Tuesday, August 25, 2015
Anyway, good bye and thanks for reading.
Wednesday, July 29, 2015
Spain traditionally has had 14 pay periods: once per month and one summer and Christmas “extra”. The extra isn’t really “extra”, it is just dividing the annual salary into different fractions.
HOWEVER, 12 payments is significantly easier from an employer’s paperwork perspective:
- Social security calculations are easier, since the deductions for the “extra” is calculated differently.
- At the end of the contract, you need to pay out the proportional amount of the upcoming “extras”. This is done in a really weird-ass way (accrued simultaneously over the entire year), and effectively gives the employee an extra month’s pay.
So next time you hire someone, forget the 14 payments with extra, and just pay once per month.
Monday, July 13, 2015
The wealth tax and Modulo 720 are filed annually: the 720 is just informational, but with huge penalties, and the wealth tax might actually make you pay something. The 720 is designed to be a superset of the wealth tax, so if you file a 720 and later file wealth tax with smaller numbers, you will probably get a letter from the tax department.
Pensions are generally not included on these statements as long as the following hold true:
The consensus seems to be that Traditional IRA and 401ks qualify under these assumptions (although technically IRAs and 401ks can be redeemed with a tax penalty, this gets glossed over).
Sunday, July 12, 2015
Even if the Greek government surrendered completely and accepted whatever deal anyone was willing to offer, its clear that the deal would not be considered legitimate since it was worse than what the Greeks rejected in their referendum.
Any debts incurred by this new deal could be considered "odious debt", since it was obviously against the will of the nation, and so for the creditors, there is really no upside in offering any kind of deal.
When the creditors talk about "trust", they are clearly worried that Greece would repudiate the deal as soon as the funds are released.
It's also clear that as soon as banks are reopened, no one would leave a single Euro in a Greek bank anymore, so the cost of recapitalizing the Greek banks would be absolutely horrendous.
The reason for this structure has been that since the EU is an association of sovereign governments, enforcing the will of the majority of EU members against a minority would violate the spirit of the whole arrangement, and we go back to the strong enforcing their policies against the weak, which was what got Europe into the whole mess of wars of the last century etc in the first place.
Given the gulf between different members of the EU, it's basically impossible to resolve this situation at an EU level, the only result can be that nothing happens at the EU levels, and individual governments sort out the mess on their own.
Monday, July 6, 2015
Anything crazy the EU might want to do can't work since it would require unanimous consent, which Greece would obviously reject.
The main shit-hits-the-fan moment will come if the Greek government decides to take control of the Greek Central Bank. The Greek Central Bank (like all European central banks) is supposed to be "independent", and effectively be under the control of the European Central Bank.
However, as much as the ECB would like, Hungary has already shown that it can take control of their central bank when the president of Hungary sacked the board of the Hungarian Central Bank and replaced everyone with his own supporters. The ECB had a conniption and has spent the last 3 years sending strongly worded letters it Hungary, which has basically told the ECB to fuck off. Nothing has happened, and the economy of Hungary has done pretty well, and the move by the president to force all Swiss-franc mortgages to be re-denominated in local currency is fucking genius in hindsight.
The nuclear option for the Greek government at this point would be to replace the board of the Greek Central Bank and start printing Euros. The Greek government actually has a pretty strong case that the Greek government debt isn't really that much more unsustainable than any other of the highly indebted European countries, under even relatively unoptimistic growth assumptions, and that the ECB cutting off Greece is a violation of the duties of the ECB.
Germany is about to learn the hard way that once the veneer of civilization is removed, debt collection only works at the point of a gun. At the end of the day, people pay their taxes and debts they know that at some point, if you keep ignoring all the warnings, someone with a gun will come and take your stuff. If people realize that the worst they'll get is a strongly worded letter, it doesn't take a genius to figure out what will happen.
Monday, June 29, 2015
European stocks are set to drop about 2.5% this morning. With a total capitalization of about 11 trillion dollars, this represents a paper loss of about 275 billion dollars in the European stock market alone.
The biggest cost to the rest of Europe is going to be a break of faith in the European governance and leadership. The fact that they would actually let the entire economy of a member of the EU crash and burn over a relatively minor issue of economic philosophy (whether is better to cut a measly 1 billion in spending or raise taxes by the same amount) shows an amazing lack of responsibility and solidarity.
This will probably go down in history the world’s costliest game of chicken gone wrong…