Cayman Financial Review
By: L. Burke Files & Mike J. MASOUD
April 22, 2015
Let’s start with being provocative: The utterly corrupt path leading to the Greek debt default theater is filled with faux EU pressures, chicanery and bribes, overt and implied, by all 11 sides.
So what are the corrupt paving stones that make up the path to debt perdition?
1981
It all started with Greece’s membership in the European Community. The EU membership entitled Greece to European Regional Integration funds, the Delors Package I. It also brought new sources to borrow from abroad. In 1981 Greek public debt was €8.5 billion (22.8 percent of Greece’s GDP), by 1991 it was €48 billion (71 percent of GDP). This is a full 10 years before Greece was made a full member of the EU. Did Greece have the institutional capacity to absorb these funds without corruption? Did anyone think to ask?
January 2001
Greece became the 12th member of the eurozone. While many fretted about such an economically weak country joining the euro, Wim Duisenberg, then president of the European Central Bank, assured all that Greece, with the EU’s help, would continue with improvements to its economy that would make euro membership appropriate.
At the time, Greece touted its fiscal reforms to cut the government budget deficit, privatizations and labor market reforms. Today those are the same areas where the troika has demanded action and the Greek government resisted.
2004
Greece admits it may have fudged its bona fides a bit to gain access to the EU club. It seems that since 1999 Greece has not met the deficit target of 3 percent of GDP that applies to all prospective and current members.
As commentators have pointed out, this was in part a consequence of a toothless Eurostat, the EU agency that monitors economic statistics, which was wholly reliant on the data provided by the national governments.
As Matina Stevis pointed out in The Guardian in 2011, “In a time when the EU issues regulations on the permissible size and shape of fruit, there are no excuses for not having in place a strict framework for the generation of statistical information.”
2004 to 2009
Greece is a big spender. Athens hosted the Olympics at extravagant expense. The estimated cost of the Olympic Games is a stunning $14 - 15 billion. No game in the history of the Olympics has lost more than a tenth of that. Associated Press reported in 2012 that eight years after the Olympic Games many of the facilities were left vacant and rotting.
Many Greeks, even the head of the International Olympic Committee, say hosting the 2004 Olympics contributed to the country’s debt crisis. The Olympic Games was such a bank buster that it was the tipping point starting Greece’s downward slide into debt perdition.
Continue reading
By: L. Burke Files & Mike J. MASOUD
April 22, 2015
So what are the corrupt paving stones that make up the path to debt perdition?
1981
It all started with Greece’s membership in the European Community. The EU membership entitled Greece to European Regional Integration funds, the Delors Package I. It also brought new sources to borrow from abroad. In 1981 Greek public debt was €8.5 billion (22.8 percent of Greece’s GDP), by 1991 it was €48 billion (71 percent of GDP). This is a full 10 years before Greece was made a full member of the EU. Did Greece have the institutional capacity to absorb these funds without corruption? Did anyone think to ask?
January 2001
Greece became the 12th member of the eurozone. While many fretted about such an economically weak country joining the euro, Wim Duisenberg, then president of the European Central Bank, assured all that Greece, with the EU’s help, would continue with improvements to its economy that would make euro membership appropriate.
At the time, Greece touted its fiscal reforms to cut the government budget deficit, privatizations and labor market reforms. Today those are the same areas where the troika has demanded action and the Greek government resisted.
2004
Greece admits it may have fudged its bona fides a bit to gain access to the EU club. It seems that since 1999 Greece has not met the deficit target of 3 percent of GDP that applies to all prospective and current members.
As commentators have pointed out, this was in part a consequence of a toothless Eurostat, the EU agency that monitors economic statistics, which was wholly reliant on the data provided by the national governments.
As Matina Stevis pointed out in The Guardian in 2011, “In a time when the EU issues regulations on the permissible size and shape of fruit, there are no excuses for not having in place a strict framework for the generation of statistical information.”
2004 to 2009
Greece is a big spender. Athens hosted the Olympics at extravagant expense. The estimated cost of the Olympic Games is a stunning $14 - 15 billion. No game in the history of the Olympics has lost more than a tenth of that. Associated Press reported in 2012 that eight years after the Olympic Games many of the facilities were left vacant and rotting.
Many Greeks, even the head of the International Olympic Committee, say hosting the 2004 Olympics contributed to the country’s debt crisis. The Olympic Games was such a bank buster that it was the tipping point starting Greece’s downward slide into debt perdition.
Continue reading
