WORLD'S WORST KEPT SECRET OUT JUST IN TIME TO KILL THE IRISH

Our budget deficit for 2009 was 15.4% of GDP and Government debt was 127% of GDP, as revealed by Eurostat in its latest release.

Amazingly, although we have no credibility to lose anyway, Eurostat did manage to damage its own credibility by missing its own earlier confidence interval substantially. The ceiling had previously been set at 14.1% for the deficit and 122% for the national debt.

Amazingly, Eurostat was, er, unable to squeeze this work in before the second round of our municipal elections, even though the ballpark figure has been out for more than a month.

Presumably this was meant to foster stability by giving Yorgo (the Threesome's only credible counterparty in Greece) a boost in the polls. Instead the announcement has coincided with Ireland's final fiscal meltdown, for which I'm sure we'll get a lot of polite greeting cards, perhaps featuring leprechauns holding empty pots.

Sounds a bit like the way in which our Government put its foot in it in 2009 by reporting its estimates of the deficit and national debt right ahead of the Dubai Debacle.

The truth hurts, Eurostat, but it hurts less if you tell it all at once. MUPPETS

DEBT TIMELINE EPIC WIN!

UPDATE: For more perspective on Greece's debt trajectory, and a more up to date graph as well, please consider this and this post.

Remember this epic graph of Greek debt / GDP which I found on one of our 'orange blogs' some time ago?

Well I think I've got an even better one. Better for two reasons - first, it goes back to 1884, with a few gaps here and there. Second, you can download the figures and read up on the methodology. The data come from a new public debt database compiled by the IMF, and presented in this paper.

The following graph is taken directly from the database, which covers an amazing 174 countries. You can download the data yourselves here.

Admire its beauty dear readers. Also, admire how much of the blame the first two Socialist Governments under our current Prime Minister's father deserve for our current fiscal woes.

I CAN HAZ DOVEY-WUVVY?

The IMF, we are often told, is a fiscal hawk whose single-minded, ideological pursuit of fiscal consolidation overrides all other concerns, including those of an indebted country’s citizens and even its creditors.

Why then is the IMF being so dove-ish these days?

First, the EU and the IMF tolerated a complete lack of progress in effective control of spending at the local government level which made it impossible for Greece to report against one of the explicit quantitative targets of our adjustment programme.

Then they allowed us to not count municipal authority employees in our controversial census of civil servants.

Then they tolerated the cover-up of our ‘final’ 2009 deficit figures until after the November elections, even though nearly everyone and their dog knows the figure is now estimated at around 15.1% to 15.5%.

Then they allowed us to delay the submission of our draft law on tax administration reform (draft here and rationale here), which they must know is desperately important.

Then they allowed us to set out a dubiously budgeted EUR2.3bn - 2.6bn plan to subsidise employment by offering incentives conditional on a stay in redundancies.

And for good measure, they now seem set to allow us to put off our capital gains tax hike until 2012 (here).

I can only assume that our creditors are incredibly invested in a Socialist victory in the 7 November municipal and prefectural elections, which they see as a make-or-break moment for our Government. Our creditors’ fears are well-founded. As I’ve explained here, while I hold most of them in deep contempt, the Socialists do offer our creditors their only hope of a stable and compliant government in Greece. Don’t forget, the Greek Right has foolishly tried to paint itself as the Greek version of Hungary’s Fidesz by claiming that signing up to the Memorandum was a choice made freely by the Prime Minister despite a host of alternatives (Russian money, anyone?) and that they would be able to bring Greece’s structural deficit down to 0% in two years (LOOOOOOOL).

Yorgo's thinly-veiled threat tο call a snap election unless his party does well in the upcoming elections has gone down very badly among Greeks, who resent being blackmailed. What they do not understand is that it is the IMF and our creditors that Yorgo is blackmailing. His signal says: 'cut me some slack, make me look good, or I swear I'll bring this whole motherf*cking place down with me.'

What our creditors and, worse, our Government, seem to forget is that the protest calendar is an even more important determinant of Greek bond prices than elections and that it is absolutely pulsing after 7 November. The 17 November celebrations are traditionally accompanied by an explosion of violence and last year’s spilled over into December due to the murder of a teenage protester.  Then four people died in May, and this too will pale in comparison with what could happen this November. 

It is amazingly short-sighted of the Government to kick the can further down the road – 7 November will simply never give it a mandate strong enough to survive another bout of austerity and the people will feel deeply betrayed. And although bad news before the 7th might dent its substantial lead in the polls, bad news between the 7th and the 17th could spark an urban war.

HOW (SOME OF) GREECE WORKZ

ΠΑΡΑΚΛΗΣΗ: Αν φτάσατε σε αυτή τη σελίδα έπειτα από μια αναζήτηση σχετικά κάποια από τις οικογένειες Chant, Mineyko ή Παπανδρέου ή προσπαθείτε να διασταυρώσετε πληροφορίες σχετικά με τη σχέση του Ανδρέα Παπανδρέου με την Chase Manhattan, σας προτείνω να διαβάσετε τα σχόλιά μου στα Ελληνικά. εδώ.

One question that keeps coming up regarding the sad saga of Greece's public finances is - how did we Greeks put up with this stuff? How did we let it come to this? Did we not see? What the hell's wrong with us?

Foreigners used to see the Greek nation at its best - my fellow exiles studying or working alongside them, or polished fellows in hotels, or carefree hipsters in beaches and clubs. They never saw the darker side, the nation that, in the words of Terry Pratchett and Neil Gaiman, has not so much fallen as sauntered vaguely downwards. Faced with it as they are now, some retreat into stereotypes of a siesta nation. There is of course more to this, and it's much darker.

WARNING: THIS IS GOING TO BE A LONG POST

So why not try a crash course? I got one myself today while casually browsing the chief Troktiko clone, Tro-ma-ktiko. You may have noticed I keep quoting this; in fact I get it drip-fed to me via RSS on my phone. Why? Because it gives me a constant insight into the darker, more primitive thoughts of my people - the nation's limbic system if you will.

After a short build-up, the following post went up today, discussing the father of our current PM, the late PM Andreas Papandreou (he's not Papandreou Sr., btw. His father, George Papandreou, also a PM in his time, is a better candidate. You counted right. That's three PMs in three generations). The author of the post is the anonymous admin account, tro(ma)ktikos, which could be any of a number of full-time equivalent staff.

"Something that every Greek should read. Anyone who wishes to do so can look it up and check whether or not it is true [ed: thanks for nothing]. According to our sources, all that you are about to read is true."  

"We've often heard it said that "we ate bread" [ed: finally achieved a tolerable standard of living] under Andreas, that he gave money away and the people could finally afford to eat, etc. But is that the case? Let us examine."

"For starters, just so that we all know what we're talking about we must examine his family tree: Zygmund Mineyko:  A Jewish Pole engineer who designs armaments for the Turks, so that they can fight those Greeks who fought for freedom." 

[ed: the Mineyko family history can be found here. Z.M. was born 1840 and was in fact on our side - a service for which he was decorated by the Greek state.] 

"Zygmund has a daughter, Zofia. Zofia marries George Papandreou from Achaia, and together they have Andreas Papandreou. Andreas leaves the country to study in America in 1941 and marries the American Jew Margaret Chant in 1951. Margaret Chant's father was Douglas Chant who served as president of the Jehovah's witnesses of America." 

[ed. this is not true. Other websites erroneously name Douglas Chant as Margaret's grandfather, and a person of rank among the Jehovah's Witnesses, not a president. The tale apparently grows in the telling]

"Andreas and Margaret have, among other children, George Papandreou, today's popularly elected PM. Now, in 1974, as the document below proves, Andreas borrowed $100,000,000 from the Rockefellers' bank, Chase Manhattan, to set up PASOK" [ed: the Greek Socialist Party]

[ed: This strikes me as excessive by 1974 standards. Compare this to the $67m spent by all candidates put together in the US presidential bids for 1976. Presumably that election was worth more of Chase's money than ours in 1981?]. 

"Common sense suggests that when a banker gives away $1, he expects a profit of $1,000. So Andreas was elected PM [ed: in 1981], he shut down all major businesses in Greece (Izola, Pitsos, Elinda etc. etc.)  by doubling wages and national insurance contributions without reducing taxation of businesses to balance this out. The logical outcome of this was for Greece to no longer produce or export anything, shutting off the flow of state revenue (which never opened again). Moreover, he increased the number of civil servants, who unlike the now defunct industries produce no state revenues, by 1,000% and furthermore increased bureaucracy, making it impossible to do business in Greece." 

[ed: Don't tell Pitsos they're no longer in business. They're very busy making appliances as we speak. Izola and Elinda have, since merging in 1977, been the same company. That's four years before A-Pap was first elected PM. They both went out of business together in 1991. Moreover, the number of civil servants went up by 57% between 1981 and 1996 - too much but not ten-fold].

"The result, due to a lack of revenue and excess costs, was for Greece to resort to BORROWING. It follows that he [ed: Papandreou] would borrow from 'familiar' banks... in order to return the favour. After 1981, Greece reaches the point, for the first time, of consuming more than it produces."

[ed. Although the criticism of A-PAP's policies is mostly correct, it should be noted that Greece has run a trade deficit every single year since at least the 1960s]

"The national debt soars from 8bn under that other father of the nation, Karamanlis [ed: that's Karamanlis Sr, the uncle of our last PM.] to 100bn. This puts Greece at the mercy of the banks (we don't need to say who owns those, anyone with an ounce of grey matter knows this)."

[Ed: The rant goes on forever, so I'll cut it short here.]  

Now for the money shot. The author of this rant attaches the 'document' outlining the understanding between Chase Manhattan and Andreas Papandreou. An official-looking piece, signed by Papandreou himself on US OMC - headed paper, linking the Chase Manhattan loan to almost every Greek national security issue imaginable. This document was originally hosted on imageshack (here), not a well known place for US military intelligence to turn up. But let's give this person the benefit of the doubt.

Now please read this document carefully and see if you can guess what's wrong with it.

Now I don't personally know any evil, conspiring Jewish bankers, but I would imagine they have to at least be relatively fluent in English to keep their jobs. And they would never be able to write "Wallstreet" unless they had a gun to their heads. Not to mention putting the dollar sign at the end of the amount. I do wonder whether the hoaxer has actually finished school.

Nor would they make so many grammatical errors that just happen to read as though they came from a literal translation from the original Greek. And of course, conspiring Jewish bankers would probably have conspiring Jewish lawyers who would advise them against all of these incredibly vague phrasings (such as 'will be fixed'), as they would allow any counterparty to wriggle out of their obligation without any problems.

Astute Jewish conspirators might also have pointed out that the only purpose of a contract is to uphold one counterparty's rights in court, should the other fail to live up to their obligations. This is a document that could never possibly be submitted to a court because such publicity would inflict untold damage on both counterparties. If such a deal did exist, I suspect that Chase would deal with a breach of contract via assassination (see? I am as Greek as anyone else).

Alternatively, this document could not have been drawn up by a Harvard-educated economist like A-PAP. By now you probably get my gist. This is a hoax, and a bad one at that, created by a poorly educated Greek LOLperson between frantic porn sessions. The editors of Tro(ma)ktiko cannot possibly have failed to notice this.Yet they publish this, and the disturbing rant cited above, and urge the reader to look into the authenticity of the document, in the obvious hope that no one will bother. Already countless clones of this article have sprung up in the Greek blogosphere, and will soon find their way into the faulty collective memory of my people.

Some people might be a little thrown by the authentically 'aged' look of the document, which the authors are clearly counting on. But in fact all of the logos and signatures included here are readily available online. As for making Courier script look like a genuinely typewritten document, that's a piece of cake for anyone with a scanner. For instance, I prepared the following document within a few seconds:

20101012164813706

Readers will know I'm no big fan of G-PAP. Yes, he's got a very bad situation to deal with, but he's dug his own hole in most respects. And at any rate, I think having yet another Papandreou at the helm is a complete affront to democracy in my country. I'll be happy to see the back of him. I also do not think much of his late father - whom many left-leaning Greeks revere almost like they would a saint, even though in reality I would liken him to a Gaddaffi-like figure, minus the guns, planes and oil. I don't know that he took money from anyone in order to set up PASOK; if he did, I wouldn't be too shocked. But this particular story is 100% fabricated. In fact, I'll go out on a limb and say that I believe the story to be fabricated by the editors of tro(ma)ktiko themselves. What worries me is that the authors know that it will chime so well with some Greek people's anti-semitic, conspiracy theorist instincts that no one will want to check.

One last note. How many people, you may ask, have read this drivel? On average, 6,000 people are reading tro(ma)ktiko at any given moment. If Troktiko is any indication, we're probably talking 400,000 readers per day. You can check it out here.

Are you scared yet?

IN SEARCH OF A COLOLDINATOR

Readers based in Greece may have noticed a great deal of inane talk recently about the need for a "co-ordinator" at the heart of the Prime Minister's office - essentially a Deputy Prime Minister in name or otherwise, based in some kind of equivalent of the UK's Cabinet Office, or the German Kanzleramt, to enforce joint-up policymaking and basically knock heads together when our ministers aren't getting with the programme. A recent survey was commissioned to ask, among other things, whether citizens feel there is a lack of co-ordination within government. 70% of the population said yes.

Now I wouldn't read too much into this. "Co-ordination" is one of those nothing-words in common Greek parlance (like "analytical", "prospect", "dynamic", "comprehensive" etc) whose purpose regardless of etymology is to convey a general sentiment rather than a judgment of facts. In this case, the call for better co-ordination basically means the government ought to do a better job. Yawn.

The idea originated back in February, when Yorgo put together a Committee (as he does) to consider the modernisation of the functioning of Government. Its members were:

• Kevin Feathestone, Director of the LSE Hellenic Observatory 
• Richard Parker, Senior Fellow at the J.F. Kennedy School of Government at Harvard
• Roger Wilkins of the Australia Attorney General's office 
• Leif Pagrotsky, formerly a Swedish Minister for Trade 
• Geoff Mulgan, now Director of the Young Foundation but once the "ultimate New Labourite" 

The Committee has now reported and judging from Prof. Featherstone's comments, its recommendations are likely to be accepted whosale. Ironically for an insolvent country, (but predictably for a committee of socialists) they involve hiring way more people into the Prime Minister's Office, which Featherstone says is one of the smallest in Europe, (boo-hoo) so that it can become a fully subsidised Think Tank with all the trimmings and become a serious agent in policymaking.

This will create a new lynchpin position, a right-hand man for the PM, an appointment guaranteed to whip Greek politics into a frenzy. This is already underway. Will successive Greek PMs ever trust anyone with this position? Past practice has been to give ambitious ministers 'electric chair' appointments like the Ministry for Education and Religious Affairs. And at any rate, is the solution to our problems really the Chancellor-ification of Yorgo and the Mandelson-ification of one of his lackeys? Will anyone be reassured by an office that gives the PM even more people to hide behind? Does it not run the risk of directly plugging the PM into tribal politics - a task formerly delegated to more junior politicians?


Sod this, Feathestone; you can keep your philosopher-King model. The machinery of government is secondary. Liberalise the labour market, root out the dead tendrils of the state, tax appropriately and cut red tape, scrap military service, introduce university fees and proper admissions; give the Greek people their drive and dignity back. Then they will be able and motivated to hold you to account accordingly.

CONSULTATION WIN, TROUGHING PIGGIES FAIL

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!

SAFETY EPIC FAIL

So, G-PAP, why is it safe to invest in Greece? I'm asking because I keep getting queries about how to move money out of Greece to a UK bank account and I'd like to just tell everyone to leave me alone.

My line so far has been that when Greece finally defaults, there really won't be any safe place left in Europe to put one's money except into gold coins and up one's own rectum.

But now our PM offers a glimmer of hope. How, I hear you ask?

Enjoy his ludicrously chummy interview with FOX News, that unrivalled bastion of socialist thought. G-PAP explains that Greece is a safe place for tourists, and hence a great place to invest if you're keen to profit from that industry. 0:22" into the interview, the FAIL lands with a momentous thud:





"Greece has a tourism industry that can really thrive, and which can become more attractive; we're now moving into niche tourism, high-quality tourism; Greece is a safe country, it's a beautiful country, a hospitable country, I'd like to make that plug on FOX News [...] " [Emphasis mine]

Let's qualify that, shall we? There are still some parts of the country that are pretty rough, where a man (or woman, including pregnant ones) can get killed just minding his/her own business. Like any bank in the centre of Athens. Like that training centre for bureaucrats in Patissia where a 15 yr old Afghan boy got a heavy sample of our hospitality. And, recently, like Greece's ministry for law enforcement, where the correspondence (no doubt checked diligently by the heavily unionised security staff and postal workers before them) has become literaly too hot to handle.

To be fair to G-PAP, no one actually mails any bombs to any of our islands - perhaps they can't be sure they will arrive. Indeed, there are almost no recorded incidents of this sort anywhere in the countryside. Which begs that question: who are our urban guerillas?  Any guesses as to where they live, or where they meet? Any guesses as to why they do what they do? (Actually, there have been some early guesses, in this excellent piece of research.)

At any rate, some of our compatriots are not too keen on these questions. What appears to matter to some is who bears the political responsibility, and who should therefore resign. Others do not mention the news at all - as they say, only the state and the capitalists are murderers. Others still, elected political leaders no less, say it's all a ploy to divert attention from recent austerity measures. The fact that some of our compatriots have no regard for human life in their ridiculous pursuit of failed ideologies is secondary

Let me be clear: the tiny, fringe element of the Greek Left will not cease to be knuckle-dragging subhumans if G-PAP and half his cabinet quit. Their well-to-do fathers will not grow a pair and turn them in if we beef up security at ministries. Those of our pupils who live for the few weeks of school occupations per year will not apologise for glorifying the molotov culture if every employer in the country accepts responsibility for the bombing.

It is true that Greece has enormous wind energy potential. If only the wind weren't blowing out of our own arses.

QUANGO FUNDING CUT WIN

Very good to see Yorgo making a start, however timid, on savaging our tablescrap-plifering quangocrats.

Apparently, the Educational and Research Foundations named after past prime ministers (including Yorgo's own grandfather) are having their funding cut.

I will write more when I've done my homework.

CREDIBLE THREAT FAIL

I must apologise for the long radio silence on this blog. I have been busy with other things but have not lost track of events in the Greek fiscal drama, I promise you.

Try this for a quick taster.

Our Government is out to get the evil specuLOLtors who have first helped us fudge our numbers and then used their inside knowledge to short our debt. To show them the error of their ways, we have banned them from our latest debt offering.

You guessed right, this is another EPIC FAIL for Yorgo.

To see why this is the case, consider how serious our threat is... to ban people from our future debt offerings. The seriousness of the threat is directly proportionate to the expected value of our debt offerings. This means that the worse our fiscal position gets, the more we implicitly punish the evil specuLOLtors. That will show them not to signal to other people that our fiscal situation is bad.

That's cutting off our hairy noses to spite our hairy faces.

WE IZ FOREIGNERS, EMPLOYING TRANZLATERZ... ZOMFG

Notwithstanding the truth in his claims, I think our PM's words today will mark us out as petulant, ungrateful idiots for ever. Enjoy the headlines:

Greek PM says EU took too long to show support (AP)
http://news.yahoo.com/s/ap/20100212/ap_on_bi_ge/eu_europe_financial_crisis

Of course this was said in Greek. In English, he said "well we never needed yer stinking bailout anyway."

New Year's resoLOLtion no.4, Yorgo: We will learn that our creditors can hire Greeks to explain all the inside stuff.

For reference, here is the full text (YES!) of the European support statement. There really is nothing else to it.

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.

DAS POO!

My vulture -meter went off the charts today and I had to check what the matter was.

It appears that our leading centre-left daily, Ta Nea, reported that the EC is about to reject our updated Stability and Growth plan. The original Greek article can be read here. I must note in the interest of objectivity that our government denies this, suggesting instead that the document seen by the journos is actually old news. And to be fair the document they offer for our scrutiny is a bit of a mess.

But why would the daily closest-aligned to the government hit them so hard in the balls at this very very inconvenient moment? Conspiracy theorists, we need your comments.

Finally, I am reading that in the midst of all this our Prime Minister took a bit of time - to the consternation of Davos attendees aligned to the financial sector - to watch clips of Avatar in 3D with James Cameron himself. Three possibilities.

1. He thought it was a presentation by David Cameron.
2. He misses the good times when beating the Blue People was his biggest concern.
3. He was  tired of being followed by FT correspondents and went into the last room they would think to look.

MALOLCIOUS FORCES

The FT reports:

Mr Papandreou said on Friday: “Everyone knows there is speculation and hedge funds that are pushing the market. That is a reality we must deal with, but what we need to do is not changed by that fact. We need to reduce the deficit and do it in a quick and orderly fashion.”

Then along comes BNP Paribas. The bank's comments on Friday are particularly intriguing:

As Greek sovereign CDS spreads continue to widen and underperform today, we ask ourselves the question more pressingly about who is most exposed. We hate to break the news, but it is impossible to say. We detail cash exposures below from the information available to us. However, what will spook the markets is CDS / counterparty risk (our understanding is that Greek banks were active CDS players), and there is no way of finding out about these particular exposures. Therefore, as long as Greek sovereign and bank spreads remain under pressure, this will weigh on the wider European banking sector.

More on this later today.

WE HAZ HERO! (MUPPETRY ALERT)

It's official - Joseph Stiglitz has come to our rescue, in an article that we are sure to see cited and re-cited ad nauseam for the next few days. His argument goes like this:

• Greece is not alone in having broken the Stability and Growth Pact. Everyone has, except this once we're not important or powerful enough to get away with it.
  
  
• The EC can afford to disregard some poor conduct from Greece because Greece is nowhere near as systemically important as other members.
  
  
• The EC's hawkish statements and its failure to acknowledge the progress we are making are compounding Greece's fiscal woes by increasing bond spreads.
  
  
• Greece's deficit is not entirely its fault  It's party Europe's fault for not giving us more money
  
  
• Greece has confronted its heritage of dodgy statistics and owned up to its poor practices
  
  
• Greece is a relatively poor country that will be plunged into a very deep recession if we're not allowed to run whatever deficit we want
  
  
• Credit rating agencies are useless at rating debt and they should not be trusted with this role when the stakes are so high.
  
  
• Yorgo personally is a great guy and the EC should back him up. 

I disagree with a great deal of this, and in this I know I am letting down many friends who have welcomed Stiglitz' messianic intervention with much relief. With respect, here are my arguments:

First, the issue of whether anyone plays by the rules anymore. Obviously they don't. But what exactly is Stiglitz' argument? The SGP was the guarantee that underpinned whatever type of solidarity there was between Eurozone economies. That it isn't worth the paper it was written on only suggests that there can be no solidarity between member states. He is right, however, that since nobody gives a hoot about the SGP, bitch-slapping Greece with it is not entirely fair. Why not just allow states to run whatever deficit or debt levels they want?

Credit where it's due. The SGP was rubbish and I agree that as a country we should have opted to set our own rules any way we want. Except of course we signed a treaty to the effect that we would respect the SGP, so perhaps it sets a very poor precedent for the EC to signal it will tolerate the breaking of treaty obligations.


More to the point, we have in the past used the SGP straitjacket as an added guarantee so we could borrow money cheaply. To this day, the suffocating stranglehold of the Eurozone ministers on our finances is the only thing that stands between us and a junk bond rating. What credible guarantee of self-discipline will we be able to offer if the Europeans cannot make us bleed for maxing out our overdraft? And if our own Ministers can't be bothered to bolster our image by refraining from alarmist bull, why should the ECB or the EC supress their thoughts on the actual facts?


So, far from making Greece less creditworthy, hawkish Europeans actually make us more so in the long run. But Stiglitz himself has managed the opposite. As I've argued before, the final guarantee our creditors have is that there is more political capital to be made in Greece from cutting the debt than from adding to it. Stiglitz' remark, on the other hand, has handed anyone who wants to increase the Greek deficit a get-out-of-jail card with at least the liberal part of the political establishment (which, in Greece, is easily 50% of it). This means that it is now politically that much easier for our government to justify an enormous deficit.


Greece's woes, it would appear, are unlikely to cause an EU-wide meltdown - just as Stiglitz argues. Although Europe's banks have lent us some pretty big wads of money, there is no evidence of infection from Greece to our neighbourhood. The point is irrelevant, however. If Spain, Portugal and Ireland were to be given the same amount of slack that Stiglitz wants us to be give (and why not?) they might take it. And if they do, the share of European GDP at risk from massive government deleveraging would skyrocket. The PIGS together account for 14% of the EU's GDP.


The new government has made some very good proposals for restoring credibility. But already the Stability and Growth Programme update shows that we're quite nonchalant with statistics. Our PPP debt, for instance, is largely unaccounted for. And while the EC has applauded us for coming clean with the dodgy practices of the departing government, they also applauded us for our honesty 6 years ago when said government came clean with the dodgy practices of the previous administration. One in which, if any reminder were needed, our own Prime Minister was a Cabinet member. What would be a rational response? Give advice, issue a stern warning, then wait and see. Which is what they've done. The EC can lie on our behalf but that doesn't mean creditors will buy it.


Which brings us to the worst Stiglitz argument of all - it's the EC's fault for not giving the periphery more money. First, in our case that would clearly be throwing good money after bad. We know this and the EC knows this and Stiglitz knows this because our own data show we are amazing at wasting EC infrastructure funds. That is, when we manage to use the funds at all. Second, it's been proven that unless we can shift our budget to investment rather than government wages (which we're not good at doing, especially with other people's money) government spending actually slows economic growth. Finally, we're already prey to the malaise that afflicts all aid-dependent countries: a version of the Dutch Disease where government itself is the bloated export industry, coupled with a perfect environment for corruption. To add to this now would consign the country to stunted growth and financial instability forever.

KEYNESIANISM FAIL

According to the updated Stability and Growth Programme, our current government is committed, despite everything, to a 15.3% reduction in public consumption over 3 years. I'm not sure they can do it, but I'm 100% sure it's the right thing to do, if they can pull it off.

Now not everybody takes my view on this. Our general union for the private sector has, as I've blogged here, made a strong if misguided Keynesian case for fiscal stimulus. Our farmers are clearly asking for a follow-up of the mad EUR500m package of last year. And some of our ministers, most notably our influential francophone Competitiveness minister, simply don't like what they see as neoconservative chemotherapy.

Apparently, a look at Greek government data from 1960 to 2000 shows that:

• shrinking government increases growth
• increasing government spending can have non-negative effects only if spending is shifted from public consumption to public investment
• but even then it tends not to contribute to growth.
  

But of course it can be argued, as many do, that these are exceptional times. We need, it is argued, a massive fiscal stimulus (pre-election the opposition mooted a EUR3bn package) to keep the economy from spiralling downwards into the Dark Ages.

Now this is a valid if factually false argument based on the same old spin on Keynesianism that has reigned supreme over Greek fiscal policy for decades. The Keynesian philosopher's stone is the multiplier effect: you pour one penny into the economy, and the froth generated by the merry-go-round of increased spending inevitably turns it into 1.4. It's like a macro-economic get-rich-quick scheme. And it works even better when interest rates are, as they are now, at rock bottom.

The problem is that any extra spending has to be financed by debt issued in the teeth of a fiscal crisis. A EUR 3bn stimulus package does not, therefore, cost only the going interest rate (let's call it 5% or EUR150m). It costs interest plus, eventually, the marginal increase in interest on THE WHOLE OF OUR PUBLIC SECTOR DEBT. That, if any reminder were needed, currently stands at EUR 300bn and rising. So if raising the extra EUR 3bn increases the interest rate by 10 basis points (5% to 5.1%), the cost of funding the deficit in year will be the 150m + 0.1% * 300bn = 300m. This means a EUR3bn stimulus package will cost, in the long run, three times what our Keynesians think it will. Now if we could depend on a multiplier of 4 (which not even the most rabid Keynesians would not dare put on paper) and on bond market conditions to drastically improve, it might be worth spending more at this point, but of course we can't.

Now this is a very crude analysis, but happily someone's gone and run a rather more sophisticated one based on Greek data, and they have found the same.

LET'S GET CUTTING YORGO!

CARBON REDUCTION FAIL, BUDGETING FAIL, TRANSPARENCY FAIL

WWF says the Greek delegation in Copenhagen was more than 70-strong, counting scientists and NGOs

In its early formative days, however, the delegation was sized at ca. 30 by our own officials, again counting various hangers-on:

Even one of our naysaying politicians on the Right only had the figure at 69.

Now I would not be willing to bet that anybody flying to Copenhagen paid their own way, so we must at least have the receipts. Apparently some stayed for more than two weeks.

All of this makes the Greek delegation bigger than that of the UK (but not as big as that of newly enviro-sceptic Australia). For a country with few domestic carbon reductions and no development money to offer, not to mention GINORMOUS AMOUNTS OF DEBT, one cannot help but wonder what we were thinking.

But of course, one thing did come out of it. The holy grail of political PR in 2009: the Obama photo-op.

LET ME GUESS... WE WANT TO THANK GOD FOR WHAT WE ARE ABOUT TO RECEIVE?

Details: http://www.tovima.gr/default.asp?pid=2&ct=32&artId=306150&dt=23/12/2009

O HAI... AI IZ AT HOME, PLAYING PLAYSTATION

“It’s a terrible waste of money,” said the former official. “It happens all the time. This is the Greek reality.”

He estimated that hosting the Olympic Games in 2004 cost Greece more than £12 billion, double what it would have been without “money flying this way, that way and often under the table”. Bribes are routinely paid by Athenians to speed up bureaucracy. Tax evasion is also rampant.

As for the new, centre-left government of George Papandreou, the prime minister, who is also the son and grandson of Greek prime ministers, the former official was dismissive. “They’re a bunch of amateurs,” he said. “Not one of them has ever earned a penny in the private sector.”

The previous government — of which he had been a member — was just as incompetent. He confirmed a rumour that Costas Karamanlis, the former prime minister, spent long hours on a PlayStation computer game at home when he might have been attending to matters of state.

http://www.timesonline.co.uk/tol/news/world/europe/article6962790.ece

I CAN HAZ CARBON TAX?

PLZ... I NO HAS TAX REVENUZ.