In the case of the American running a business from Crete, how does that work in terms of taxation and residency? People seem to get away with it in the far East, but (mostly) you can't just stay in a country indefinitely, mooch off the cheap system and pocket the difference.

That said, there it is not difficult to overstay the standard 90-day EU visa and simply pay the fine when leaving / on the next entry.

As far as taxes go, I would wager that any American in Greece is only paying taxes in the States. The Greek tax system is notoriously insane.

Don't do this. Customs officials really don't like it when you show a flagrant disregard for their laws. Also, you can create permanent problems for yourself if you ever decided to return.

But the chatter in the Greek expat forums specifically describe the purely financial nature of the Schengen zone penalty: pay-to-play. The punishment comes in the form of the fine amount, which in a range is left to the discretion of the customs agent. Evidence of "flagrant disregard" or an otherwise spoiled attitude might get the maximum fine, whereas an honest mistake (or an engaging attitude) might cost only a few hundred euros.

Canada, for example has a Working Holiday visa which lets you remain for up to two years, travel and find employment (if you wish). There are restrictions: age, nationality and there are a limited number, but it's essentially a free ticket for 24 months.

If I'd known about this when I was young enough, I would have spent year in each of a dozen countries.

Any idea how long your friend took to gain traction? What do they do to find a community of fellow techies/dropshippers/SEO mavens/whatever in Greece? Do they ever talk about moving back to north Europe?