Tax evasion is rampant in Greece. So a new property tax will be added to peoples' electricity bills, which are collected by the state-controlled power company.
Pay your taxes, or we'll turn out the lights! What could possibly go wrong?
Cut to Reuters:
the state-controlled company's powerful labour union ... said it will try to block the tax because it was unfair to consumers...
"We will obstruct the issuing of bills... and we will order ... employees not to cut the power (of customers who refuse to pay the tax)"
Meanwhile, Greece's economy is on track to shrink by more than 5 percent this year. Its two-year bonds are yielding 68 percent (compared to 0.4 percent for two-year German bonds).
The country seems locked in an austerity-contraction death spiral. Germany is bracing for impact.
Der Spiegel reports today:
Merkel and Schäuble are facing up to the inevitable and thinking the previously unthinkable: Greece is going bankrupt, and not even its withdrawal from the monetary union can be ruled out anymore. ...
The planning for the day of reckoning is already underway, in departments at the Finance Ministry in Berlin as well as in task forces at the EU in Brussels. German Finance Ministry officials hope that a Greek bankruptcy would be manageable, as long as European politicians keep their cool and the bailout funds are increased as planned.
Throughout Europe's financial system, tensions are rising this morning.
The cost of insuring European bank debt against default hit a record high today, according to Dow Jones. And shares of the biggest French banks fell more than 10 percent this morning, driven at least in part by worries over loans the banks have made to Greece.
The rout prompted this statement from the head of the Bank of France:
Whatever the Greek scenario, and whatever provisions have to be made, French banks have the means to face it. French banks have neither liquidity nor solvency problems.
Got that? No problems.