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Greek deficit 10.5% of GDP. That funny Orwell feeling...

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Paul Mason | 17:25 UK time, Tuesday, 26 April 2011

Emails from the Greek finance ministry always drop with a title that says "?????????" since the BBC's email system cannot cope with the Cyrillic alphabet. However today's missive from the Greek finmin is worthy of those question marks plus a famous 3-letter acronym that does not stand for World Taekwando Federation.

Here's the graph issued by Mr Papaconstantinou's office:

greekversusEU deficit reduction

It shows that even though the Greek deficit is higher than expected, it has still done better than anybody else in Europe in deficit reduction in a single year. Unfortunately there is no Bafta for this achievement, nor any form of credit in the international sovereign debt market.

Ireland, bailed out for its role as a large, English-speaking quasi-Grand Cayman in the Euro banking system, may have done worst, but it is still the most likely country to achieve leniency. Greece, which on its own figures has made good progress, is now being openly discussed as a candidate for a swift boot up the rear-end out of the zone altogether.

German economic adviser Lars Feld told Italian TV today that Greece should restructure (ie a controlled default): adding of course that Germany could not support such a default.

As we watch the inevitable happen, in slow motion, always preceded by disavowals and denials from those in power, it always calls to mind a paragraph from Orwell's diary on the morrow of the German invasion of the USSR:

"Remarked to X that, for the past few years, have had the feeling of waking up knowing more about what is about to happen in the world than any member of the Cabinet. Less to do with powers of prediction, but with the power to grasp what kind of world we are living in."

Comments

  • Comment number 1.

    Graph issued by Greece showing just how well they have done - no worries? No smoke and mirrors then. Has Greece stopped being a basket case of unemployment and negative growth - I doubt it.

  • Comment number 2.

    Perhaps they should live within their means instead of borrowing loads of money then wasting it because they all want to retire at 60 yet couldn't be bothered to collect taxes.

    Greece is not about the subjugation of a people, it's about countries living within their means and building a sustainable future.

    Whether other debtor nations should be getting more or less severe punishment smacks of the usual media relativism. They are both in the wrong after mismanagement and both will suffer for it.

    Some of it comes from internal issues, some from banking. If you want the latter to suffer at source then let's start the wave of defaults and haircuts. But we can't because we all have to keep pretending everyone can retire early, all our houses are worth mega-multiples of the average wage and our nation states can spend nearly 50% of GDP, and everyone wants to vote for this because it makes them feel good. The longer we can kick the can down the road the bigger the intergenerational pass-the-parcel-bomb gets.

  • Comment number 3.

    Paul - have to say I really love that Orwell quote. Slow motion is right. It's like watching a video of a car 20 feet short of a cliff travelling at 80mph. Various people stop the clip, slow it down, talk about what could be done to prevent the car going over the cliff. People come up with all kinds of fancy schemes: inserting a wall at the end of the cliff, building wings onto the car, extending the cliff from beneath, circumventing gravity, teleportation etc. Any non-academic would just tell you that car is going over the cliff as there is no rewind button in life.

    Let's just hit play and stop delaying the inevitable. Then get on with constructing a proper economy.

  • Comment number 4.

    I really doubt you'd be getting emails from Greece in the Cyrillic alphabet, Paul.

  • Comment number 5.

    @ Ben

    When you say that countries should "live within their means", I presume you don't believe in bond markets and the concept of sovereign debt at all?

    My goodness, now there's an argument for 100% default!

  • Comment number 6.

    I my be the slowest in the class but I need someone to explain the graph to me. What is the measure? What is the source of the information? What testing has Paul done to assure himself and us that it is truly representative of anything except the Greek wish to continue self delusion? How has the improvement/deterioration been achieved? Perhaps you could do a feature on NN Paul? I dont think that Ben Goldacre would be impressed with this post.

  • Comment number 7.

    Those familiar & with a grasp of Marx (which probably included Orwell), know more than those in the cabinet.

    2008 all other again?
    This time with a dollar crisis?
    And with no governments able to borrow from anyone?

  • Comment number 8.

    Mark - not if you borrow way over your ability to ever repay, no. Or am I not thinking like an economist?

  • Comment number 9.

    Ben, actually, I agree with you. I want to see a total reorganization of society, the economy and so on. It's just that a lot of people who pull out that "live within our means" rhetoric have little sense of the sheer radicalism of the change they are imagining.

  • Comment number 10.

    If the BBC's email system can't handle the Cyrillic alphabet then shouldn't all the people responsible for the server and desktop builds be asked why? I assume quite a lot of them are paid almost as much as newsreaders?

    Simply installing the Cyrillic character set in either or both servers and desktops, something that I and many other IT professional have done in global organisations for a long, long time now, solves this problem.

    That way when you get junk mail at least you know who it is from ;)

  • Comment number 11.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 12.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 13.

    @4 Phil

    The Duke of Edinburgh is correct. Greek is written in the Greek alphabet (alpha, beta, etc)

  • Comment number 14.

    Mark - yes things do need changing. Until then when a country signs on the dotted line to agree to a loan they do so under the current conventions. Such as being able to pay it back at some point.

    Anything else is just a nonsense eg I'm not paying it back because when I signed I was thinking about a utopia that has failed to manifest itself prior to the maturity of my debt. The responsibility for the creditworthiness of the borrower falls on the lender +and+ the borrower.

    If the consumer is not responsible for his actions we would end up in a real mess. For example if our country lost it's sense of self-control and said that if people eat without restraint and become fat it's not their fault, rather it is the fault of food manufacturers. Which would obviously be ridiculous and could never happen.

  • Comment number 15.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 16.

    Ben

    Have you ever wondered who has lent us all the money? Do you know how much debt all the countires in the world are actually in? And have you wondered how on earth the sum total of all countries credits and debts is still a very large deficit? How can we all be in debt? Who are we indebted to and why did these people lend out all this money to us when it clearly looks like we're not good for paying it back?

  • Comment number 17.

    Ben, I have a mortgage which is about 1.5 times my household income, which is dependent on my partner and I remaining in work. Our ability to pay that debt is dependent upon things outside our control eg. the strength of the economy. But by your standards, we - and most other people - should never take out a mortgage as we can't guarantee that we will be able to pay it back.

    And the point is that government debt is like this too. As Merkel herself said, there can be no lending without risk. Otherwise, there should be no lending at all - which is the natural (yet radical) consequence of this rhetoric about countries living within their means.

  • Comment number 18.

    Mark - I'm finding this exchange burdensome. First you produce this, extrapolated by taking an incorrect interpretation of my initial post:

    "When you say that countries should "live within their means", I presume you don't believe in bond markets and the concept of sovereign debt at all?"

    I think perhaps we are agreed that lenders who lend to people who are useless at running their economies should loose that money. Hence the risk. The world is waking up to that now as interest rates rise on Greek debt. As I said we can't face up to this because it would also call time on the lie that our own economy is sustainable. We want to call in one half of the lie but do not want to go back to our half of the ledger and face the truth.

  • Comment number 19.

    @11 It appears that, in the context of the Greek debt, I am not allowed to mention the word "fraud" and a major US investment bank in the same paragraph. So I'll give the New York Times link and let you judge for yourselves:

    http://www.nytimes.com/2010/02/14/business/global/14debt.html

    The Euro was never going to work properly without high common standards of accounting and greater economic integration than the nation states were prepared to accept. Now, as a result of austerity and currency rigidity, the Greek economy is contracting and they are unable to reduce their deficit.

    http://krugman.blogs.nytimes.com/2011/04/26/the-confidence-fairy-has-taken-a-leave-of-absence/

    Either there needs to be an end to economic sovereignty for Greece in return for aid, or let them default, leave the Euro, start with a clean slate and rebuild from the bottom. The latter option probably isn't compatible with EU membership either, as any who could would vote with their feet.

    In reality, European economies have needed each other for a very long time. In 'The Economic Consequences Of The Peace', Keynes, then a Treasury civil servant, wrote that in 1914 "the statistics of the economic interdependence" of the soon to be warring powers was "overwhelming", and gave numerous examples.

    I imagine that this holds true today also, but the politics needs to catch up. The question is: has the EU the natural resources, manufacturing capacity and manpower to provide for its own needs? (The UK clearly does not.) If it has, then the debt is just a number game, and internal debt can be dealt with by controlled default. Otherwise future generations will be crucified on a cross of worthless paper (to misquote William Jennings Bryan), and impoverished by beggar-my-neighbour economic warfare.

    http://en.wikipedia.org/wiki/Cross_of_Gold_speech

  • Comment number 20.

    @12 "Comments on the BBC blogs will be removed if they contain words or phrases in a non-English language, codes or text speak."

    I understand that this is the letter of the law: we certainly do not want international obscenities or inflamatory statements on BBC blogs, or anything which might be interpreted as such. However, usually the rules are interpreted with a bit of common sense.

    What I posted was:

    "Aren't extended Unicode character sets default these days? They certainly are on my Linux system - and there's a nice character selector too! It there anyone who can't read the Cyrillic and Greek alphabets below?"

    Then I gave character lists to see if other bloggers could read them.

    This is a BBC2 blog, and therefore supposed to be cultured. Would I be censored if I posted extracts* from a famous Rupert Brooke poem, 'The Old Vicarage, Grantchester'?

    "The Old Vicarage, Grantchester

    Just now the lilac is in bloom,
    All before my little room;
    And in my flower-beds, I think,
    Smile the carnation and the pink;
    .
    ........
    And when the day is young and sweet,
    Gild gloriously the bare feet
    That run to bathe . . .
    'Du lieber Gott!' .......
    .
    .....
    ειθε γενοιμην . . . would I were
    In Grantchester, in Grantchester! .... etc."

    *(written in 1912, so long out of copyright; Brooke died in 1915)

    http://forum.poetryconnection.net/viewtopic.php?t=5599

    PS if you can read the Greek characters, then you'd be able to read Cyrillic too.

  • Comment number 21.

    Sasha

    I'm outraged at your use of the word "Fraud"!

    I believe the correct term is "obscure":

    "One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels."

    There we go. The worst that these institutions have been doing all these years is just obscuring things. And that's hardly illegal is it? I mean obscuring ownership of assets and liabilities, obscuring the real state of company performances, obscuring the real value of fiat currencies, surely all this is the very pinnacle of human endeavour. There's even Nobel prizes for this sort of obfuscation and obscurantism! ;-)

  • Comment number 22.

    @21 You're quite right Hawkeye. :-)

    Regular bloggers need to get used to a culture of euphemisms, Private Eye style.

    Eg: The obscuring of billions will discuss Uganda with the economy.

    http://www.slang-dictionary.com/definition/discuss-Uganda.html

  • Comment number 23.

    Sasha

    If it were just a case of minimising blog thwacks then that would be OK. But I am concerned that word manipulation is the order of the day, both in the media and more worryingly in legal terms too.

    If ever confronted with a charge of "fraud", the contorting of language will be their defence in a court of law: "We were just helping to obscure it, your honour. That's what we're paid to do!".

    Maybe the Black Bloc could try that defence "Er, I was just obscuring the Starbucks winda, like, wiv a big metal object. The fact that the glass shattered wos just an unintended consequence, guv."

    But I doubt it will work. "Through tattered clothes small vices do appear. Robes and furred gowns do hide all."

  • Comment number 24.

    I agree Hawkeye.

    Newspeak is alive and well, but not quite as Orwell envisioned it. Ordinary people get paid, but executives are "compensated". Asset stripping is translated as "moving to a more liquid position". Then terms such as "downsizing", "collateral damage" etc are well embedded in the language by now. One of the worst words is "modernise", as to some it might sound good, but can mean anything or nothing; "reform" is not much better. They are ultimate weasel words, as they suck the meaning and life out of themselves.

    My favourite term is one of Terry Pratchett's zombies, Reg Shoe, describing himself as "differently alive" rather than undead. :-D

  • Comment number 25.


    Paul, I rather like your toxic bank debt analogy, where the Alien’s acid blood burns through progressive floors of the ship until it reaches the hull. Greece’s inevitable slow motion crash similarly reminds me of the final episode of Stargate SG1. Let me bore you with my analogy...

    SG1 are onboard a ship that is attacked by an energy weapon. They are “saved” from destruction by activating a time dilation field around themselves. Time now moves more slowly inside the ship than outside. It has bought them time.

    Years pass. We see the weapon beam slowly inch towards them.

    Fifty years pass before they work out a solution, but by now they don’t have enough energy onboard to execute the plan. They now must take an even riskier approach. It means shutting down the dilation field and letting the energy weapon hit them, so they can harness its power.

    In the end, after all that time, the ship must take the direct hit if it has a chance of being saved.

    http://en.wikipedia.org/wiki/Unending

    How many ships are out there in their own time bubbles waiting for the beam to hit?

 

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