Greek Public Finances

This article from Spiegel Online is interesting on the Greek situation, including the role of unpaid invoices as a way to understate the level of debt.

10 replies on “Greek Public Finances”

The print edition of the Spiegel, from which this online article was translated, carries an interview with Greek finance minister Giorgos Papakostantinou (yes, that’s really his name!) in which he responds to the interviewers question “Do you need fresh funds this year?” with a reference to Ireland:

“Our deficit is lower than other countries, for example Great Britain or Ireland…”

Later, when prodded by the interviewer that “private parties in your situation would be bankrupt” he responds rhetorically:

“Is Ireland bankrupt? Is Italy bankrupt?”

Later the interview seems to degenerate, with the Spiegel interviewer spinning the tired line of how poor old Germany has been paying (via Brussels) for countries like Greece for years, then threatening to send the Greeks to the IMF if they get uppity.

But his rhetorical line seems clear – if we’re going down, the Irish are coming with us!

@Graham Stull – “But his rhetorical line seems clear – if we’re going down, the Irish are coming with us!”.

….. and one or two others as the dominoes fall I suspect. It will be interesting to see how this Greek tragedy plays out. Is there any will in (e.g.) Germany to bail anyone out right now, especially if they think there may be others lining up behind Greece?

“But his rhetorical line seems clear – if we’re going down, the Irish are coming with us!”
Yeah. There seems to be a battle of wits (a battle of tits might be a better description) between finance ministers at the low end of the confidence scale. Nobody wants to be tail-end Charlie with the Luftwaffe swarming…

Does it seem now that there will be an example made of the last man to sober up? That even if there is some sort of bailout, it will not be one that is to be enjoyed (i.e. it might be preferable to be the IMF).

““It’s easy to cut wages and pensions to boost the economic indicators,” he said. “What we will do is make radical, long-term changes to improve our fiscal position.”

To loud applause, he announced a 90 per cent tax on bonuses for senior bankers in the private sector and a ban on bonuses for executives at public sector corporations.”

“Corruption, cronyism and a lack of transparency – have undermined the state and have to be eliminated,” Mr Papandreou said.

Is this type of language supposed to offer comfort to bondholders? As Delboy would say “What a plonker”.

Well the bond markets can rest easy then.


Its gets better. The hair stood up on the back of my neck when i read the following. In fact, I had to check that it wasn’t a wind up.

“Greece, with so much potential, is in critical condition,” he said.

“Greece faces the risk of sinking under its debt,” Papandreou said, adding that the country “has lost every trace of credibility” and that financial markets want to see action.

“Our slogan of ‘Either we change or we sink’ is more pertinent than ever,” he stressed.

“We are all hurt when Greece is held up as an example to be avoided in the entire European Union,” Papandreou said. “We are all hurt when we hold the negative records in corruption, lack of competitiveness, in the deficit, the national debt.”

Eamonn Kehoe

This from Wolfgang Münchau in the FT 13th Dec 2009 (two days before Papandreou’s statement) is interesting in that it discusses Merkel’s possible response to the Greek problem and the partial culpability of “Northern” Europe in turning a half blind eye to the excesses of the PIIGS (Portugal Italy Ireland Greece Spain).

European farce descends into Greek tragedy

“The markets’ perception of the credibility of this guarantee is absolutely critical.”

Let’s see how “critical” it gets.

Why would the international markets care so long as it’s Greek bankers who are being hit? Answer: They don’t care at all. The Irish establishment says the bond markets will go nuts if we put our establishment to the sword. No they won’t – they would be delighted. It would take all the attention off the massive bailout they are getting through NAMA for their bond losses – which they are insured against in any case per Morgan Kelly.

Other Greek anti-Ireland arguments:

– we don’t have a superlow Corporation Tax rate
– we didn’t make you bail out DEPFA
– we are not on course to take down global capitalism when we fail to regulate the IFSC
– we are not as corrupt as Ireland

Why all countries are in trouble!

The Greeks do seem to have more sangfroid than they are usually credited with! Nonetheless fraud will out and they are facing some action by their would be lenders. Why lend to Greece if they have the attitude that the debts are of no consequence? Their published statements remind one of hubris! Theirs is an example of a country where corruption has become endemic and almost universal. Ireland is headed down that path as more people realize how guilty Irish leaders are of corruption. And how unaccountable!


Thanks for that I was able to smile, a rare event!

There will be no more bailouts soon. TPTB will officially realize what I have been saying, that destroying what little real capital we have left is ineffective.

Officially, because those who control TPTB will have secured their capital along NAMA lines!

The effects of the depression have been postponed by funny money and will soon start to bite. This will take decades to burn through.

God help us all!

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