The Greek government has been engaging in financial shenanigans on a routine basis for years—example, it hired Goldman Sachs to hide the actual size of its deficits in order to be allowed into the Eurozone. As shocking as these revelations used to be, they don’t surprise anyone anymore … until they come up with something that surprises everyone.
Mid October, Greece is going to plunge into insolvency because it won’t be able to pay the salaries of its 1.3 million civil servants and government employees. Unless it gets more EU bailout money. The inspectors from the Troika (ECB, IMF, and EU Commission) are in Athens right now to inspect once again if Greece is complying with the Troika’s demands. Most likely, they will leave angry again; getting an accurate read on Greece’s finances is like nailing Jell-O to the wall. It can’t be done.
Meanwhile, the Greek government has been pressuring the Troika to pay the next installment of the bailout money rather than to dillydally with inspections. Remember, insolvency is going to happen by mid October, they threatened.
But Jean-Claude Juncker, Prime Minister of Luxembourg and President of the EU Group, announced on Tuesday that the next installment of the bailout package wouldn’t be paid before mid November (Spiegel, article in German); the inspectors are still trying to nail financial Jell-O to the wall and need more time.
No problem, said Evangelos Venizelos, Finance Minister of Greece, and announced that his government had suddenly found €1.5 billion in a bank stabilization fund that was set up during the crisis of 2008. Enough to keep Greece liquid until mid November.
As if to underscore the impossibility of bailing out Greece and putting it back on track: A 24-hour general strike is paralyzing the country right now. Airports are closed, and tourists and others are stuck. Hundreds of incoming flights have been cancelled. Yesterday, civil servants blocked the entrances to seven ministries in Athens. They’re all part of a massive wave of protests by civil servants and government employees who fear losing their jobs, rich salaries, early retirement, and hefty benefits that politicians have handed to them—funded with cheap Euro debt. Take the state-owned railway system. Trainose, which operates the routes, and OSE, which manages the tracks, pay out €400 million in salaries a year but take in only €100 million in revenues. It’s all part of the Greek vote-buying system that is now crashing.
For more on the impossible enterprise of reforming the Greek government apparatus: Reform Rebellion in Greece.
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.