Strikes, damned strikes and statistics


And so the hand-to-mouth existence that has become Greek reality continues. The almost grudging confirmation by the troika inspectors that the latest instalment of the country’s bailout package will be paid in early November means that default has once again been put on hold.

It is sobering to think that we are only six instalments into the 110bn euro bailout negotiated more than a year-and-a-half ago, and that there are seven more to go.

And even if a second aid package, worth 109bn euros, supplants the first and the complicated combination of bond-swaps and haircuts replaces the current bailout currency of hard cash, there is no economist who can accurately predict the future.

With every passing day, European policymakers are apparently preparing us for a haircut of anywhere between 20 and 60 percent of our 350bn euro national debt that will be another step into the unknown.

It took the troika inspectors a month to green-light the latest 8bn euro tranche of aid, and they did so mostly to avert the danger of a disorderly default and contagion. They most probably wouldn’t have done so had they based their decision solely on their findings.

For the second year running, the country will miss its deficit-slashing target. The recently upwards revised figure of 8.5 percent of GDP by the end of the year is almost a full percentage point higher than the bailout target. More crucially, the debt-to-GDP ratio - the key measure of whether the massive public debt will come down - is set to rise from 145 percent to 162 percent of GDP. That at a time when we’re supposed to be getting our spending under control.

The culprit is the anticipated 5.5 percent recession projected by the end of the year (up from an initial estimate of 2.6 percent).

The simple fact is that, once again, the figures don’t add up.

As we head into what will be - even by recent standards - an especially gruelling week of public transport, taxi, garbage collector, teacher, dock worker, journalist and lawyer strikes, it might have been a good idea for union heads to be invited to join the troika negotiations.

They could then have proposed their alternatives to the people really calling the shots. Perhaps then they may have realised the futility of holding the country to ransom. Their dispute is with the government, not the public.

Far beyond government statements and union threats, it would be better to focus on the bare statistics that represent reality. Missed targets were the reason we got into this mess in the first place and will be what determines whether we have any chance of getting out of it.

Source: Athens News (October 16, 2011)