GREEK DEBT: under-reported in 2007, over-reported in 2009, and indeterminate in 2012.

When it comes to Greek debt, the only certainty is uncertainty

A couple of days ago, Der Spiegel gave the Greeks something of a hammering by sensationally alleging that the country’s deficit isn’t €12.5bn at all, but in fact €20bn. But from Day One, the real size of the country’s problem has been the subject of wildly differing views.

The Spiegel piece is interesting in that it is Wolfgang Schäuble’s systemic leak aperture of choice, and would thus suggest that Berlin’s FinMin at least has decided an onslaught of “they’re useless” is called for prior to summary Greek ejection from the eurozone.

As always, the situation in Germany is confused, with Merkel blowing this way and that but, on the whole, convinced that chucking Athens out of the ezone would be the start of a rush for the door…stopping off to raid the ECB’s bailout coffers on the way. Indeed, Der Spiegel itself reported as much a fortnight ago.

But the Bankfurt faction has gained ground in recent weeks, and Germany’s Finance Minister shares many of their concerns. Unsurprisingly, the Greeks have flatly denied the Spiegel story: but over time, there have been charges of both under and over-reporting the Greek debt problems as circumstances dictated.

Many in the Greek intelligentsia have long maintained that George Papandreou was persuaded by Berlin in 2009 to overstate the problem he’d given them on coming to power. Three weeks ago, Zoe Georganta of the Greek Statistical Authority ELSTAT wrote a long piece after studying that period very closely. This was her conclusion:

‘Based on the most recent official data published by Eurostat for our country on the 14th April 2012, the item K for the year 2009 is small: it is equal to 0.1% of GDP. It is noted that Eurostat has defined K as small if it is not higher than 2% of GDP….the following years 2010, 2011 and 2012 (forecast) K suddenly and mysteriously jumped up from 0.1% of GDP to 2.8%, 3.03% and 26.2% of GDP respectively, with a corresponding deficit as a percentage of GDP equal to 10.3%, 9.1% and 6.7%…[from available data and minutes of the time] I can support that the debt of 2009 was inflated by 27.914 billion euros…18.214 billion euros of debt were transferred from the private to the public sector in a seemingly “urgent”, non-transparent and totally unchecked way…’.

Georganta also highlights three other bizarre ‘additions’ to the budget costs – from the Health area, the social security budget, and a Goldman Sachs bill from 2001. The question of course is, why did the Director of ELSTAT actively collude in this process? And the general opinion has always been that Berlin thought the Greek plight wouldn’t be taken seriously enough by the other eurozone members if it wasn’t claimed to be bigger than it really was.

The mainstream media coverage of the Greek debt crisis has pretty well unfailingly bought the simplistic line ‘Greeks hide borrowings from Brussels, need to clear up their own mess’. That’s true of Papandreou’s predecessors, who achieved the debt-swap scam in their accounts after senior Goldman executives sold them a seminar package on how to do it.

But in the period since then, the international machinations and wheels within wheels regarding Greece’s finances have been so Machiavellian and complex, they are at times almost funny. The entire saga is like watching one of Jean Tingley’s action sculptures.

As we have seen, at some point (probably around mid 2011) the geopolitics of oil, minerals and Islam have added a further dimension. Here in September 2012, we watch as the Troika’s report on Greek finances is blatantly put back to ensure the re-election of Barack Obama. I was told last month by a reliable source that, in its draft form at least, the Troika dossier accuses Athens of keeping back a secret fund to help the country survive Grexit.

Truth left the building from the moment Papandreou’s PASOK discovered the size and nature of the Greek debt hole. We’ll probably never know what its actual size was, and we’re unlikely to discover its magnitude as of today. The only inevitable reality is that it is big enough for Europe and America to fall into it….with room to spare.

Also at the Slog today: Wall Street banks transmute lead into gold via ‘collateral transformation’

35 thoughts on “GREEK DEBT: under-reported in 2007, over-reported in 2009, and indeterminate in 2012.

  1. Dear John.

    Where is the truth ?

    The whole Hellenic political elite and their collaborators are traitors.

    We are sick of the them.

  2. I think its fair to say that most eurozone countries have plans in place for a possible Greek exit and its aftermath.
    Greece would be remiss if it was not also doing the same and it says something about their present situation that they feel they have to do so in a covert way.
    No pound of flesh must be undeclared?

    • @zeusgoose

      I wish it were so.

      But suspect that – because of the “the geopolitics of oil, minerals and Islam” – the plan is to keep them very much IN, but on the EU’s terms.

      And these terms, needing cooperative agents inside Greece, will mean more megadosh in greek politicians’ Cayman Island accounts, and ever more austerity (on the lines of Karajozi’s donkey) on the home front. Which euro-clinging greek voters – afraid of losing their money, hah! – will rationalise as the “cost of inclusion”.

      • Eleni.
        I take some comfort in the obvious effort to delay any firm action until after the American elections. Obviously the feta is going to hit the fan big time…… so anything might happen.
        Hope springs eternal that Greece will find a way out…. but it will not be easy.

  3. Pingback: John Ward – Greek Debt : Under-Reported In 2007, Over-Reported In 2009, And Indeterminate In 2012 – 24 September 2012 | Lucas 2012 Infos

  4. The criminality and stupidity of greek politicians and their supporters is beyond the imagination of anyone that hasn’t lived and worked and watched them in full action for the last 20-30 years .We will never know the depth of the lies , frauds , crimes , burglaries , never , we will only know the results and the devastation which is still evolving and will for many years to come .We need hope and we are desperately looking for hope but hope has a cost ,hope requires risks and action ,sometimes needs to be synonymous with rebellion to be potent .Hope knows that the stupid criminals that wiped hope from our country can not fix anything .They still beset the greatest danger for our country and they have to be judged and put to jail or at least get the hell out of Greece to Uruguay or where ever their money is and make space for someone else to offer hope .They ruined , polluted and impoverished greece and they are responsible for the thousands of death that will occur from hunger , despair , lack of medical and crime .They will be throwing people out of their homes , depriving youth of proper education and jobs and let the elder die in poverty and indignity .I loath them like i never loathed anything before in my life .

      • Well yes but . . . You seem to abdicating any responsibility for the situation in Greece today, conveniently loading it all on to your political class whom you elected. And I’m sorry to say this but I do not see any improvement in that ‘class’ – Tsipras is no different to all the others, only too happy to dip his hand into the States till (His party gets 8 million Euros).

      • @ Andy , i am sorry to tell you that syriza is included ,same batch of politicians more or less responsible as well .As for my responsibility , i am sure you don’t want the story of my life , but as an overseas working greek , the nearest i came to voting for something greek was Eurovision when i lived in UK .

      • @Yana, I assumed you lived in Greece, but my point is valid as I am sure you appreciate. I have met a number of Greek politicians (including Andreas Papandreou) and I have a very dim view of the lot of ‘em. Quite how you sort out this mess, short of dictatorship for 10-15 years, I would not like to say.

        But I find it quite disgusting that a jumped up little idiots like Tsipras and Syriza get a nice ‘bung’ of 8 million Euros while the State cannot pay the pharmacy bill – the local chemists where I go on holiday would have gone bankrupt had it not been for a couple of us who have lent him money. It just shows the sense of priorities that Tspiras and all the rest of them have. They could also do without each MP having a staff of 5 employees paid for by the taxpayer. They could well manage with just a secretary or even a secretarial pool. Gravy train politics of the worst sort.

  5. The “Greek plight” which is referred to here has little to do with the question of whether public debt was over-/understated back in 2009/10. Instead, it has everything to do with the fact that Greece (the overall economy! Not only the state itself) had pursued an unsustainable economic model which led to a zombie-economy after less than a decade of the Euro.

    97% of GDP-growth from 2000-08 was driven by consumption (instead of investment) and was financed by debt. New foreign debt was the cause of everything which superficially seemed positive about the Greek economy, even tourism: 70% of tourism’s growth was driven domestically by the fact that more money was around domestically. By 2008, Greece had an economy which seemingly imported everything it needed. Domestic value generation, never high in Greece’s history, all but disappeared.

    So, it is almost irrelevant to discuss the level of public debt back in 2008/09, today or even in 2020. The debt is the “derivative”. The “underlying” is the Greek economy. Until the “underlying” gets fixed, Greeks will continue to get poorer and poorer.

    • “So, it is almost irrelevant to discuss the level of public debt back in 2008/09, today or even in 2020. The debt is the “derivative”. The “underlying” is the Greek economy. Until the “underlying” gets fixed, Greeks will continue to get poorer and poorer.”

      But what makes it relevant is whether the various machinations have been honest or dishonest and it is pretty clear to me that per se, they have serially crooked. Maybe until the ‘underlying’ *and* the crooked gets fixed, Greece will get poorer. Isn’t that the real point?

      • Of course, what I summarize in one half-line that the “underlying” needs to get fixed would be one giant reform effort to make Greece a modern country and an attractive place to do business, part of which would be to get the “crooked” fixed. That’s not a project for a few months or even years. That’s a project for an entire generation!

    • Not that you seem wrong in what you are saying but in the case of the crisis in Greece is not just economics and mathematics . Though the complexity of moden finance makes it easy to hide what is going on , suits politicians because they can use systems and loans and buy favours and win elections and get rich ,for the broader public all this is not very clear until lives are ruined and jobs are lost .Though the troika in greece and top economists can explain our catastrophe with numbers and bottom lines , we know that is greater than that .Is deeply rooted at stupid, corrupt politicians that infected the whole culture and way of thinking and mutated a whole nation for generations .If we dont try to reverse and correct this we will never achieve sustainable economy or real growth or competitiveness or market confidence or whatever .Really this is the big “underlying” that needs to be fixed and a good place to start from is the hardware store to buy rope .

    • You are quite right Klaus. The original problem was that Greece joined the Euro, and this has proved to be a disaster. You are right also about tourism: in my experience foreign tourists have markedly declined, put off by poor service and out of date accomodations and frankly it has become bloody expensive. I still think that the only way for Greece to start to sort out her problems is by leaving the Euro.

  6. A brief and interesting view although not 100% complete.

    I hope that my translation is adequate.

    Kathimerini

    http://news.kathimerini.gr/4dcgi/_w_articles_columns_2_21/09/2012_496173

    Date of publication: 21-09-12

    “The experiment and the guinea-pig “

    “S. Lygeros”

    The crisis of Euro zone can be connected with her architecture, but it is registered in the wider frame not only of the international economic crisis, but also the tectonic changes in the international distribution of work, because globalization. The western political elite undertook him, because they are so much intermingled with the big companies of their countries that have the tendency to identify the interests of these companies with the interests of states.

    This, however, is not in effect. Because due to lower cost of work, the “western” multinationals have transferred their productive activities outside West. That is to say that they have deprives places of work from the Western societies and consequently they have deprived income from the western states.

    From mainly producer, the West progressively has been changed mainly to consumer, so that it devalues in decline. In other words, the current crisis has also permanent characteristics. When are in effect so much big differences in wage, labor relations and conditions of work, the free trade is changed in illicit competition. This is in effect more for Europe, which does not has the arms that the USA has, as politico-military superpower.

    The high profits of multinationals only partly return in the West and mainly as loans . Consequently, they cannot maintain for a long time the level of prosperity of western societies, which constitutes leading conquest in the human history. In these conditions, the problem of inter EU distribution of resources will be highly worsen . The very expensive rescue of banks blew the deficits and increased the debt of countries-member. Actually, however, the cost of rescue was the water that overflowed a glass, which depending with the country it was from half-full up to l full. The European countries for years they had begun to accumulate debts, despite the fact that the international economy was going through a period of “fat cows”.

    In this contributed also the tax competition that resulted to government income reduction of. In order to maintain the western governments elementarily medium standard of living and the social infrastructures, resorted to the lending, also drifted from the very low interest-rates. This resulted the public debts to follow an ascendant orbit.

    The answer of leaders elite is the austerity, with the known argument that the western societies live above their possibilities. In the point that they have reached the things, the argument is not always unfounded, but, as always the big lies uses the vehicle of half truth. They do not say that the devaluation of western economies in the decline was the result of the political elite choice and not a natural phenomenon.

    Given our given pathogenesis , Greece has been turned to a guinea-pig. Here is tested the recipe that is intended initially to be applied in the European peripheral region and later and in the European core.

    The critical question is if the European societies will accept not simply certain necessary cuts, but the systematic qualitative devaluation of their standard of leaving.

    • Exactly, the real problem of free trade and no currency controls.
      We might all wish for a level playing field and no restrictions in our quest for growth, wealth, security, whatever. But man is a cunning animal when looking to his own self-interests.
      The international corporations have no national loyalty, their accountants look at the biggest return for (their) investment. That means seeking the lowest production cost. Currently that means China, Vietnam and other parts Asian.
      Us comfortable lot in the West (and remember only about 15% of us are unemployed -wait til it is 40%) at some point either have to accept a reduction in living standards so we can compete, put up trade barriers, or improve our technology so we stay ahead. Choice No.3 would be a good move, but our education standards are wretched.
      I haven’t seen any long-term thinking from any government in the past 30 years. Nor any bank, they are quite happy stealing commission and fees off any money they can pull out of the ether.
      I think the first step should be to root out the corruption and fraud, then we might pull together a bit; but there are a lot more problems coming down the line for us than can be solved by hanging a few investment bankers.
      The Greek solution has to be to quit the Euro and renege on their debts.
      They will do fine.
      The German solution (if they can’t face quitting the Euro too) is to either invade France or Switzerland.

  7. French Prime Minister Jean-Marc Ayrault is reported as saying today “we can already offer it [Greece] more time… on the condition that Greece is sincere in its commitment to reform, especially fiscal reform.”
    On the same day, Der Spiegel reports “European debt inspectors have reportedly discovered a €20bn black hole in Greece’s budget.”
    I don’t see much evidence that Greek politicians are sincere, but we can be sure the EU will give them both more time and more money. (As always, respect to the Greek PEOPLE; this is about your politicians.)

  8. Reality check……. former President of the Greek Parliament just published a book justifying the appointment of his daughter as a (permanent) public servant in his office, although he was President only for the duration of one (1) working day. Since he had to fill a whole book though he accused the current Prime Minister and others for doing the same thing for a number of his constituencies… This is all happening today and probably will continue till the end of our (the Greeks’) time.

    • On offer for this week at Praktiker , high quality rope ,nylon polyester , for a wide range of use , for your nautical , mountain or political adventures , in a variety of colors , full customer satisfaction guarantee with full return policy at 9.99 Euro per roll ,while stock lasts .

      • Our politicians will never change , they will always be thieves – traitors and collaborators .

        My wish is the deplorable Hellenic political elite and their collaborators to be excoriated and hanged at Syntagma Sqr.

      • Such rope is no good for hanging. You need quality hemp, and a ‘used’ rope is better than a new one – less ‘spring’ in it. And of course it needs to be stretched overnight. I would refer you to the Home Office Execution Procedure.

      • This kind of useful and practical information is worth every single Kbyte of my data plan.Thank you.Mind you, big brother is a slogger too….I hear doorbells ringing.

      • Why spoil them with Hemp? Far too good for them.

        Nylon has no stretch, is very strong in quite narrow form and will therefore have a cutting effect as a bonus. Equally important is it’s availability and cost, practically nothing, I commend it to Sloggers.

      • Yes Full Stop, but do you really want them decapitated ? That is terribly messy and distressing for those conducting executions. Stick to hemp and follow the Home Office Execution Protocol.

  9. Pingback: GREEK DEBT: under-reported in 2007, over-reported in 2009, and indeterminate in 2012. « Silver For The People – The Blog

  10. My wife is Greek and we have two houses there, so I am an interested bystander, sufferer, and I know what it should be.
    I am afraid despite all the wonderful people, you are nepotistic, selfish and famitribe ( my new word). Greece is a mess and has been for 15 years.
    To the Greek bloggers, there needs to be a new moral code. It needs to be learnt at school – I love my country!
    Arrest all your current politicians, they are no more use than the donkeys I feed in our field and cost so much less. Change all the existing judiciary, they are worn out and mostly corrupted.
    You have an elite who are bleeding everyone else.
    What a beautiful country being screwed by the ineptitude and malaise of the masses do something – Act!

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