delanceyplace.com 11/7/11 - beware of greece

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In today's excerpt - Greece is a country at the heart of the current European financial crisis. The country had entered the European Union under the administration by manipulating its financial data so that it appeared to conform to the European Union's exacting financial requirements. It had then kept the truth about its debt and deficits from the EU until a scandal brought down the administration of Prime Minister Kostas Karamanlis in 2009 and incoming prime minister George Papandreou and his administration quickly discovered the catastrophic depths of their country's financial problems:

"The long-term picture was ... bleak. In addition to its roughly $400 billion (and growing) of outstanding government debt, the Greek number crunch­ers had just figured out that their government owed another $800 billion or more in pensions. Add it all up and you got about $1.2 trillion, or more than a quarter-million dollars for every working Greek. Against $1.2 trillion in debts, a $145 billion bailout was clearly more of a gesture than a solution. And those were just the official numbers; the truth is surely worse. 'Our people went in and couldn't believe what they found,' a senior IMF official told me, not long after he'd returned from the IMF's first Greek mission. 'The way they were keeping track of their finances—they knew how much they had agreed to spend, but no one was keeping track of what he had actually spent. It wasn't even what you would call an emerging economy. It was a third world country.'...

"In just the past twelve years the wage bill of the Greek public sector has doubled, in real terms—and that number doesn't take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national rail­road has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful business­man turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece's rail passengers into taxicabs: it's still true. 'We have a railroad company which is bankrupt beyond comprehension,' Manos put it to me. 'And yet there isn't a single private com­pany in Greece with that kind of average pay.' The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland's. Greeks who send their children to pub­lic schools simply assume that they will need to hire private tutors to make sure they actually learn something.

"There are three government-owned defense companies: together they have billions of euros in debts, and mounting losses. The retirement age for Greek jobs classified as 'arduous' is as early as fifty-five for men and fifty for women. As this is also the moment when the state begins to shovel out generous pensions, more than six hundred Greek professions some­how managed to get themselves classified as arduous: hair­dressers, radio announcers, waiters, musicians, and on and on and on. The Greek public health-care system spends far more on supplies than the European average—and it is not uncommon, several Greeks tell me, to see nurses and doctors leaving the job with their arms filled with paper towels and diapers and whatever else they can plunder from the supply closets."