economics

[michel123456]

Need help in finding accurate data about Greek debt.

 

The datas I found so far do not match together.

 

1.from medias we have Greek debt from 344 to 352 billion Euro. (media source JPmorgan). We'll take the higher figure.

This is the whole debt.

The greek problem is not the whole debt, because all countries have debt.

When this debt reaches 100% of GDP, the bell is ringing. When it goes to 110% of GDP, the country is going bad. When it reaches 120% of GDP, there is a real problem.

 

That was the situation of Belgium in the 80's-90's, which took measures at that time and managed to reduce to about 100% of GDP when entering the Euro zone.

 

For Greece the ratio Debt/GDP is 352/238= 1,48 meaning that debt is 148% of GDP and that is far over the acceptable.

 

2.from Wiki, we have

Greek GDP $312.042 billion (nominal, 2011 est.) $309.231 billion (PPP, 2011 est.) changed in Euro makes 238 billion Euro.

 

3.If I take the acceptable 110% of GDP (when the bell is ringing, just before the real trouble), we get an amount of acceptable debt of 110% of 238 billion= 261,8 billion

 

So the greek real problem is equal to an amount of

 

352 - 261,8 = 90,2 billion.

 

So the PSI program now under discussion , the "haircut" alone, said to be about an amount of 100 billion (?need a reliable source), should be able to solve the greek problem alone, without any other help from the european partners, nor from IMF.

 

That's why I suppose my data's are wrong. Or maybe my logic is wrong.

Does anyone here have some more knowledge in economics before I start spreading wrong information everywhere?

Edited February 17, 2012 by michel123456

[ajb]

I have no idea. But please keep us informed on here of any details you find.

[iNow]

Have you seen pages like this? It's very well sourced.

 

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

 

[michel123456]

Oh yes.

These are very bad diagrams. It looks like Greece is a very very bad companion.

First of all, this diagram has a cut from below.

It should look like this:

 

Now you can compare.

If you can compare a pachyderm to a mouse of course, because Greece's economy is only 3 or 4 % of Europe's.

I added roughly the datas about Belgium, from the link provided in the OP.

you can see that Greece in 1999 was in a better position than Belgium.

Things didn't go that bad until 2007. From this date and after things are going out of control for Greece. It corresponds to an average increase in the whole Eurozone, suggesting that the increase happened in other countries too (look at Belgium).

What happened in 2007 ?

Edited February 17, 2012 by michel123456

[iNow]

What happened in 2007 ?

Excessive lending by banks led to economic collapse.

 

 

http://globalpublicsquare.blogs.cnn.com/2011/12/20/the-euro-in-a-shrinking-zone/

 

It was not deficit spending by governments that fueled the economic collapse of 2007-2008, but excessive lending by banks. Government’s mounting debts have been a response to the economic downturn, not its cause. What ought to have been hard-wired into the EU’s institutional structure was not permanent fiscal austerity, but tough financial regulation. Of this there is little sign.

 

<...>

 

The reason why recovery from the crash of 2007-2008 has been so anemic is straightforward. When an economy shrinks, government debt grows automatically, because its revenues decline and its expenses rise. When it cuts spending, its debt grows even more, because its cuts cause the economy to shrink further. This makes the government more, not less, likely to default.

 

In the eurozone, most government debt is held by private banks. As this debt increases, the value of banks’ assets falls. So the crisis of the sovereigns engulfs the banks. To put weakened governments on iron rations, as Merkel did, was to make a financial crisis inevitable. To continue to preach salvation through austerity as the economy declines and banks collapse is to repeat the classic mistake of German Chancellor Heinrich Brüning in 1930-1932.

 

Here's another good article:

 

http://globalpublicsquare.blogs.cnn.com/2011/11/20/what-really-went-wrong-in-greece/

 

Greek public debt as a percentage of GDP did not dramatically rise right after Greece joined the euro. Greek debt actually accumulated back in the 1980s and early 90s, years before Europe got its common currency. The size of the Greek public sector (as a percentage of GDP or share of the labor market) is around or even below average compared to the rest of Europe. Greece did try to spend its way out of the global recession in 2008-2009 and ran large deficits; but so did most other developed countries, including the UK and the U.S.

 

There are two sides of the public finance coin: expenditure and revenue. What is left out is that while Greek public spending and debt crept up, government revenue fell or remained constant in the years after Greece adopted the euro. Between 2001 and 2007 Greece’s average government revenues totaled 39.4% of GDP, whereas the EU average was 44.4%. Taxes are by far the largest component of government revenue. The issue is not unique to Greece. Declining tax revenues were observed in Ireland, Spain, and in the U.S. after the Bush tax cuts kicked in.

 

In Greece the culprit has been rampant tax evasion by corporations owing millions in taxes and self-employed professionals who can hide their earnings, unlike salaried employees and pensioners.