GREEK DEFICIT: How Berlin encouraged Papandreou to big-up the 2009 Greek deficit [The Slog]
June 27, 2012 Leave a comment
The Western MSM have never questioned the ‘received truth’ that Athens understated its liability and obligations for several years following the launch of the euro. But few if any outside observers know the truth behind what happened when Papandreou took over the Premiership in Greece….and for Machiavellian reasons, the debt was suddenly overstated.
In October 2009, George Papandreou stepped into what one Athens source has called ‘the shitfilled shoes of Kostas Karamanlis’, and discovered that the two previous administrations had lied about both the size of the National Debt, and the ongoing level of government spending. In Greece, the folks you go to see to find out this kind of stuff hang out in an organisation called ELSTAT – the Hellenic Statistical Authority.
What happened in the weeks following was quite bizarre – and pretty fully documented. Somewhat panicked by the degree of mendacity he’d discovered, Papandreou confided to key Cabinet cronies that the real fiscal situation involved not balanced books, but a 7.8% deficit…well beyond the limits allowed by Brussels – although Brussels had, from Day One, been something of a paper tiger when it came to enforcing the currency rules. An insider from that time comments:
“Papandreou thought there was a serious chance he’d be thrown out of the eurozone. Unbelievable I know, but he did. But then things went rapidly from bad to awful. He really did have no idea what was coming.”
Rather like an Olympics Budget, the deficit figure kept rising with each week, as the new government opened more and more worm-cans. First ELSTAT said 7.8%, then 9.8%, then it went to 11%, before finally settling at 13.6%. Only then – some time shortly before Christmas 2009 – did Papandreou talk to Brussels, Paris and Berlin about the possible need for a bailout.