The Mediterranean Diet?

This should come as a shock, but somehow I am not exactly surprised. Mediterranean cooking evidently isn’t always as benign and healthy as it seems.

Greece was warned on Thursday that it could face legal action for grossly under-reporting its national deficit and debt figures but was told it would not be ejected from the 12-country eurozone.

Revised figures revealed Greece broke the single currency’s 3 per cent of GDP deficit ceiling every year in the 2000-3 period.

The European Union will launch an inquiry to check the veracity of the figures it provided before 2000, the year Greece qualified to join the single currency.

The scale of the inaccuracies has sent shockwaves across the single currency area, which relies on member states to provide sound economic data.

…………Eurostat, the EU’s statistical arm, could start legal proceedings against Athens for breaching accounting rules.

Greece, however, is unlikely to be ejected from the eurozone, even though there are now doubts about whether it complied with the membership rules before 2000.

The new data revised the Greek 2000 deficit to 4.1 per cent from a prior estimate of 2 per cent.

The 2001 and 2002 deficits now stand at 3.7 per cent compared with 1.4 per cent previously. The 2003 deficit, which had already been revised up in May to 3.2 per cent from 1.7 per cent, is now shown to be even higher – at 4.6 per cent of GDP.

Cost-overruns on the building of venues and transport systems for last month’s Athens Olympics games, estimated at more than ?2.5bn ($3bn, ?1.7bn), contributed to a projected deficit of 5.3 per cent of GDP this year.
Source: Financial Times

It is also worth bearing in mind that the accumulated Greek deficit currently is one of the highest in the EU and stands at around 100% of GDP. The interesting question now is what happens next.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

3 thoughts on “The Mediterranean Diet?

  1. Oh, I think it would hardly be sporting to boot the Greeks out of the eurozone for cheating in the past, when bigger and richer European countries are cheating now…

  2. “I think it would hardly be sporting”

    Oh I entirely agree, and I would certainly not be proposing this. But the bigger question is how all this can work moving forward as the liabilities accumulate.

  3. I’m afraid it’ll work as it always has worked. That is, the Commission will express its high indignation, set up new committees to look into it, and finally clothe the entire problem in innumerable layers of obfuscation, paperwork and reports laden with figures and names of projects.

    The accumulation of liabilities has never slowed down the engine of European bureaucracy before; rather that seems to be its fuel.

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