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Wednesday, 3 February 2010

WE CANZ DREAM OF CHEEZBURGERS

The only news that has mattered for some time now is finally out. The Commission has approved our Updated Stability and Growth Programme. They are still suing us for tampering with statistics but that can't be helped.

This took some painful last-minute tweaks following Yorgo's tour of Davos and his consuming bro-mance with Joseph Stiglitz. In order to flesh out the proposed savings in our government consumption, which, as I've blogged before, are quite substantial, we've announced a host of detailed adjustments, including a longer public sector pay freeze. There's going to be a lot of striking over this but, as the following graph (sourced from this study) clearly shows, our civil servants have little to complain about.



I believe that this is the beginning of the end of the Greek fiscal drama. Already the people reviled by our PM as speculators are looking to the next weakest PIIG, most likely Portugal, to Poland as the weakest CEE link, and quite deservedly the UK as the weakest EU link.

Now all we need to do is come up with a good implementation schedule over the next month, meet our targets and keep quiet and this could yet blow over. The Conservatives have pledged cooperation and they better keep their promise. They are as guilty as a puppy next to a pile of poo worth EUR 80bn and their attempts to produce incremental policies are starting to annoy me.

This won't be the end for us Greeks, of course. The SGP still leaves us, if perfectly successful, with a structural deficit of 2% of GDP. This is nothing to celebrate; it simply means that any macro-economic pressures in the near future, especially a double-dip in the US and Western Europe will send us back into the straitjacket.

But for now, let's remember to thank the "evil" speculators. They may not be nice and they may not give a hoot about us, but they've saved us all the same.

The EU couldn't get us to stop robbing our grandchildren in order to pay ourselves lavish pensions or ill-deserved public sector and quango wages. Not even when we broke their rules every year (bar one) for 13 years straight (see table below, source here). Our politicians couldn't stop us. We certainly couldn't control our urges ourselves. These guys made us and the Commission sit up and take notice.

Despite all our brave words about getting governments to rein in the excesses of financial markets, we really ought to thank goodness the financial markets are there to rein in the excesses of governments.

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