WE ARE NOT [NAME OF DISTRESSED COUNTRY] FAIL PART 2

Apologies for the long interval, dear readers. Even LOLGreeks must work for a living.

However, I have come across a real gem on Alphaville today which I thought I must share with you. A report by Morgan Stanley entitled "Ask not whether sovereigns will default but how".

Remember how the IMF proved to us the other day that we are not Hungary (but would really, really like to be)? I'm sure I got some cheers from the Troktiko-readers back home by pointing out that Ireland and the UK and in worse shape, from an intertemporal budgets perspective, than we are.

Oh, dear. Well it turns out they are not.

You see, unlike the UK and Ireland, Greece is an old, old country. By 2050 over one third of our population will be over 65.

And we're very bad at being old because we believe people over 55 shouldn't work. The British and the Irish may be insolvent but they just might be able to dig themselves out through changes in policy if they can just buy some time. We on the other hand, cannot because we have very little discretion.Our population is ageing and they will need their hospitals, their pensions, their bus concessions and whatever have you.

Unsurprisingly, the Morgan Stanley report finds that we carry a bigger demographic burden than almost any Western country. The IMF can't fix this. The Government can't fix this. They can only work on the two first bands of the graph above, which incidentally only represent about a quarter of our problems.

Good luck Yorgo.

Readers can browse the full MS report below:

MS Default

TARGETS FAIL, WIN, WHATEVER

Welcome, dear friends, to the 100^th post on LOLGreece. We’ve come quite a way and I’m grateful for your support. As a token of my gratitude I'm not going to do very much but I do promise to tag all of these posts and maybe add some kind of cool tag graphic. Yay!

The big news this weekend were the latest figures from the Greek statistics agency, which reveal that the Greek economy stands on the brink of a death spiral, clocking in at -3.5% growth. Why anyone is surprised, I don’t know. I won’t even bother to say “I told you so” even though I kind of did, because it should have been obvious to anyone paying attention.

Now, for the facts. First, the 3.5% fall is a year-on-year statistic. GDP actually grew by -1.5% in Q2.

Annualise this and you get a much more dramatic number: -6.1%. Or if you’re feeling more generous, annualise the figures from Q1 and Q2 and we’re on track for -4.6% growth this year. Both of these figures are well in excess of the 4% GDP fall anticipated by the EU and the IMF. Which of the three “annual” figures is the more accurate depends on what you think of the momentum of the Greek economic cycle.

My guess from the data so far (see below) is that we’re not halfway there yet and therefore I’m holding out for the worst-case scenario of a -6% growth figure for 2010.

Where does this leave debt to GDP and the deficit? It’s not too hard to approximate. You can get the latest external debt stats here and can approximate the incremental nominal debt in Q2 2010 based on the Q2 2010 change in our budget shortfall, which can be found here.

The result is a lovely linear upward trend, which has brought our debt to GDP ratio to a wonderful 120%, up from 115% in 2009. We're still some way off the forecast 133.2%, but there's always hope.

The verdict is that we're still way behind.