Greek Government Deficit – Why The Figures Do Not Make Sense

Even after 4 years the Greek government deficit is still over 2 billion Euros a month.

When you look at this figure more closely it exposes something extremely worrying, even if the government were to cut the public sector workforce by 150,000 people the Greek government would still be in deficit.

Which is why I say something is seriously wrong with the deficit, I mean where does all the money go?

Assuming each public sector worker costs the government 2000 Euros a month to employ. Cutting the payroll by 150,000 people would only make a saving of 300 million Euros a month, in short, nowhere near what is required.

Doubling the estimate of the cost of each worker per month still only gives a figure of 600 million Euros a month savings and this is excluding the tax that the public sector workers pay.

So my question is where is the remaining 1.4 billion Euros a month going?

In short the appears to me a massive black hole in the Greek government budget somewhere.

While looking for a breakdown of the Greek government’s budget I found this graph on trading economics, an awesome website. http://www.tradingeconomics.com/greece/government-budget

It shows that despite the Greek government massively raising taxes the government deficit has actually increased since 2008. In short, everything the Greek government has done since 2008 to meet the goals of the Troika have made the situation worse not better.

And it is not rocket science as to why.

All Americans know that the quickest way to set an economy back is to raise taxes, apparently the powers that be in Greece believe the laws of physics work backwards in Greece.

Until the Greek government acknowledges that it needs to cut taxes in order to increase revenues Greece will be in one never-ending recession.

To put it into perspective how big a 2 billion Euro a month deficit actually is. Every 3 months the deficit would buy the country’s state-owned telecoms company, the deficit could buy the country’s second largest bank every 3 months, the deficit would buy the state-owned oil company every 2 months.

Despite having searched for a breakdown of the Greek government I could not find one.

But I did find this article by Reuters, the obvious standout here being the miliary’s administrative costs.

http://www.reuters.com/article/2010/04/28/greece-waste-idUSLDE63R0QZ20100428

Having seen how much conscripts get paid, the money is clearly not going to them. Having seen the cars driven by career military personnel it starts to make sense.

As I have said many times before, a Greek default would eliminate all this waste almost immediately.

Here is reinforcement if any was needed that bailout out the government simply allows them to continue on their existing kamikaze system of corruption and  high taxes http://www.heritage.org/index/country/greece

In summary, it is a complete mystery to me how the government manages to overspend by 2 billion Euros a month

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