The Real Greek Statistics - Let The Numbers Speak For Themselves!

(Photo credit: Jenn Durfey)

 "The head of Greece’s statistics agency, Andreas Georgiou, is to face a criminal inquiry. An ex-employee of the Hellenic Statistical Authority (ELSTAT), Zoe Georganta, has accused him of colluding with the European Union’s statistical arm, Eurostat, to inflate Greece’s deficit figure for 2009, thereby justifying Greece's EU-IMF bailout, signed in May 2010, and its drastic austerity measures. Georgiou vehemently denies the charges." ekathimerini

Kathimerini English Edition, the government news mouthpiece, allows Yiannis Mouzakis, whose blog is here: http://theprodigalgreek.wordpress.com/ and who is an 'economics content specialist for a global content supplier' to provide a lengthy put down of her 'foolish' position. Zoe Georganta has an interesting academic blog here: zoe-georganta http://zoe-georganta.co.uk/, She is a professor of applied econometrics and productivity at the University of Macedonia.

Her text (in Greek) on the underestimation of Greek GDP is here: http://zoe-georganta.co.uk/wp-content/uploads/2012/09/Underestimation-of-Greeces-GDP.pdf

He claims:

"The argument that had the shortfall been smaller than Ireland’s, Greece might have avoided the bailout or an austerity package is unconvincing. Firstly, it should be pointed out that Ireland did not escape a bailout or austerity measures. Beyond that, the two countries were suffering from vastly different problems. Greece’s debt was much larger than Ireland’s. Whereas Greece owed 112.9 percent of its GDP in 2009, Ireland’s debt-to-GDP ratio was just 44.5 percent. The Irish problem was in the financial sector, Greece’s was predominantly fiscal and macroeconomic. By May 2010, Greece had a financing gap of 35 billion euros for the rest of the year, so it is difficult to see how there was any prospect of Athens borrowing from international markets at reasonable rates, staving off a financial assistance program."

Note that 112% in 2009 for Greece was less than Italy and Japan; The credit ratings had this for Ireland in 2009: Fitch Ratings at 20 January 2009 had affirmed the Republic of Ireland’s‘AAA’ and ‘F1+’, these are the top ratings a country can get. Standard and Poor’s and Moody’s were under review.

But look at the figures I have for debt in Ireland by 2011:

• GDP: €0.2 tn
• Foreign debt: €1.7 tn
• foreign debt per person €390,969
• foreign debt to GDP1,093%
• Govt debt to GDP109%.

Greece is this:

• GDP: €0.2 tn
• Foreign debt: €0.4 tn
• foreign debt per person €38,073
• foreign debt to GDP 252%
• Govt debt to GDP 166%.

Source: http://www.bbc.co.uk/news/business-15748696

Ireland was and still is in a significantly worse condition than Greece, on the whole, even after the positing of Greece as the 'baddest' of the Eurozone. But Greece is treated differently in the ideology of the crisis.

In this piece from 2009 on debt at CNBC Greece doesn't even get a mention, but Ireland, wow:

"Out of the world's 75 largest economies, the United States has the 20th largest as debt-to-GDP ratio, standing at 94.3%, with a gross external debt of $13.454 trillion and an annual GDP $14.26 trillion. In fact, out of the largest 75 economies, this number is just above the worldwide average of 90.8% Western-European and North American countries dominate the upper end of the spectrum, with Switzerland (422%) and the United Kingdom (408%) at the #2 and #3 spots, respectively, and Ireland representing the most drastic debt-to-GDP ratio. According to the most recent World Bank data, Ireland's number stands at a staggering 1,267%."

And it correctly explains the danger of external (foreign) debt as opposed to public debt:

"External debt is more worrisome and important than public debt, as public debt is generally recycled back into the economy," says Josh Bivens, Economist at the Economic Policy Institute who has studied the long-term trends of national debt positions. "With US government debt, a majority of interest payments go to US citizens and money stays within the country. External debt represents pure 'leakage' out of the United States and is money that citizens will not have because they've borrowed it in the past."

According to the Irish Sunday Tribune

"[On Ireland:] A further breakdown of the country's external debt data, provided by the World Bank, shows that a significant proportion of the country's external debt is represented by the country's banking sector, accounting for approximately $976.48 billion. The argument is that the country's International Financial Services Center (IFSC) "lends almost nothing to the domestic Irish economy".

See - http://www.cnbc.com/id/33506526/Countries_Overloaded_With_Debt

So we have noted that Yiannis Mouzakis has posed Ireland’s debt-to-GDP ratio was just 44.5 percent in 2009 while CNBC has said in 2009 that it was a staggering 1,267%. Confusing, and who is doing the confusing? Mouzakis isn't really saying what debt to GDP ratio he is using (government debt to GDP? At what point in time in the year? – it was a fast changing year -).

But here we have Eurostat itself with its figures for deficits for 2009:

"In 2009 the largest government deficits in percentage of GDP were recorded by Ireland (-14.3%), Greece (-13.6%)"

So here Ireland is worse than Greece. But it has the ratios of government debt to GDP with Greece at 115.1%, and Ireland at 64.0%, and Greece is notably now worse than Ireland, but it is a different figure to Mouzakis' 44.5%.

Note that Ireland's private banks massive debts were taken care of by the Irish public in January-February 2009, when the Irish government determined that recapitalization would not be enough to save Anglo Irish bank and it was nationalized. Since this time it emerged that Anglo Irish falsified its accounts before it was nationalized. Recapitalization was also carried out at Ireland's two largest banks Allied Irish Bank and Bank of Ireland with bailouts of €3.5 billion confirmed for each bank on 11 February.

Damn statistics (They reveal everything)!

Whatever, it appears that Greece has been singled out for rough treatment in Europe, and that Zoe Georganta has a valid argument, but why singled out?

What would be the motive?

Greek public debt has, since the bailouts, been converted into foreign debt, debts owed to the Eurozone 'core', and this has in turn meant terrible austerity for the ordinary citizens of Greece. It is as if the Eurozone big hitters have looked around at who to pick on, and they have decided that it is those warmer nations by the Med that need be put into greater debt to them, also to help pay off the debts of their own banks. Like Africa itself, these nation's workers are to be super exploited.

But why does specifically Greece get more adverse attention within these?

Apart from having a history of being dominated at one point in modern history by repressive regimes (though Germany has this dishonor too), the only aspect that seems relevant is that they are southern and nearer Africa. So a simple geographical imperialism at work, indeed, a quasi racism (which is reflected in the term PIIGS, which although includes Ireland, doesn't really since it is 'Club Med' which has the finger pointed at it); but Greece also fits the ideological bill better than the rest because in its case it is the public authority rather than the private banks that can be more easily blamed (so, very differently to Ireland), and this ideology can then be used as a general way to understand the crisis globally throughout the media: essentially the ideology has it that it is people like the lazy (socialist) Greeks who caused the global crisis, not capitalism.

Zoe Georganta appears to be, in essence, bravely challenging this ideology. We could call it the 'European Ideology'. It is interesting that CNBC mentioned at the time that the "first time this analysis was published on CNBC.com, it stirred angst from Ireland", but I should think it stirred angst beyond Ireland.

The final paragraph of the article still remains relevant:

"Although the perspective of debt-to-GDP can be a revealing way to understand the sustainability of a country's debt position, the future of a country's external debt relies on both domestic economic policy and the ability of an economy to attract foreign investments. The debate continues over whether there exists a realistic way to pay off these rapidly increasing levels of government and private debt, but one thing is clear: if we have learned anything from the global economic crisis, the policy of taking on excessive debt cannot be perpetually sustained, no matter the size of a debtor nation's domestic economy." eurostat

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