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Lewis on Greeks, CC Fraud, Basel III, Airline Seats

The stock market hits a new recent high, crossing 5700 on the Nifty and 19,000 on the Sensex. The last time it was this high it was January 2008 and an altogether different world. Are we reaching bubble territory again? Stay tuned. Meanwhile, read:

Michael Lewis in Vanity Fair, “Beware of Greeks Bearing Bonds”. A story about the crazy greek money problem, some of which sounds, er….:

The systematic lying about one’s income had led the Greek government to rely increasingly on taxes harder to evade: real-estate and sales taxes. Real estate is taxed by formula—to take the tax collectors out of the equation—which generates a so-called “objective value” for each home. The boom in the Greek economy over the last decade caused the actual prices at which property changed hands to far outstrip the computer-driven appraisals. Given higher actual sales prices, the formula is meant to ratchet upward. The typical Greek citizen responded to the problem by not reporting the price at which the sale took place, but instead reporting a phony price—which usually happened to be the same low number at which the dated formula had appraised it. If the buyer took out a loan to buy the house, he took out a loan for the objective value and paid the difference in cash, or with a black-market loan. As a result the “objective values” grotesquely understate the actual land values. Astonishingly, it’s widely believed that all 300 members of the Greek Parliament declare the real value of their houses to be the computer-generated objective value. Or, as both the tax collector and a local real-estate agent put it to me, “every single member of the Greek Parliament is lying to evade taxes.”

I’d be surprised if this was not happening in every frikking real-estate transaction in India.

Credit Card Fraud with just $9 charged to random accounts. (HT: @sonaliranade , @nixxin) This is why I look at all my credit card charges, even the smallest ones.

Felix Salmon on Basel III. It’s no great shakes for Indian banks, who mostly already comply.

The world’s most cramped airline seat.

  • Raja says:

    >"I’d be surprised if this was not happening in every frikking real-estate transaction in India"

    Very true. Add to that the fact here even the buyers don't have to pump black money or take black market loan to fund the difference part. PSU banks and most of the other lending institutions fill in the gap while accepting documents which clearly show this difference.

  • Shankar S says:

    >This sounds like India on many counts, govt salaries, huge pension pay outs, tax evasion at a large scale by almost everyone except pvt sector since its TDS, large scale corruption between industry and govt. A black economy which is estimated at half of the real one, finding and fuelling a real estate boom. Heck, if it were not for a part of economy that innovates,works and pays taxes, we would be Greece ^ 100.