I am in awe

[andrewducker]

I had assumed that the thigs I'd heard about Greek corruption and incompetent financial practices were overblown. Reading an amazing article which highlights just how bad things were. It's clear that Greece wasn't being run as a normal country in the slightest.

In addition to its roughly $400 billion (and growing) of outstanding government debt, the Greek number crunchers had just figured out that their government owed another $800 billion or more in pensions. Add it all up and you got about $1.2 trillion, or more than a quarter-million dollars for every working Greek.

...

In just the past decade the wage bill of the Greek public sector has doubled, in real terms—and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension,” Manos put it to me. “And yet there isn’t a single private company in Greece with that kind of average pay.” The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland’s. Greeks who send their children to public schools simply assume that they will need to hire private tutors to make sure they actually learn something. There are three government-owned defense companies: together they have billions of euros in debts, and mounting losses. The retirement age for Greek jobs classified as “arduous” is as early as 55 for men and 50 for women.

...

"The second day on the job I had to call a meeting to look at the budget," he says. "I gathered everyone from the general accounting office, and we started this, like, discovery process." Each day they discovered some incredible omission. A pension debt of a billion dollars every year somehow remained off the government’s books, where everyone pretended it did not exist, even though the government paid it; the hole in the pension plan for the self-employed was not the 300 million they had assumed but 1.1 billion euros; and so on. "At the end of each day I would say, 'O.K., guys, is this all?' And they would say 'Yeah.' The next morning there would be this little hand rising in the back of the room: 'Actually, Minister, there’s this other 100-to-200-million-euro gap.' "

...

As he finishes his story the finance minister stresses that this isn’t a simple matter of the government lying about its expenditures. "This wasn’t all due to misreporting," he says. "In 2009, tax collection disintegrated, because it was an election year."

"What?"

He smiles.

"The first thing a government does in an election year is to pull the tax collectors off the streets."

"You’re kidding."

Now he’s laughing at me. I'm clearly naïve.

The rest is here

Comments

[gonzo21.livejournal.com]

Yeah... the EU had better get to work fast on a mechanism for kicking countries out of the Euro zone, before Greece brings down the entire European Union.

[pete stevens (from livejournal.com)]

http://dev.null.org/blog/item/201005091742_324_swimming_pools_a

Number of swimming pools in Athens according to the tax authorities, 324.

Number of swimming pools visible in Google Earth, 16,974.

That's not exactly subtle tax evasion...

[spacelem.livejournal.com]

*little descending whistle*

Ouch. That's beyond bad.

I wonder if at this point it will ever be possible to sort this mess out, if Greece will just disappear as a nation, or become something akin to Port Blacksand.

[blearyboy.livejournal.com]

Thanks so much for that link. Beside everything else, it's a cracking piece of writing.

If you like that, I'd recommend PJ O'Rourke's book Eat The Rich. There's a chapter in there on how the Albanian economy collapsed which is worryingly similiar.

[andrewducker]

I have a whole bunch of PJ O'Rourke books. I went through a phase of them about 10 years ago :->

[sigmonster.livejournal.com]

"the Greek number crunchers had just figured out that their government owed another $800 billion or more in pensions"

A useful rule of thumb is that any time someone presents future government pension liabilities as a lump sum in this way, that person is a lying bastard who is lying to you.

One reason they are a lying bastard is that somehow or other they always forget to total the past and future employee contributions as a comparable lump sum (in the UK that would be NICs). Another reason is that they never present this "liability" against current assets on hand, which would be the total national wealth. A third reason is that it simply makes no sense to take such a total: the government will never be faced with the "liability" all at once, nor even have to roll over a large part of it at once, unlike the actual national debt. It's just a highly predictable annual cashflow which is far less than the annual tax take (even in Greece).

No comment on the rest of the article as yet, though!

[undeadbydawn.livejournal.com]

yup. Even though I am the least economically minded man in the universe, the pensions thing rang totally false.
it would only be an issue if the entire nation retired tomorrow. Which is unlikely.