Wednesday, September 26, 2012

GREEK DEBT: under-reported in 2007, over-reported in 2009, and indeterminate in 2012'

A couple of days ago, Der Spiegel gave the Greeks something of a hammering by sensationally alleging that the country’s deficit isn’t €12.5bn at all, but in fact €20bn. But from Day One, the real size of the country’s problem has been the subject of wildly differing views.

The Spiegel piece is interesting in that it is Wolfgang Schäuble’s systemic leak aperture of choice, and would thus suggest that Berlin’s FinMin at least has decided an onslaught of “they’re useless” is called for prior to summary Greek ejection from the eurozone.

As always, the situation in Germany is confused, with Merkel blowing this way and that but, on the whole, convinced that chucking Athens out of the ezone would be the start of a rush for the door…stopping off to raid the ECB’s bailout coffers on the way. Indeed, Der Spiegel itself reported as much a fortnight ago.

But the Bankfurt faction has gained ground in recent weeks, and Germany’s Finance Minister shares many of their concerns. Unsurprisingly, the Greeks have flatly denied the Spiegel story: but over time, there have been charges of both under and over-reporting the Greek debt problems as circumstances dictated.

Many in the Greek intelligentsia have long maintained that George Papandreou was persuaded by Berlin in 2009 to overstate the problem he’d given them on coming to power. Three weeks ago, Zoe Georganta of the Greek Statistical Authority ELSTAT wrote a long piece after studying that period very closely. This was her conclusion:

‘Based on the most recent official data published by Eurostat for our country on the 14th April 2012, the item K for the year 2009 is small: it is equal to 0.1% of GDP. It is noted that Eurostat has defined K as small if it is not higher than 2% of GDP….the following years 2010, 2011 and 2012 (forecast) K suddenly and mysteriously jumped up from 0.1% of GDP to 2.8%, 3.03% and 26.2% of GDP respectively, with a corresponding deficit as a percentage of GDP equal to 10.3%, 9.1% and 6.7%…[from available data and minutes of the time] I can support that the debt of 2009 was inflated by 27.914 billion euros…18.214 billion euros of debt were transferred from the private to the public sector in a seemingly “urgent”, non-transparent and totally unchecked way…’. Read More