Have the Greeks Actually DONE Anything to Address Their Deficit?

ILW

They seem to talk about it, but has anything concrete been done?

BlondeHeadOn

They rioted a bit, and complained a lot - but then it was the summer, so they all went on holiday for 3 months as usual.

HAMISH_MCTAVISH

ILW wrote: »

They seem to talk about it, but has anything concrete been done?

Yes.

But the austerity destroyed the economy, so the deficit as a % of GDP remains pretty bad. Just like Ireland.

You can't cut your way out of a recession.:cool:

ILW

HAMISH_MCTAVISH wrote: »

Yes.

But the austerity destroyed the economy, so the deficit as a % of GDP remains pretty bad. Just like Ireland.

You can't cut your way out of a recession.:cool:

You can cut your way out of a deficit though.

HAMISH_MCTAVISH

ILW wrote: »

You can cut your way out of a deficit though.

Not if those cuts result in GDP falling by a similar amount as the deficit.

If spending falls 10% and GDP falls 10% as a result, then the deficit remains the same. And that's pretty much what we're seeing in the countries like Ireland and Greece.

ILW

HAMISH_MCTAVISH wrote: »

Not if those cuts result in GDP falling by a similar amount as the deficit.

If spending falls 10% and GDP falls 10% as a result, then the deficit remains the same. And that's pretty much what we're seeing in the countries like Ireland and Greece.

Depends how much you cut. Cut spending to zero and the deficit goes away.

HAMISH_MCTAVISH

ILW wrote: »

Depends how much you cut. Cut spending to zero and the deficit goes away.

If you cut spending to zero, then what you'd have left would look a lot like this.....



Probably not the best plan.....

ILW

It was just an example.

It appears they are still retiring many at 50 with the average pension at around 95% of final salary and are doing very little to address the massive tax evasion. Seems to be a lot of talk and very little action and the German people are getting rather fed up.

Degenerate

ILW wrote: »

Depends how much you cut. Cut spending to zero and the deficit goes away.

You can't cut spending to zero unless you cut the payments on your existing debt, ie default on it.

ILW

Degenerate wrote: »

You can't cut spending to zero unless you cut the payments on your existing debt, ie default on it.

It was just an example for Hamish who seemed to suggest that if you cut public spending then GDP dropped by an equal amount.

They are going to default anyway, possibly just by a different name.

gagahouse

DJ UPDATE: Greek Debt Dynamics "Out Of Control" Last Update: 31/08/2011 19:38:00

--Greek parliamentary budget office says Greece unlikely to meet deficit targets for the year
--Greek economy expected to contract 4.5% to 5.3% in 2011
--Greece's budget deficit in seven months to July widened 24.6% on the year to EUR15.51B

(Adds background in paragraphs two, five and six, eight and 10 through 12)

ATHENS (Dow Jones)--Greece's debt dynamics are veering "out of control" and the country is unlikely to meet its deficit targets for the year, the country's parliamentary budget office said in a report Wednesday.
The dire outlook comes as the heads of a visiting troika of international lenders continue their meetings in Athens to assess Greece's eligibility for the next tranche of aid, amid the country's deepening recession.
The budget office said extra deficit-cutting measures voted on by parliament in June won't be enough to close a yawning budget gap that has already outpaced targets for the first seven months of the year.
"The significant further increase in the debt, the high primary deficit, which in the first seven months of the year has already surpassed the annual target, the deeper recession, have led to an extreme deterioration in the debt dynamics, which are out of control," the report said.
The country's economy is expected to contract by 4.5% to 5.3% in 2011, versus an official forecast for a 3.9% decline, with tax revenues having missed targets, pushing Greece's budget deficit wider.
According to the latest data, Greece's state budget deficit in the seven months to July widened 24.6% on the year to EUR15.51 billion, while net budget revenues fell 6.4%, and budget expenditures jumped 7.1%.
The report also called for the "timely implementation" of the June medium-term budget plan, but warned that the plan would "significantly constrain, but not completely address," a widening budget gap in 2011 that it was supposed to plug.
In June, the Greek parliament approved a new EUR28 billion austerity package aimed at shoring up government finances through 2015, via a combination of tax hikes and spending cuts. Measures for 2011 amount to EUR6.8 billion, many of which will be implemented next month.
"The achievement of the goals in the mid-term plan is surrounded by significant risks. A particularly significant risk for 2011, is the non-timely implementation of the measures," the report added.
Inspectors from the International Monetary Fund, the European Commission and the European Central Bank arrived in Athens earlier this week and met with Finance Minister Evangelos Venizelos Wednesday in talks focusing on budget execution and privatizations.
They are expected to decide by mid September on whether Greece is due to receive the next EUR8 billion tranche of a bailout loan.
In May 2010, Greece narrowly avoided default with the help of a EUR110 billion bailout from its fellow euro-zone members and the IMF in exchange for measures to bring down its deficit. Since then, European leaders have pledged EUR109 billion in fresh financing.

-By Stelios Bouras and Alkman Granitsas, Dow Jones Newswires; +30 210 331 2881; alkman.granitsas@dowjones.com

(END) Dow Jones Newswires
August 31, 2011 13:38 ET (17:38 GMT)

Austerity without the levers of free floating currency or interest rate setting can only lead to internal deflation. All a bit moot now, Greek default is priced in now as well as some of the contagion effects on Euro banks. The Greeks never had a chance of getting out of this when they are spending up to 7% of GDP just to service the interest on the debt.