Deadlines: They're there not to be met
Troika officials leave the office of Lucas Papademos, 5 February. AFP PHOTO / ARIS MESSINIS
There are lies, damned lies and statistics, but there are also ultimatums, last warnings and Greek deadlines...
In the political soap opera known as the road to the certain Greek default, there have been many milestones, 'D-Days' and points of no-return.
And every time such a decisive fork in the road has been reached and a sharp right or left bend taken, a U-turn was then made in order to meet the same checkpoint a couple of weeks or months later, to such an extent that even now, quite a few financial periodicals employ full-time present-day historians to produce a timeline with beautiful graphics depicting the umpteenth decisive moments we have lived through in this drama every other day or so.
These illustrations start with the first time Greece decided that facing yields (interest rates) of more than 7% was more than the country’s poor taxpayers, both of them, could swallow.
This was around two years ago. However, pretty soon, people started to realise that perhaps these high interest rates did not just happen overnight but may have had their origins in a more distant past, say the beginning of the euro, ten years ago. And soon enough it became apparent that the euro did not just start from nothing ten or 11 years ago, but rather that it was the culmination of a project that began a decade before that - the European Monetary Union (EMU).
Thus, now we find timelines in our papers to illustrate events starting from somewhere in the late 80s or early 90s; it so happens that this week, we are celebrating the 20th anniversary of the Treaty of Maastricht.
It was in this treaty that the outline of today’s Eurozone was sketched. Well, not exactly today’s Eurozone, with its economic divergence between North and South that is wider and deeper than the Grand Canyon, but more a Eurozone that was seen as a monolithic bloc sharing one currency among a family of happy, prosperous people. And, true enough, at its introduction it seemed like we were all together.
OK, the poor euro then was a very fragile child worth only $0.86, something that is far too often forgotten nowadays. Papers are now writing Doomsday stories that the euro has dropped below the “psychologically important barrier” of $1.30, but this is more than 50% above its initial value!
And, besides, who decides these “psychologically important barriers”? They use the same term when the German stock exchange index DAX falls below the 6,000 mark (sic) or the CAC 40 between 3,000, “markets see this as a psychologically important”.
I always wonder how journalists that write this have found access to therapeutic centres where markets discuss such matters, apparently with their shrinks.
The idea itself that markets can be influenced not by economic data, but just magical numbers, already shows that perhaps we should stop treating these matters as scientific economical phenomena, and see economics for what it is - a human science, then things become quite different.
Perhaps deficits are not just deficits, but only deficits in the eye of the beholder. And this brings me back to where we started - the Greek problem.
Perhaps the Greeks have understood economics in the philosophical sense of the word better than those in north-western Europe who think that 1+1=2, and that a deficit means you owe someone money and somehow you will have to find a way to pay it back.
Do not forget, either, that these northern do-gooder Calvinist austerity fetishists allow themselves, even with the new fiscal compact, to run a deficit, albeit a small one, so never ever are even the countries such as Germany, the Netherlands or France going to pay back the debts they owe - these will grow while they adhere to the new stringent rules.
As long as their economies grow, their debts will do likewise, as a percentage of their GDP decline, and thus everyone is happy, but no-one is paying off their debts. Perhaps, as I say, the Greeks have understood this better than we think.
After all they have the copyright on philosophy, and so they must have decided: "Let’s do like the others, borrow money and never pay it back."
That is to say, just borrow more to keep the worst creditors off your back and, as long as your economy grows, no-one will be any the wiser. And it's only this last part that the Greeks have not yet mastered, the growth part, at least not in their official statistics.
But I am sure they think, that as long as deadlines in Europe mean exactly nothing, they can buy time to find growth somewhere. And as growth is also a relative measure, perhaps they can find growth by fiddling with past statistics of the past.
They have enough experience with this, so they must be able to come up with statistics showing that today's Greek output outnumbers the Greek output of any given past. In this way, the troika can go back home happy, give Greece its €130 billion or €145bn that will turn into €1tr overnight, by just using Greek statistics and everyone will be happy.
And, by the time the bailiff comes around to collect the debts of the past, the ECB can write IOUs and we’ll leave it for our children and grandchildren to worry about when the time comes.
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