tv Real Money With Ali Velshi Al Jazeera May 4, 2015 10:30pm-11:01pm EDT
al jazeera america's hard-hitting... >> today they will be arrested. >> groundbreaking... >> they're firing canisters of gas at us. >> emmy award winning investigative series new episode the death of aging only on al jazeera america count down to a crisis that could have an imfact on the economy greece is this close to running out of cash. i went there to show you how tax cheats drive the economy into ruin. out of the shadows and into the open. i'm ali velshi and this is "real money".
>> we don't have the mentality to pay taxes. >> taxes aren't being put to good use. >> this is not just now. it is a leg can legacy, left from our patients. patients. >> the clock is ticking on a greek financial drama that has the potential to become a tragedy for grease and the rest of europe. it is a tragedy that could have ugly implications for the entire global system if greece doesn't pay its debts and ultimately gets bounced out of the euro zone. what's scary we don't know what stocks and bond markets will react. deliver a short term blow to your retirement accounts. what we do know is a bankrupt
grease would leave the government workers and pensioners holding a bag that has no money in it. this greek drama is all about money. the first big number is $8 billion. that is the payment to greece with the bailout money but creditors are refusing to release that last bit of money. that is why so much is riding on negotiations of the syriza government alexis tsipras. finance ministers meet one week from today. greece owes the imf about 850 million. that is nothing compared to the more than $9 billion in repayments that greece owes the
imf, the central bank and others, and the clock is ticking. talk of bond payments and defaults can make it easy to forget the real pain greece people have suffered. years after the global financial crisis and greece's own crisis in 2010, the greek economy has shrunk more than a quarter since the melt down. it's not hard to see why many greeks are resentful of making more sacrifices to get their financial house in order. but greeks themselves played a major role in their plight, tax evasion, not paying the money it needs to pave the roads pay police and and not paying taxes
is rooted and running deep. always a magnet for tourists but today, also a bargain. because after decades of terribly mismanaged funds corruption scandals and rampant bribery, the greek economy itself is a catastrophic ruin. much of the catastrophe comes from a tax evasion ruin. i talked to some of them, some don't want to be identified. >> this is not just now. this is 50 years old. it is a legacy left from our parents. >> to be honest with you we don't have the mentality to pay reason for a certain reason. the most important if you pay taxes you expect to having something back. but here what you take back. >> you're paying your taxes for your health care and so forth from our wages.
yet to get anything done you really got to go to the private system. our taxes aren't being put to good use basically. >> last year the government announce they'd greece is ode 76 billion euros that's about $82 billion. that is 82 billion in unpaid taxes. but with an economy still reeling from the global financial crisis of 2008, greece only expects to collect about 10% of what it is owed. while tax evasion occurs across all income levels it's most rampant across middle and lower-income greeks. that said, we heard plenty of stories about wealthy greeks systematically hiding their wealth to avoid paying taxes. greece's new government led by staples, helps to bring in more
revenue to pay its creditors. minister of state for combating corruption an anticorruption czar if you will, 2.5 billion euros of the 7.5 billion euros unpaid since 2012. nikolutas was president of an independent organization formed to identify greeks money-laundering through swiss banks. >> translator: i want to state that we already know how much money was picked up from greece and was transferred to switzerland or other places since 2010 and after. we have all the dates we have the information. we know how much money was pulled out of grease and went to switzerland. therefore we have no problem with taxing it. >> like elsewhere in the world wealthy greeks have the resources to underreport their earnings and conceal money in
offshore accounts. like many here john gianis who owns a small fish market in athens blames the tax crisis on the wealthy and since the economic crisis began his business has lost about $18,000 a year. >> the rich people can hide money. and avoid paying taxes. i would say that the middle class pays the fairest part of taxation. >> this man is an associate at a law firm. he is unmarried and has no kids but he does have a large extended family and like many other work greeks he hopes authorities won't bother chasing down the smaller amounts they owe. >> translator: the 400 euros is just enough for me to pay the utilities by rent and expenses like that. the rest of how i supplement my income comes from friends and family. so you do the math. i don't have enough to pay
taxes. >> but increasingly greeks acknowledge that to truly dig themselves out from the country's financial ruin the culture of tax evasion must end for everyone at every income level. this athenian owes more than $9,000 in personal taxes and another 5 and a half thousand in social security taxes. he hopes the new government follows through on its promise of forgiving up to half of what an individual owes in taxes. that is something many he greeks greeks are loath to do. >> translator: i took advantage of the law that passed in parliament, the one about pailt, i'm tryingpayment. i'm trying pay back my taxes
little by little. >> that won't be enough to solve the debt problem. when we come back, i'll introduce you to a school teacher who says working off the books is the only way he can survive. >> the past 30 years our government has been taking money only from the middle class. that's the only class that's been properly taxed in greece.
>> we don't have the mentality to pay taxes. >> taxes aren't being put to good just. >> this is not just now. it is a legacy. left from our parents. >> in greece's current financial mess a lot has been made of the country's rampant tax evasion. especially among super-wealthy greeks. but now the government is so desperate for cash that it
started cracking down on lower income professionals. most greeks give private tutoring license to helptutoring lessons to help supplement their wages. they are paid so little wages it is impossible to feed their families and pay tear taxes on the salaries they earn. >> explain how it works on teaching. when you teach in the school, your salary is recorded, you obviously must pay tax on that. when you tutor out of work, how does that work? >> we get ten euros per kid per lesson. if you decide to declare that income you get taxed 30% and there's nothing left. >> officially, it doesn't get declared? >> all of it is under the table we say it's a necessity.
>> what account government do to get everyone to declare what they earn, to take the earnings out of the shadows into the mainstream do they have to reduce the amount of tax they charge for people who do work off the books? >> translator: i do believe the government needs to lower taxes and give us incentives in order to get out of this undocumented economy and into the mainstream. the past 30 years our government has been taking money only from the middle class. that's the only class that's been properly taxed in greece. if you don't start taking a little bit of tax out of the rest of the populace your approximate which staleproblems will stay the same. >> tell me about your colleagues are they all tutoring or doing other jobs? >> most of my colleagues are indeed doing private lessons. some of them maybe do something else but all of them do some additional activity to supplement their income.
>> younger students high school students middle school even into university? >> mostly up until the point of the student entering university but sometimes even after that. >> what's the average salary for a teacher and how much does it cost to live a middle class life in greece? >> translator: once you first enter the profession your salary's around 650 euros. over the years it gets to around a thousand. but it never exceeds that. to feed a family of four, everybody, almost everybody needs to supplement. >> this government has proposed some changes to the education model. what do teachers think about those changes and what effect will they have? >> translator: we actually haven't seen anything concrete coming out of this administration. it's just torture for us. we have to wait and see. but keep in mind every government in greece that comes into power they try oput their
stamp on education and on the health system. >> i asked stelios how concerned he was about the crack down for taxes on people like him? he says he's not really concerned, the real concern for the corruption czar will be cracking down on the super-wealthy tax evaders. they are much better hiding their income than teachers are. we met last week at the milken conference in los angeles where business persons and policy makers gather to schmooze. i ask paul sheerd why this time is different? he's what he told me. >> i don't think anybody really knows. i think that's the point ali that people can't see around the corner and how exactly this would play out.
obviously you know being in the euro zone, a country like greece being in the euro zone is a essential where it's if a country is borrowing in a foreign currency. greece does not have a printing press that will be used to create euro euros if they can't pay the money back and somebody doesn't refinance and roll over and provide new financing then almost arithmetically you fall into a default situation. in that kind of situation would they default in the euro zone or would they, you know what, get two for the price of one and leave the euro zone, they would get a boost to competitiveness. they don't know yet how this is going to play out. everybody is focused on preventing that from happening in the first place. >> now we are possibly within days they might do something
they might come to some agreement, they might be able to make their payments. it doesn't seem like there's enough cash on the books in greece to be able to meet their salaries their pension payments and their debt repayments. there are no examples of a country that's defaulted and left a monetary union. to what degree do proponents of the euro zone not want that to happen and why? >> well, i think there's a great will in the euro zone. you wouldn't always know this from the headlines. but i think there's a great political will to hold these together. 19 countries in a 28 member european union 19 of the 28 are in the euro zone, the single currency zone, they want to keep this together. one thing is the streeties of europe in which the whole system is founded it would be
uncharter territory and very messy. one level the markets are looking at it this way as well, there is a solution here and the solution of course is it as the two to tango that the official financiers continue to finance and greece agrees to do things which would make the lenders happy. this game of chicken where neither side can quite agree but they're not that far away are from a potential compromise. and that's really been the history of the euro zone sovereign debt crisis, at the 13th hour a solution is found. >> when we were in greece one of the things we saw was there weren't obvious levers for growth. greece has 26% official unemployment almost 50% unemployment amongst youth people can't get bank loans for
their homes because there is a sense of instability. what is the impact on a country when it defaults? >> the default removes the debt, the debt is an asset for somebody. if the asset is held within the country, it's moved from one pocket to the other. but it gets rid of the debt overhang but of course it simultaneously updates a lot of people. people who would hold debt in the future. typically when a country defaults in a disorderly kind of fashion, that is not as kind of some negotiated process. that means they can be cut out of debt markets which means very hard to finance their future economic growth. so this would not be a step to be taken lightly. >> so in a country where there's low economic growth there's high unemployment. if the country then can't raise money through borrowing in the future it also has difficulty
raising money internally through revenue. >> exactly. >> so at some point you see the destruction of the economy and public roads and infrastructure. >> you mentioned what the 25, 26% unemployment, a quarter of the population unemployed. that's a huge social welfare cost today but it also is something that can permanently impair the potentiality growth of the economy. another -- potential growth of the economy. another level of real gdp which is about 25% similar number below the precrisis peak. so i think when the greek government talks about a humanitarian crisis and is essentially appealing to the rest of the euro zone to cut them a bit of slack i think they have a bit of a point here. i think the best solution is some sort of compromise where greece commits to the longer term reforms but gets a little bit of a help in the short term, to get growth back into the system. growth would be a great tail
wind and healer for the economy. >> i'll keep covering this this week cutting into the corruption in greece that threatsens the euro zone. and the man trying to root out that corruption. seven so far with at least 11 more expected to join, how many of them actuallyity they can win? i tell you how -- actually think they can win? the losers end up doing well financially. stay with us.
presidential contenders in 2016. so far two democrats and five republicans have officially declared that i candidacies. others is haven't announced their intentions yet we already have a crowded field but some candidates enter the field knowing the shot is against them. some are political but others are financial mary snow has the story. >> dr. benjamin carson. >> there's a good chance you've never heard of ben carson. he's a retired neurosurgeon now making a bid for the oval office. >> i'm ben carson and i'm a candidate for president of the united states. >> but if history is any indication new doors will open for him even if he doesn't wind up in the white house. ditto for carly fiorina better known as the form he ceo of hewlett packard. >> i have not been in politics
all my life. >> along with adding the presidential candidate to her resume, both are adding a crowded field of republican candidates and hopefuls. while hillary clinton is far ahead in early polls it hasn't stopped vermont bernie sanders throwing his hat into the ring. lesser known candidates have long odds of actually winning. political professor costas penagopolus says, it brings on a lucrative career. >> if you look at what presidential candidates have been able to parlayed that into, it could be millions of dollars. >> life before politics was that
of a pastor, then i got into a politics. you can be here for a while. >> mike huckabee has found his fortunes rising. he won a political caucus, and in 2008, his assets were listed under $700,000. while it's not clear how much he's worth now his beach house is worth $7 million. >> when he was governor of arkansas it's not as if he didn't have a prominent position but by running for president he got introduced to a lot of the country and that translated him into a brand. >> talk show host, his most recent book debuted as number 3 on the new york times best seller list. >> on the right newt gingrich.
>> newt gingrich signed a contract with cnn. >> take back the white house. >> howard dean went on to become the head of the democratic national committee. his speaking fees topped $20,000. certain candidates don't stand a chance to become president ton other side, candidates hold out hope. >> you're the center of attention and you've got ideas and you are telling people how you want to make their lives better and for a lot of people that can be its own reward. >> long shot presidential contenders can keep their campaigns going on someone else's dime. >> these candidates have ideas they have policy positions and voters are supporting those position he and want to fight for those causes. so it's not necessarily only about winning. sometimes it's about keeping an
issue in the national spotlight. >> reporter: and with the issues come the candidates who stand to gain financially or politically. >> mary snow joins us now. we're expecting to hear from mike huckabee tomorrow. >> he has an announcement in hope arkansas. it is expected that he will join the race, second run more well-known to the nation, is popular with social excessive. theseconservatives, opportunities open up to him after that first presidential run. >> that's double dip to him. he increases his prestige and his wealth. a lot of it has to do with prestige. some of these people maybe they think they have a chance of winning, most pollsters wouldn't say so. >> even talking to the most
cynical political observers they say even though it's a long shot the candidates themselves it's hard to believe they would put themselves through this just to make money or just to boost their resume. there is an idea behind them. you remember herman kane in 2012 he introduced the 9% flat tax. >> well, nine nine nine. >> and bernie sanders is something he is injecting into the campaign. >> and rick santorum believes somebody is out there to finance him and keep talking about it. >> and keeping the issues in at the timethespotlight. >> and barack obama was considered a long shot. >> by political observations were supposed to be hillary clinton and rudy giuliani. you can't always believe the polls. ronald reagan was a long shot so
was jimmy carter. >> mary snow, thank you. i'm ali velshi, thank you for joining us. ing us. >> . >> they were there to shoot people ... attack in texas. new details about the gunmen who opened fire outside a controversial contest that had artists drawing the prophet muhammad tears of killer. dzhokhar tsarnaev breaks down during his sentencing filing suit. >> it did a lot of damage the elderly black man stopped by