Publicized Numbers. Publicized Statements. Facts.
Early 2009 the Government started borrowing in view of the increased needs for the service of the Greek debt
31/12/2003 the Government Debt of Greece was 182 Billion Euros. 31/12/2008 it was 262 Billion Euros, an increase of 80 Billion. Of this sum 50 Billion (62.5%) covered the interest due and paid for the total debt outstanding. 10 Billion was paid for Defense Armaments and Equipment ordered before 2004, the year the New Democracy Party won the elections and formed its Government. 2.5 Billion was paid to settle Hospital Debts created in the previous to 2004 years. 7 Billion was paid for dues to Social Insurance Funds which the previous Government had committed to. 69.5 Billion in total was paid out by the New Government (2004) to cover commitments from the previous Socialist Government. The remaining 10 Billion was the deficit of the years 2004 to 2008, created because the New Democracy Government simply went along with the convoluted public sector set up of the Socialist Governments that had Governed Greece for 20 of the last 23 years.
Early 2009 the Government started borrowing in view of the increased needs for the service of the Greek debt, compared to those of 2010. The spreads were 200 to 300 b.p.s, the average rate 4%. The country’s needs were comfortably met and the Treasury was left with a Reserve, a cushion which the present Government inherited. All the while the Socialists, then in opposition, were decrying the Government for burdening the people with debt before it was needed. They just could not see what was ahead (?).
In March 2009 the Prime minister, Costas Karamanlis, called all the Parties of the Parliament to concur to a plan to confront the International crisis and the Colossal Public Debt. He proposed a) Adherence to the rules of the EU. b) Confrontation of the Public Debt. c) Gradual decrease of the Public Deficit basically through the reduction of Public Expenditures. d) Consideration of the Restrictions to Deficits and to additional Public Debt. e) Specific Actions for Development and for Social Insurance. f) Self Restraint for the Parties and the Unions.
The Leader of the Opposition and his party (now Prime minister and Government party) led the rest of the parties to a NO to all the above.
On February 5, March 18 and June 25 of 2009, the Government announced measures aimed at reducing the Deficit, vehemently opposed by the very same persons who early in 2010 were obliged to take the harsh measures necessary for the country to survive. In the fall of 2009 the Government held elections purporting to proceed to the necessary measures to gradually contain the country’s deficit and confront the National Debt, with the consent of the people. The Prime minister campaigned on the ground of orderly fiscal policies, no pain but no more “butter” until the country is out of the danger zone. By contrast, the Socialist Party promised raises as usual, only moderate this time. When the, then challenger now Prime minister, was asked where is the money to cover the promised raises to salaried and to pensioners, his famous answer was : there is money. Where was the money that the incumbent Prime minister did not know (?). The Greeks gave the Socialists a comfortable majority in Parliament, but instead of the good life as usual and the raises they got harsh austerity. WHY ?
The Governor of the Bank of Greece had dully informed the Leader of the Opposition, now Prime minister, about the country’s perilous fiscal situation. In March 2009 the Prime minister had presented the fiscal situation to all the Parties and proposed the measures to be taken, with their consent and support, only to be turned down.
On September 14 2009, before the Elections , the, then, EU Commissioner for Economic and Monetary affairs, Mr. Almunia, publically stated that <All the Political Parties and Political Leaders participating in the Elections and who may possibly assume the Government of the country after the Elections, know the situation>. He went on to say that whichever the Greek Government will be, must advise the EU at the end of October about the policies it intends to institute in what concerns the reduction of the deficit, so that in November we can carry out an assessment in order to ascertain whether effective action has been taken for the attainment of the goal of deficit reduction. On the basis of this assessment at the beginning of the New Year we shall take the necessary decisions so that we can start the process according to the provision of the stabilization accord.
In the memoirs of the former Finance minister of Germany, Mr. Peter Steinbrouk, one reads : When the then Leader of the Opposition, now Prime minister, George Papandreou, came to visit me at the end of January 2009 he had no illusion whatsoever about the Economic and Fiscal condition of Greece. He was fully conscious of the immense challenge facing him if he were to win an election. After answering all his questions concerning the restoration of “health” to Germany’s Economics in the period of 2006 to 2008 and after expounding my views concerning the condition of the Greek Economy he bid farewell with the ironic remark that he was no longer certain he wanted to win the elections:
The Head of the European Central Bank, Mr. Jean Claude Trichet, in an interview published in the German magazine “Spiegel” (13/5/2009) stated that “we in the ECB were warning loud and clear the Greek Government that it should act swiftly and decisively. In these very demanding and intense times it is essential that one acts swiftly and decisively”.
Although Mr. Papandreou and his Government knew exactly how things were and what they had to do they did nothing. Instead they introduced a 2010 Budget proposal totally disconnected with reality. The markets viewed with suspicion. The Government came out with statements like : Greece is a Bankrupt and Corrupt country with a Tax Collection mechanism in disarray : Yes all this is true but such confessions do not encourage the markets, on the contrary. The Prime minister and his cohorts also talked about the country being like the TITANIC. They “leaked” that there is also the venue of the I.M.F, that China was interested in buying Greek Bonds, which set off a rally of the spreads that started climbing. At the EU summit of December 2009 the Prime minister drew attention to the fact that in Greece we have a case of huge systemic corruption, a “client” voters-politicians relationship, a parasitic Economy, an intense sense of lawlessness and arbitrary citizens actions. All this was true but what purpose did it serve to loudly “broadcast” it (?) even the International Media suggested that he and his cohorts stop blabbing, reminding them the old Greek saying that … silence is GOLD. This defamation coming from the Prime minister and his Government, as well as the innuendos about the I.M.F (“we have a loaded gun on the table”) intended as a bluff, made Germany and the EU decide that it is not a bad idea to have the I.M.F join in the rescue of Greece since, in addition to the defamation and the attempt to bluff, the inactivity, and the refusal to understand the situation and act, had shot up to prohibitive levels the cost of borrowing. By the time the Prime minister was jolted to action by the harsh reality, he had no alternative but to accept what was dictated to him.
The Head of the Greek Organization for the Administration of the Public Debt told CNBC on March 31 2009 that without all this talk we could have easily proceeded to the issue of Bonds.
The former Socialist minister of Finance and the Head of the country’s leading economic think tank, with interviews and press articles maintained that considerably milder measures and under no circumstances involvement of the I.M.F would have kept interest rates lower and the country would not have suffered the ridicule it has, if only the Government had taken the necessary measures without delay and had not behaved irresponsibly on the subject of deficit.
These being the facts from numbers and statements publicized one can draw one’s own conclusions.