Whatever happened to those who promised Grecovery for Greece?

Perhaps the saddest tale that has unfolded over the past few years has been that of Greece’s economy and its people. Back in May 2010 European finance ministers such as Christine Lagarde – whatever happened to her? Surely she must have been demoted for such incompetence? – proclaimed that their “shock and awe” policy would soon turn Greece around. As I wrote on the 6th of October bold claims were made back then.

Believe it or not the Greek economy was supposed to return to growth in 2012 (1.1%) and then grow at over 2% from 2013 onwards.

We now know that these could be placed in both the fiction and comedy sections were the consequences of the failure not so grim and sad. Indeed only a week ago the position was declared to be even worse than previously thought.

The correction of the error has as a result that the GDP
change in volume terms in 2013 is -3.9%, instead of -3.3% published on 10 October 2014.

In spite of the continual promises from the state and the troika of the IMF,European Central Bank and European Commission of Grecovery it has so far been rather short on the ground.

Were they economical with the truth back then?

According to the words of US Treasury Secretary Timmy Geithner the true feelings were very different. From the Brussels Blog of the Financial Times.

I said at that dinner, that meeting, you know, because the Europeans came into that meeting basically saying: “We’re going to teach the Greeks a lesson. They are really terrible. They lied to us. They suck and they were profligate and took advantage of the whole basic thing and we’re going to crush them,” was their basic attitude, all of them….

I completely underweighted the possibility they would flail around for three years. I thought it was just inconceivable to me they would let it get as bad as they ultimately did.

Should not such people be in jail for such wanton economic destruction? Oh silly me! I forgot that they decide who goes to jail….

The European Commission tries again

Like a gambler who keeps doubling down, but with the Greek people’s money, the European Commission winter forecast for 2014 told us that the Greek economy would grow by 0.6% this year and positively boom next year.

The recovery is forecast to gain strength in 2015, as investment takes over as the main engine of the recovery, also attracted by the opportunities created by the ongoing structural reforms. The euro-area recovery should support a revival in goods exports, as well as stronger shipping and
tourism revenues. With consumption recovering, real GDP growth is projected at 2.9%.

So the recovery we have not yet had will boom next year. I guess that many of you reading the quotation above were thinking “euro-area recovery”? Personally I am thinking of the forecast 0.6% growth in 2014 which if it happens will only offset the latest revision to 2013. On such a road are potentially very dark thoughts for the statistics.

But the official message remains one of jam tomorrow although when it eventually comes it will face an economy that is at least a quarter smaller than it was when what historians will no doubt call a great depression began as the credit crunch hit Greece.

Greece has seen genuine deflation and in fact DEFLATION

The word deflation is bandied about regularly by people in the media these days although they mostly only demonstrate that they do not understand the concept. Greece has had it in full force for some time. The reason for the capitals is that not only has Greece had falling overall economic output the economy has seen falling prices and wages as well. This weeks inflation data confirmed that prices are still falling.

The Harmonized Index of Consumer Prices (HICP) in October 2014 compared with October 2013 decreased by 1.8%. In October 2013, the annual rate of change of the HICP was -1.9%.
The HICP in October 2014 compared with September 2014 decreased by 0.9%.

The underlying index for this was set at 100 back in 2005 and has gone in the last three October’s 124.09,121.74 and now 119.55.

Whilst such a thing would start a media panic if it happened elsewhere this is not on its own a bad thing as good get cheaper. For example many people in the UK would like their housing costs to be falling at an annual rate of 6.1%. But once we add in what has happened elsewhere in the economic we see signs of a downwards spiral.

The Production Index in Industry (IPI) in September 2014 compared with September 2013 recorded a decline of 5.1%. In September 2013, the annual rate of change of the IPI was –3.2%.

Also if we move to household disposable income Macropolis has looked at the numbers.

Greek disposable income continues its slide in Q2, reached 29 pct during crisis.
Greek household disposable income fell by 4.3 percent year on year (YoY) in the second quarter (Q2) of 2014 to 30.8 billion, according to the Hellenic Statistical Authority. (ELSTAT).

Putting this another way there have been extraordinary falls in the construction industry in Greece. Now let us look at this morning’s data. It shows a 19.9% fall in building permits, a 19.4% fall in surface area and a 7.1% fall in volume if we compare August 2014 with the same month a year ago. This resonates as this indicator should at some point have bottomed out and yet down and down it continues to go.

The business surveys are not optimistic

The Purchasing Managers Index told yet another sorry tale.

The PMI registered in contraction territory for the fourth time in five months in October, in a further sign that the recovery in Greece’s goods-producing economy is faltering after a relatively positive start to 2014.


Tomorrow will see the latest economic growth figures published for Greece and the Gross Domestic Product numbers for the third quarter could show some growth. After all there was a positive sign this morning from the latest unemployment numbers.

The seasonally adjusted unemployment rate in August 2014 was 25.9% compared to 27.8% in August
2013 and 26.1% in July 2014.

I do hope that the seasonal adjustment used is more reliable than the series which was abandoned for the GDP numbers. Also the employment numbers were not quite as positive.

The number of employed increased by 32,636 persons compared with August 2013 (a 0.9% rate of increase) and decreased by 15,698 persons compared with July 2014 (a 0.4% rate of decrease).

Should we get a positive growth figure tomorrow would that be Grecovery? After all if we look at the employment numbers they were still in August more than a million lower than in the same month in 2009. how much of the lost ground needs to be recovered before it can be called a full Grecovery? All of it looks a very long time away doesn’t it?

Also I think of those who became cheerleaders for official policy which it is now clear was a punishment regime rather than a plan for economic recovery. How must they feel as they observe the lines at the soup kitchens?

A consequence of the falling oil price?

From twitter

A flip side of the ass falling out of the oil price is it’s going to be cheaper to drive all those tanks into Ukraine.

Congratulations to Philae and the Rosetta project

H/t  · 

Incredible photo from the comet landing.


13 thoughts on “Whatever happened to those who promised Grecovery for Greece?

    • Hi Forbin

      Whichever method it worked and congratulations to all involved with the Philae and Rosetta projects. If only the Clangers had been waiting for it!

      Meanwhile look at the price of oil again, it is below US $78 for a barrel of Brent Crude now. That makes it down 27% on a year ago.

  1. When the Greeks were lying (imagine a banker/politician having the sheer brass neck to call someone else dishonest), who was corroborating their lies, and just how tough did the authorities get with them?

    • Hi therawbuzzin

      There is a panoply of lies that have gone here starting with Greece’s entry to the Euro. It was a bad idea and the numbers were fudged/misrepresented. Along the way a familiar body was involved which is none other than the Vampire Squid itself. So the phrase “all in it together” genuinely applies for once at least for those in authority as the ordinary Greek was misled too.

  2. Hello Shaun,

    One day Greece will “recover” be it in or out of the euro zone. Then all concerned will bleat how wonderful they are to have forfilled the dream…… and no doubt break their arms patting themselves on the back !

    Again after these few years it may be wise to compare Iceland with Greece , who’s rally doing better , not forgetting the utter hatred ( from Gordo ) from our Banking Leaders of Iceland not bailing their chums out……

    Again being in the Euro and the United States of Europe seems like Hotel California – by the Eagles ………

    you can check out any time you like , but you can never leave !


    PS Oil prices may well be dropping on the curse of lack of demand , I suspect in a few months we’ll see an increase at this time I see oil Brent at 78.9 !!

    Baltic Dry is 1400 and dropping 5 years ago at this time it was 4400 , the charts show the declines from 2009 to now , it matters in that shipping goods around the world is suppressed…..

    Hmmm, better check my popcorn stocks before they rise !!

    • I don’t think it’s lack of demand Forbin, rather flat demand faced with over supply (due to unrealistic demand increase projections made a few years ago – remember the so called “commodities super cycle”? ) and OPEC seemingly reluctant to cut supply.

      I heard it was because the Saudi’s are angry with Iran and want to hurt them whilst I suspect a Western conspiracy against Russia over the Ukraine. Price will no doubt rise when demand shoots up on the back of low prices and just as the global economy gathers speed it will…slow down again in the face of rising oil price. Hang on, didn’t Gordon tell us that in addition to saving the world he had abolished Boom bust?

  3. Shaun, I believe that a fair number of folk in the ECB, commission and the IMF knew all along that this was going to happen to Greece but would not say so to avoid a revolution in Greece and panic in the markets. Eurocrats have already admitted that they are prepared to lie to protect the greater good of the ‘project’. I think they see Greece as ‘collateral’ damage and necessary to save the Euro and German and French banks. I will never forget how quickly Merkel changed from pushing Grexit to a position that no one must leave once the consequences had been spelt out.

    • Hi Pavlaki

      The IMF certainly knew as it ignored its own game plan which involves some or both of default and devaluation. I have written before that it got politicised and lost its way and it has done so under 2 French leaders namely DSK and now Christine Lagarde.

      Speaking of lies I wonder how the man who has publicly proclaimed they are necessary (Jean Claude Juncker) will deal with the fact that the country he led appears to have allowed companies to dodge tax for years and years.

      If we look at the currency Greece will not be the only country which does not welcome the latest euro rally. Up a little against the dollar but strong against the UK Pound, Yen and Ruble.

  4. Hi Shaun,

    One of your most depressing posts that’s for sure. I guess this crisis has affected the country’s demographics, with all the inherent issues that will bring in the future. Presumably the younger end of the spectrum must have left in droves to find a future elsewhere.

    • Hi Zummerzetman

      Yes I agree and there was a snapshot of some of this in Tuesdays Sydney Morning Herald.

      “But since 2010, there has been a significant surge in the number people arriving in Australia from Greece on temporary and permanent visas, including a seven-fold increase in people on student visas and a four-fold rise in family migration.
      An estimated 8000 people have arrived in Victoria since 2010 according to a report released yesterday by the Australian Greek Welfare Society. The largest stream – about 60 per cent – has been returning Greek Australian expatriates and their families, including many who left as children or are Australian citizens by descent.
      Unlike the post-war wave of largely poorly educated, unskilled emigrants from rural areas with no English, many of those leaving Greece today are urban, educated and middle-class, often arriving with young families. “

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