Has Greece delivered another Trojan horse?

January 14, 2010

Greece’s economic statistics are dubious in more than one sense. The country probably bent its figures to get into the euro zone. Now, the EU is angry that Greece has not been straightforward about the size of its fiscal deficit. But the greater doubts concern how an uncompetitive, highly indebted, weakly governed country can live with a strong currency such as the euro.

The Trojans were shocked after Greek guile got them in. The feeling may be similar at Eurostat, the European Union’s statistics office. There is particular anger at Greece’s increase of its estimate of the fiscal deficit last year from a tolerable 3.7 percent of GDP to a quite intolerable 12.5 percent.

A revision that huge in the course of the year is ridiculous – and shows something worse than incompetence. Greece’s finance ministry blames interference in the statistics office by the previous government. But the EU, which says it has been applying intense scrutiny to Greek figures since 2004, also seems to have lacked sufficient insight. The Greeks were still keeping a lot of danger in the dark.

With the numbers out in the open what Greece and the zone face is ugly. The country has a fiscal deficit of about 13 percent of GDP, government debt of about ten times that, and prices and wages that have risen far faster than those of France and Germany for a decade. Greece is uncompetitive and, as a member of the euro zone, cannot devalue.

That suggests its growth and unemployment will get worse, along with its deficit and debt. Crisis is coming. The only way to avoid it — with or without an ugly exit from the zone – is profound reform. Greece needs to balance the government’s budget, or come close to that, while the private sector cuts wages in order to become internationally competitive again.

The process will be a brutal marathon. But before it has even begun Greek workers are protesting – louder than Irish ones, who have already started the slog. It’s not clear that Greece can make it to the zone survivors’ finish line.

Comments

Greece may serve its purpose (as a tool) in keeping the euro from getting too strong these days as it is an alternative to the deteriorating US dollar which is heavily being printed to monetize the incredible debt in the US.

Posted by Montpessat | Report as abusive
 

The Greeks will never be able to tolerate the cuts necessary to bring the deficit down to acceptable levels. More fudging will be attempted! Greece is not the only problem – take a close look at Italy and Spain! The new balkan entrants to the eurozone are also none too clever either. Add this to the fact that the euro is already well over valued compared to it’s trade weighted index and it isn’t difficult to see that the story of 2010 is going to be the dramatic drop of the Euro. All the good news comes from France, Holland and Germany – the rest are a mess and have huge unemployment problems. It can’t go on.

Posted by paulos | Report as abusive
 

The EURO is toast. Paper the wall with it. Once Greece defaults – and they will – the rest of the PIIGS won’t be far behind. An alternative to the greenback! The world’s other reserve currency! What rubbish.

Posted by Gotthardbahn | Report as abusive
 

If not the Dollar or the Euro, who will come in to take over the world… Big Red China. We have to get it together in the US. Stop spending and Stop taking money from China.

Posted by dpaper | Report as abusive
 

I consider this article very provocative as a Trojan Horse attitude requires a strategic plan that most probably, Greece employed in order to get into the Euro Zone which latter proved to be the unpromised land of a currency responsible for the rising cost of living and the rising cost of insecurity due to a corrupted government not ready yet to provide a better well-being for its own people.

Posted by berts10m | Report as abusive
 

Look, Greece’s problems are (more than) occasionally due to corruption. The fires, this summer, outside of Athens brought attention to the government of Greece that the fires were near areas that were never cleared for development yet had small communities living there. Grecian thinkers had paved the way for western thought for many a year and without this mindset, Europe and the world would be drastically different. They should be in the Euro zone for this. For the currency, I am doubtful. I am all for 1 euro souvlaki but I am also for a government without corruption.

Posted by toosun | Report as abusive
 

Greek economy will be strong after the liquidification of a statistically qualified unprocessed huge debt resting upon Greeces’ shoulders while other European overworked members call for assistance international organizations such as IMF to supervise one of EU’s own children member’s forgotten pocket money. The North South split is not a rather economic phenomenon but the starting point of a New Era between developed and newly founded publicly broken and unhelped semi-developed countries. May God Bless Greece and EU’s distant institutions of austerity and reduced solidarity in times of a financial crisis and withing a very expensive coin system.

Posted by berts10m | Report as abusive
 

Greek economy will be strong after the liquidification of a statistically qualified unprocessed huge debt resting upon Greeces’ shoulders while other European overworked members call for assistance international organizations such as IMF to supervise one of EU’s own children member’s forgotten pocket money. The North South split is not a rather economic phenomenon but the starting point of a New Era between developed and newly founded publicly broken and unhelped semi-developed countries. May God Bless Greece and EU’s distant institutions of austerity and reduced solidarity in times of a financial crisis and within a very expensive coin system.

Posted by berts10m | Report as abusive
 

Yes, there is corruption in the government, like most, but what is happening here is forced privatization. The IMF was set up to help and support struggling economies, not negotiate on behalf of corporate interests to force social spending cuts and privatization of public resources and companies. This is Chili and Indonesia all over again w/ whiffs of Poland. Corporations want to wrestle control of resources from the Greek people. The IMF is helping by demanding that Greece impose this ‘austerity bill’ that will rape the people and put everything from water and electricity to communications and any other state industries on the block and into the hands of Disaster Capitalists. Greece is being pillaged by modern day pirates and robber barons. Nothing more, and unfortunately for the Greek people, nothing less.

Posted by liamfox | Report as abusive
 

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