Saturday, 31 July 2010


My more dedicated readers will remember the debate that took place in Greece a few months ago on just how many civil servants there are. Last time our government counted, there were some 550,000, and I argued that the total could be as high as 1m if everyone in education, health and social services was thrown into the mix. Our government has now completed its mandatory census of civil servants and the total (excluding any non-compliant piggies) appears to be somewhere in between those estimates.

Here's how it actually works. We know from LFS that the number of people working in public administration is ca. 370,000. The number of people on the Government's direct payroll, on the other hand, now appears to be more than twice that, at ca. 770,000. (Original government statment here).

A quick bit of math reveals that one in ten of all the people working outside public administration are also civil servants, and that (given the past estimate of 550,000) at least 200,000 work in agencies or organisations whose finance people answer to the central government only in the most rudimentary of ways. This may still not include the staff of nominally private but actually publicly funded organisations which have stubbornly refused to acknowledge their troughing ways.

Some priceless gems have come of the fraught census exercise. My favourite is captured here:

According to a civil servant: ” The only thing they want to find out is how much we earn and not who we really are!!” 

That is correct Mitsos. We could not give a monkey's.

Even this figure may not be accurate as the government believes many people have not signed up - these will be given a chance to explain their reasons for not doing so before final figures are released in late August- early September. Members of the judiciary are likely to be the most common offenders as their professional association (i.e. union) stubbornly opposed their participation in the census. Our troughers in black have explained that they are offended by the suggestion that they are civil servants - they are, as they point out, not subject to the Civil Servants' code and, as officials of the Third Estate they are more like MPs or Ministers than civil servants.

Yaaaawn. I'll bet they would soon become civil servants if their paychecks started arriving late. In all seriousness, I sense a new pattern forming whereby everyone fingered as a civil servant will henceforth go to any lengths to prove they are not - as a possible insurance policy against redundancies. I don't think it's going to work.

Friday, 30 July 2010


Many readers will know that Hungary, one of the first European countries to take the IMF's cursed silver in the recent crisis, has recently experimented with the time-honoured genre of Sticking It to the Man and broken off their relationship with the IMF, forfeiting a sizeable tranche of money.

In light of this, I feel compelled to state in no uncertain terms that we are not Hungary - and even if they manage to pull off this latest piece of brinksmanship, we will never be able to emulate them.

The reason is made clear in a very enlightening paper written by - who else? - IMF staff (who may themselves be starting to suspect that Hungary may just get away with its two-fingered salute and are probably keen to warn the flock against straying too far).

In this massive collection of statporn, the killer graph is the one reproduced below:

What does it say? It says that while Hungary may have some liquidity problems (which can be fixed), Greece is simply insolvent (and in that respect we are in good company, with the UK and Ireland just ahead of us in fact).

Picture the situation like this: If a monstrous, futuristic corporate from a cyberpunk graphic novel were given the right by the IMF to bid for and buy the Greek state (along with our debt), there would be no takers.

Which is good in a way, because at least it means we can have it. That should put the conspiracy theories to rest.

Sunday, 25 July 2010


Back to our data fetishism today with some of the best-ever data on the wastefulness of Greek public investment - the only type of government spending with a snowflake's chance in hell of producing growth. This paper comes straight from the LSE’s Hellenic Observatory, whose work I’ve cited before.

In his time as an NBG Senior Research Fellow, a certain Y. Psycharis (of the humble but clearly well staffed University of Thessaly) managed to piece together a complete and consistent set of Greek regional investment data over 30 years – a very formidable task. 

Psycharis' aim was to examine how much the allocation of funds varies between different regions, how it is determined, and how it has changed with successive governments. His key findings, thought tactfully delivered, are devastating. I reproduce the key findings with no additional commentary as none is needed:

“Neither a North-South/Mainland-Island/Urban-Rural divide nor ‘the needs based approach’ could carry sufficient explanation for the allocation of public investment.”
“Second, contrary to what many researchers have portrayed about history and inertia for the stability of the devolved spending in the UK and ‘the remarkable stability’ of regional spending pattern in the USA, the regional allocation of public investment in Greece is changing over time.”
“Third, the level of underdevelopment - and as result redistribution - does not appear to have constantly and systematically comprised the principal criterion to explaining the regional pattern of resource allocation in Greece during the period 1976-2005.”
“Fourth, the policy followed throughout the study period concerning the regional distribution of public investment does not seem to have been dictated by a higher-level strategic regional development plan.”
“Last but not least, the regional distribution of public investment seems to be affected by electoral geography. The electoral preferences of prefectures, even the place of origin of certain members of each government, seem to comprise explanatory variables for the regional distribution of public investment.”

Thank you Mr. Psycharis. More on our misuse of public funds here.

Saturday, 24 July 2010


Those of my readers more used to following the news on the Greek economy may have been surprised to find that, over the last week, most of the news and blog traffic on Greece was concerned with news of a far more sinister nature, questioning not just the viability of Greece’s public finances but also of its political establishment.

The story that threatens to plunge Greece into truly Zimbabwean levels of ill-repute is none other than the assassination of radio news editor and blogger Sokratis Giolias, the man behind Troktiko.

For foreign readers trying to make sense of this story, I am pleased to offer the following summary.

A married father of one (and one more on the way), Giolias was gunned down by three strangers who lured him out of his home in the small hours of the morning by claiming that his car was being stolen. Police claim that no fewer than 15 bullets were fired at him. Responsibility for the attack has now been claimed by the Sect of Revolutionaries, a terrorist group that grew in the aftermath of the Greek riots of November 2008 and had in the past threatened to attack high-profile journalists as collaborators of the capitalist establishment. 

The Sect has assumed responsibility for this latest attack and issued further threats here (in Greek I'm afraid). 

Despite the reasons cited by the Sect, there is no consensus on why Giolias was killed. Readers should note that Greek society is deeply cynical about the nature of terrorist groups and theories abound of their connection to either the Greek political establishments or foreign state agencies.

Greek anarchists had recently denounced Giolias as a police collaborator following the arrest of members of the Revolutionary Struggle, another one of our militant anarchist groups (in English here and in Greek here and here). Mainstream media stories about his death both in Greece and abroad usually come with a corollary to the effect that he was preparing to launch a major story on corruption. While this might suggest the kind of news story that would bring down the Government or endanger business interests (an explanation with very alarming implications of political instability), it has been more commonly suggested that Giolias was preparing a story on the trade of illicit arms, alleging the involvement of the Greek police force. Police have got hold of the hard drives from his home and office computers and only time will tell what they will find – or how much they will let on.

Others point out that Giolias had got in with the wrong crowd from the start: he emerged into the blogosphere having spent a great deal of time working for Makis Triantafyllopoulos, one of our shadier journalists. They parted ways in a sensational barrage of disturbing letters and online posts, with Giolias alleging all manner of journalistic, employer and even sexual misconduct on Makis’ part, as a result of which Giolias claimed to fear for his life. Triantafyllopoulos ended up naming Giolias as the editor of Troktiko, – something which Giolias had falsely denied right up to his death, but which his Troktiko colleagues confirmed subsequently. (Audiatur et altera pars – Makis has his own detailed views on Giolias’ career and death, reported by his staff here).

Troktiko (Greek for “Rodent”) was a tremendously popular blog, which I used to cite on LOLGreece’s own reading list and even once named as one of “my media heroes”. It now claims to be shutting down, and offered its farewell post this Saturday. I will miss it, not for reasons related to journalistic achievement but because I believe that Greece is chronically under-served by its mass media.

As the first Greek media blog with mass appeal (with 450,000 visitors daily and 1.44bn pageloads to date), Troktiko made it quasi-acceptable in Greek society to cite a news blog, though apparently not to run one. In so doing, it (and by extension, Giolias himself) rendered an invaluable service to the Greek nation.

This is not a pronouncement on the independence, objectivity or quality of Troktiko itself, which had found a bizarre niche serving both the middle-upper class “in the know” crowd and the great semi-literate masses. Its material varied from reposted youtube videos of cats doing funny things to consumer advocacy pieces, to endless, incoherent, misspelled and ALL-CAPS’ed jeremiads from ill-informed, semi-literate and anonymous “readers”. Most of this was, one is tempted to think, not the work of Giolias, but of his team of at least 3 full-time equivalent staff and numerous external contributors, who provided window-dressing for the occasional piece of investigative journalism.

Astute readers will remember the embarrassing non-story, published by Troktiko and re-published by Zero Hedge, of a rejected Russian loan offer to Greece, which ended up being reported around the world. This kind of stuff was not only irredeemable drivel that no “investigative journalist” had bothered to research, but also dangerous in that they were leaking raw sewage into the ears of the financial community. An old friend working for a major investment bank confirmed to me at a later date that Greek colleagues were frequent visitors of Troktiko, and it is easy to establish that a Greek reader had forwarded the story to ZeroHedge. When I wrote to the anonymised “letters to the editor” address provided by the blog to point this out, I received no acknowledgement. A “letter” did, however, go up on Troktiko days later wondering why the scandalous matter of the Russian loan was not receiving more attention.

The death of Giolias is tragic in every way, and I wish his young family all manner of strength and comfort. As for Troktiko, I hope that it will be the first of many game-changing Greek blogs. I also hope, however, that its demise will mark the beginning of the end for the kind of journalism-by-innuendo that has left many Greeks so hopelessly and defiantly ignorant.  

Sunday, 18 July 2010


I don't know where this graph came from originally, so I'll credit Troktiko, where I saw the photo in the first place.

People around the interwebs seem to be taking this graph as evidence that Greece's Socialists are to blame for our huge mountain of debt. While I have endless sympathy for this sentiment, that is the wrong way to read the graph.

You see the Socialists actually paid off a good deal of our debt under Simitis and the Conservatives added to it (even above the purely cyclical effect) under Karamanlis Jr.

What actually happened was that the gravy train only stopped on three occasions: under dictatorship, during Papandreou's last (read: senile) days, and under Eurozone convergence. The three situations have one thing in common: the Greek people were unable to influence fiscal policy through clientilist politics either because no-one was listening, or because the people in charge were answering to a higher power.


Saturday, 17 July 2010


A little publication for my Greek friends.

You can download the entire issue (in Greek, I'm afraid) here.

I wonder if the people at Proto Thema realise the extreme irony of calling their business inset "Business Stories" and then truncating this to "BS".

It does, however, help to keep my ego from inflating any further.


I suggested the other day that readers who find themselves in London might be interested in the Alan Beattie lecture at LSE on why Greece should default.

An audio recording of the lecture (plus endless Q&A) can now be found directly below, or at the LSE events website.

Those of you with less time on your hands can wait for a while while I upload my notes (if I ever do). Those with a more academic predilection can do some background reading on the last 800 years of sovereign defaults here.


The IMF is lovin' it.

IMF staff have published today their review of the stand-by arrangement with the IMF which will no doubt make G-PAP and even some of our journos happy. The full report can be read here.

In summary they suggest that reforms are proceeding according to plan and economic growth has only been affected to the extent they had planned for.

I sincerely hope they are right.

However, they also note the following risks to the plan:
  • Out-of-control inflation - only to be expected when one racks up VAT in an economy with a very rigid labour market. 
  • Healthcare and local authority expenditures not entirely under control - primarily because we still don't know what they are
  • Publicly owned enterprises are invoking public sector guarantees on their debt.
  • The pensions reform bill is on track but we don't actually know what savings it will achieve because the actuaries are taking forever to crunch the numbers - not their fault really as the system is too complex in the first place. 
  • Greek banks are still locked out of the interbank lending markets 
  • Too many naysayers are still talking about default - credibility is not yet restored. 

Sunday, 11 July 2010


I am not the biggest fan of G-PAP and our current Government but I have to give them their dues on occasion. 

The decision to put all public consultations online was brave and, if followed up properly by policymakers, could change the country for the better.

At the very least, it will provide some badly needed LOLs.

The Government is currently consulting on the winding down of a number of quangos and other useless public organisations in a bid to save money and sanity. The consultation page (in Greek only, I'm afraid) can be found here.

As one might have predicted, it has prompted a torrent of self-serving comments from people employed in, supplying or otherwise benefiting from the entities being considered for closure. My personal favourite (and a heavily defended one at that) is the National Milk Committee. The problem with the NMC is that, the more they try to defend themselves through they Chairman, the deeper a hole they dig for themselves:
“How much does the NMC cost the State?
The NMC does not at this time receive a single Euro from the State. It carries out its work, whose significant is universally acknowledged, thanks to the funding it receives from the Hellenic Dairy and Meat Association, which in turn is funded entirely out of the money of Greek milk producers and manufacturers of dairy products in return for services rendered. It should be noted that, during the first 25 years of its operation it had no regular funding and was able to operate thanks in main to the contributions of the Greek dairy industry and other dairy stakeholders.”

Sadly, it is hard to corroborate this as the NMC does not feel any obligation to publish any financial information in Greek or English. However, it does appear suspect in light of what is mentioned under the “funding” tab of the NMC’s own website:

“Until 2004, the NMC operated with no steady funding. […] Over the last few years, some of its more significant  function were funded by the Hellenic Dairy and Meat Association, the association of Greek Dairy Manufacturers and the Ministry of Agricultural Development and Food to whom we express our gratitude.”
 “In 2004, Presidential Decree no. 89, established an annual €200.000 grant to the NMC, levied from the Hellenic Dairy and Meat Association.”

Let us forget for a moment the direct funding from the Ministry and focus on the HDMA money. It is clear that, contrary to the NMC's claim, this is not quite a quid-pro-quo model of funding – the NMC receives this money regardless of what services it has rendered. And it has a claim on this money by presidential decree – hardly a model of free enterprise. But even if the HDMA were paying out of genuine interest, this would also be problematic because they are not in fact spending “the money of Greek milk producers and manufacturers of dairy products in return for services rendered .” A look at the website of the august HDMA suggests where its own funding, of which it so generously gives to the NMC, comes from in the first place:

“The HDMA is not funded out of the State budget. Its revenues are derived from a 0.75% levy on domestically sourced milk, a 0.5% levy on foreign-sourced milk, and a 0.2% levy on domestically and foreign-sourced meat.”

In my village, this is called a tax. But I’m getting ahead of myself – back to the NMC for now:

“Since its establishment, the NMC has been housed free of charge in premises granted by the Senate of the Athens Horticultural University. This grant essentially allowed it to exist through its first 25 years of operation, during which time it had no steady source of income.”

Finally, as the NMC explains, its Chair and Vice-Chair are both University Professors, i.e. civil servants, whose wages, travel costs and expenses are paid out of the state budget. This last point is important because the NMC is based in Athens but the HDMA is based in Thessaloniki – an 8-hr drive apart. The other three Board members are all high-ranking industry association people.

That aside, why do we have an NMC? Why can’t the HDMA build its own resource? Because to have an NMC ties in nicely with the structures of the International Dairy Federation, of which the NMC is a member. The IDF’s job is, once one has read through the fluffy language, to act as chief self-regulator and lobbyist for the dairy sector.

From the above it is clear that the NMC is typical of the culture of the Greek quangocracy. Here they are, an organisation that receives EUR200,000 per annum levied by state decree, is housed free of charge in public property for a quarter-century, occupies the time of well-paid civil servants and taps into the state budget to pay for their travelling costs. Despite all of this they STILL DON’T REALISE THEY ARE BEING SUBSIDISED BY THE STATE.

That’s just not good enough. G-PAP has my vote on this one – make them, and everyone else like them, squeal!


This was never going to be pretty, my friends. After talks with potential investors to test their appetite for Greek debt, our Government decided not to put any 1-yr Treasury bills up for sale in our first brush with the markets since the May bailout. This contradicts our earlier statement of 28 June.

This is of course not important enough for the Ministry of Finance to put up on its website for our edification – unlike, say the Minister’s tedious interview with Athens News, for instance. But I was wondering how our more liberal minded media would spin this. My favourite example is the E-net coverage:

“The head of the Public Debt Management Organisation, P. Christodoulou, was forced to circumvent 1-yr bills in favour of 6-month and 3-month bills in order to keep the cost of public borrowing at levels that would not further whet the appetite of rent-seekers.”  

In fact it is a little more complicated than that, Christo my friend.

It appears that in announcing the sale back in June, we have actually played into the hands of specuLOLtors – such as they are. Note, for instance, the reaction of Goldman’s chief European Economist Erik Nielsen when this sale was originally announced:

“Since the IMF-EU package is fully funded (i.e. no need for commercial borrowing) through 2011, and the numbers [on Greek austerity measures] are coming in somewhat better than expected, there should be no need for this borrowing – so why are they doing it? Could it be that they are responding to demand from banks and other investors who have started to appreciate that a debt restructuring [in] the next 12 months is very unlikely and therefore looking for high-yielding assets? If so, this would be a mis-guided move, in my opinion, and – frankly – I hope the IMF and EU would tell them to back off.” 

What? Could it be that the uber-evil, uber-specuLOLtoring Goldman urged against this entire auction? Did we really get talked into the whole thing by greedy bankers, only to slam the door on their face halfway through?
My guess is our motivation was very different: only a few days earlier, our Ministy of Finance reported a projection-busting 39% reduction in the Greek deficit. Hoping that the market would be impressed by this figure, our Government sought to capitalise on the good news by successfully raising a little bit of money and sending a powerful signal.

I must admit that I don’t think this was such a bad idea – in principle. If our figures were robust and we could be seen to raise even a small amount of money on the market at near – bailout terms we could signal to investors that we were serious about not defaulting and willing to take the pain, and also signal to our domestic audiences that we are that much closer to being able to tell the IMF to f—off. So full points to G-PAP and his merry men for going to the markets in the first place.

Unfortunately, the 39% figure is clearly not what it seems. From our own Government’s triumphant announcement:

“Net revenues of the ordinary budget increased by 8.3% year-over-year against a targeted 11.7% annual increase foreseen in the SGP, including the additional measures of March.
This reflects receipts of 779 million euro from an extraordinary tax on profits of large companies in 2008, an increase in receipts from the excise tax and corresponding VAT on fuel, tobacco and alcoholic beverages, as well as a 364 million euro year-over-year reduction in tax refunds. It is estimated that the additional measures adopted in March and May 2010 will begin yielding results in the coming months, thus rendering feasible the achievement of annual targets. 
Ordinary budget expenditures declined by 10.5% year-over-year against a targeted 4.8% annual decrease foreseen in the SGP. In particular, primary expenditures declined by 11.3% against a targeted 4.4% annual reduction and interest expenditures decreased by 7.5% against a targeted 5.1% annual increase.”

So to be clear: we’ve raised less incremental net tax revenue than we thought, mostly as a result of the last tax hike under the previous incompetent Government – which was a growth-killing one-off that we can’t really repeat – and by delaying (not really reducing) tax refunds.  I.e. we haven’t reduced the structural shortfall in tax revenues. We did, however, manage to cut expenditures twice as much as forecast. Now this is suspect, considering that our original plans were severe enough to threaten social cohesion. One does not casually achieve double the savings in question without some trickery at play. The announcement goes on...

“The decrease of primary expenditures is mainly due to expenditure restrictions for salaries and pensions, in health and social security (lower grants to the Social Security Funds by 1,139 million euro compared to the respective period of 2009), a 939 million euro reduction in operational and other expenses, such as grants and consumption expenditures, and a 486 million euro reduction in the allocation of earmarked revenues. 
Public Investment Budget (PIB) expenditures declined by 29.6% and PIB revenues decreased by 43.2%, compared to the respective period of 2009.”

So we’re inflating the savings figure by cutting public investment faster than public spending – which research tells me is the worst way to cut the deficit – and we’re delaying payouts to our Pension Funds, risking social unrest and implicitly defaulting on our debt. I can see that going down well.

No wonder nobody’s psyched about this announcement. But it gets worse. Recent polls suggest that the vote for the two main parties is plummeting. With the country now only nominally sovereign, voters are happy to try out a minor and radical party or to not vote at all. At the same time, voices within our own Government (perhaps with plans to topple G-PAP) are talking about a need for democratic legitimisation of the policies of our ruling Socialists, who of course campaigned on a very different set of policies than the ones they have since been forced to pursue.

If a new election returns a hung parliament, our creditors know with 100% certainty that they cannot count on the Greek Left to stay the course of the Stability and Growth Programme as the Communists have long denounced both the IMF and the EU and the liberal left is slowly disintegrating into a myriad disparate groupings. Worse, they now know that they cannot count on the rapidly fragmenting and increasingly populist Conservatives or the nationalists (who are busy talking about J-LO’s touring schedule instead) to act as responsible coalition partners. This means that any hint of G-PAP weakening or of elections approaching is tremendously bad news.

At least, in a rare display of maturity, our own people oppose a snap election.