So, what is the real truth about the Greek catastrophe?

New Europe

In late 2009, Europe and the world discovered that Greece was a “fraud” and a “deceiver” that had never stopped forging its economic performance in order to enjoy the benefits of membership of a privileged club, at the expense of its partners and the euro.

Le Figaro, Nov. 2, 2011

But how accurate is this really? Due to the advancing international economic crisis at the time, the majority of European governments were inaccurate in their deficit estimations. For example, in their Stability Programmes, at the beginning of 2009, Britain had predicted a deficit of 8.2% that finally reached 11.4%, the Netherlands predicted a surplus of 1.2% that turned out to be a deficit of 5.4% and Portugal predicted a deficit of 3.9% that rose to 9.3%.

Why was Greece alone in the dock?
Also, in the years 2008-2009, the deficit in Spain extended to 11.1% and in the United States to 12.9%. In April 2010, Ireland predicted a deficit of 11.7% for 2009 and 11.6% for 2010, while the latter finally reached 32%. However, it was only Greece who was accused of falsifying its data and being unreliable. And that by its own government! One wonders what caused this sudden and precipitous self-criticism.

At a time of global economic crisis, the newly elected government in Greece had structured its entire electoral campaign around the motto ‘There is money’, in order to topple the governing party’s campaign that highlighted the need for painful measures. In line with its election commitments, the budget drafted by the new government for the year 2010 included a whole set of allocations, such as wage and pension increases, public expenditure increases, a solidarity allowance and pledges for not imposing additional taxes.

Furthermore, the previous government had estimated that the 2009 deficit figure could finally reach 6-8%, because of the escalation of the crisis, and therefore, in an already turbulent internal political environment, it called for elections, in order that the next government should take such measures.

The new government’s estimation at the end of the year that the deficit had finally reached 12.7% reveals a considerable difference between estimations. However, this difference takes into account a number of expenditures made by the new government in the last few months of the year totalling around €9 billion, among which was €1.5bn worth of  tax refunds, €500 million for the solidarity allowance, €1.2bn for contestable hospital debts, €2bn from withdrawing regulations of the previous government and €1.7bn in revenue shortfalls.

Not ‘irregularities’ but ‘reclassification’

One comment

  1. There is an old saying that usually where numbers prosper, people get miserable. Unfortunately today in greece , both people and figures are getting worse off every day for the last three and a half years. And the most shocking angle of this financial genocide is that everything goes according to plan and that economics are supposed to be a social science. Lack of ethics, crisis of morals, political absence, disfunctional justice, obsolete non transparent political system. The grown seeds of an diminuishing social education that permilted Hellas to become that on going global experiment. Ancient Hellas gave the boost for major social reforms and a new world to be born. Let it be our case.