at the trend in the share of government spending to GDP in Greece, it becomes immediately clear that “austerity” essentially means “austerity for the private sector, while the State remains largely untouched”, correctly describes the prevailing state of affairs (consider that Greece has recently reported a mild recovery in GDP as well):

Latvia’s approach to the downturn was essentially the exact opposite of the standard Keynesian prescription. Since this path is only rarely chosen (one such rare instance was e.g. the 1921 recession in the US under president Harding), historical evidence is sparse, especially evidence of recent vintage. However, what evidence there is seems to confirm that the approach results in a thorough and swift clearing out of malinvestments in the economy and allows sound economic growth to resume fairly quickly. In a nutshell, it amounts to enduring severe short term pain in exchange for lasting long term gain.

One must keep in mind that every cent government spends is a cent the private sector can no longer spend or invest, since the private sector is the sole source of government funding. Whether government expenditures are financed by increasing taxation or by borrowing is secondary, as the funds must be obtained from the private sector in any case.

This should actually be blindingly obvious, but common sense has been missing in action from the public debate on this topic for quite some time.

It seems though that the idea of actually reducing the size of the State is still considered anathema in most of Europe, as tax hikes were generally favored over cutting spending in countries implementing austerity polices.

The EU and the Greek government may well come to an agreement this week that allows for the “extend and pretend” scheme to be resumed.

EU Commission president JC Juncker recently bemoaned the potential “loss of prestige” the EU would suffer if Greece were to be grexited. This remark didn’t received much attention in the press, but it basically represents word from the centralizers as to what they expect to be done. It should become clear in the course of this week whether an agreement that allows both sides to save face will indeed be struck.

Greece fears it will run out of cash in April if bailout money is not released.

George Will writes:

George Will writes:   Every day the Chinese go to work, Americans get a raise: Chinese workers, many earning each day about what Americans spend on a Starbucks latte, produce apparel, appliances and other stuff cheaply, thereby enlarging Americans’ disposable income. Americans similarly get a raise when they shop at the stores that made Sam Walton a billionaire.

The ranks of billionaires are constantly churned. Most of the persons on the original Forbes 400 list of richest Americans in 1982 were off the list in 2013. Mark Zuckerberg, Facebook’s CEO, was not born until 1984. America needs more billionaires like him, Michael Dell, Bill Gates, Jeff Bezos and Steve Jobs. With the iPod, iPhone and iPad, unique products when introduced, Jobs’ Apple created monopolies. But instead of raising their prices, Apple has cut them because “profits attract imitators and innovators.” Which is one reason why monopolies come and go. When John D. Rockefeller began selling kerosene in 1870, he had approximately 4 percent of the market. By 1890, he had 85 percent. Did he use this market dominance to gouge consumers? Kerosene prices fell from 30 cents a gallon in 1869 to 6 cents in 1897. And in the process of being branded a menacing monopoly, Rockefeller’s Standard Oil made gasoline so cheap that Ford found a mass market for Model T’s.

Monopoly profits are social blessings when they “signal to the ambitious the wealth they can earn by entering previously unknown markets.” So “when the wealth gap widens, the lifestyle gap shrinks.” Hence, “income inequality in a capitalist system is truly beautiful” because “it provides the incentive for creative people to gamble on new ideas, and it turns luxuries into common goods.” Since 2000, the price of a 50-inch plasma TV has fallen from $20,000 to $550.

Henry Ford doubled his employees’ basic wage in 1914, supposedly to enable them to buy Fords. Actually, he did it because in 1913 annual worker turnover was 370 percent. He lowered labor costs by reducing turnover and the expense of constantly training new hires.

All these thoughts are from John Tamny, a one-man antidote to economic obfuscation and mystification. Thomas Carlyle (1795-1881), who called economics “the dismal science,” never read Tamny, a Forbes editor, editor of RealClearMarkets, and now author of the cheerful, mind-opening book, “Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You About Economics.”

In the early 1970s, when the Rolling Stones were coining money and Britain’s top tax rate was 83 percent, Keith Richards, lead guitarist and social philosopher, said: “That’s the same as being told to leave the country.” The Stones decamped to France, leaving Britain, Tamny notes, to collect 83 percent of nothing.

Jim Rickards writes:  A lot of people think about gold as a percentage of a country’s total reserves. They are surprised to learn that the United States has 70 percent of its reserves in gold. Meanwhile, China only has about 1 percent of its reserves in gold. People look at that and think that’s an imbalance. But those are not very meaningful figures in my view.  Gold: US v China