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"Its deficit is still like 9-10% of GDP." This is very wrong. Greece has run primary surpluses in recent years. They will probably miss that goal this year, bu
by natrius 11y ago
"Its deficit is still like 9-10% of GDP."
This is very wrong. Greece has run primary surpluses in recent years. They will probably miss that goal this year, but not by 9-10% of GDP. Forgiving Greek debts would solve the problem.
http://mainlymacro.blogspot.com/2015/02/greece-and-primary-surpluses.html http://mainlymacro.blogspot.com/2015/02/greece-and-primary-s...
- tptacek 11y agoApparently the deficit is more like 3% (depending on whether you believe Greece's own stats, or the EU's. Forgiving debt by definition doesn't change the primary surplus, right? The primary surplus is the budget before taking interest payments into account. And that's the whole premise of not bailing Greece out on Greek terms, right? That bailing them out doesn't accomplish anything if they're still on a course to rack up more debts due to unsustainable fiscal policy.
- natrius 11y agoYears of primary surpluses are clear evidence that Greece is capable of funding its own ongoing spending. This year is an aberration due to the crisis. If the debt were forgiven, I don't think Greece would need outside funds in 2016. Greece isn't asking for forgiveness though—they're asking for restructuring. Greek fiscal policy is not unsustainable. Much of it is unwise, but still affordable.
- peterfirefly 11y agoGreece most assuredly has not had years of primary surpluses! There has been a single quarter so far -- and that's assuming we can trust Greek accounting!
- tptacek 11y agoCan you cite some sources for the years of primary surplus? I'm looking for them, and the stats I'm seeing all suggest years of severe deficits.
- natrius 11y ago2013: http://www.wsj.com/articles/SB10001424052702304549504579320343987313738 http://www.wsj.com/articles/SB100014240527023045495045793203... 2014: http://www.wsj.com/articles/greece-misses-target-on-budget-surplus-1421244654 http://www.wsj.com/articles/greece-misses-target-on-budget-s... 2013 caveat: http://yanisvaroufakis.eu/2014/04/24/greek-statistics-are-back-primary-deficit-presented-as-surplus-with-eurostats-seal-of-approval/ http://yanisvaroufakis.eu/2014/04/24/greek-statistics-are-ba...
- arethuza 11y agoThe second of those articles seems to imply that aid to Greece is a key part of the income in the calculation of "primary surplus" and the third says "Alas, the Greek government’s 2013 primary surplus is a statistical mirage" - not exactly positive messages!
- tptacek 11y agoYou can find WSJ stories suggesting that the 2014 primary surplus is also dubious; under what the WSJ says is a "conventional" definition of primary surplus, not the one tailored to Greece, they apparently ran a deficit of over 8% of GDP in 2014. http://blogs.wsj.com/brussels/2014/04/23/greek-primary-surplus-statistics-troika-edition/ http://blogs.wsj.com/brussels/2014/04/23/greek-primary-surpl... So far, the narrative that Greece was chugging along running a surplus before accounting for debt service does not appear to square with the facts.
- alexandros 11y agoGoogled, "greece primary surplus". First result: http://www.forbes.com/sites/timworstall/2015/02/16/greece-still-has-a-vast-problem-it-doesnt-have-a-primary-budget-surplus/ http://www.forbes.com/sites/timworstall/2015/02/16/greece-st... Second paragraph, krugman quote: "Despite this catastrophe, Greece is making payments to its creditors, running a primary surplus — an excess of revenue over spending other than interest — of around 1.5 percent of G.D.P." How much did you look, and where are you seeing the opposite information on primary deficit the last few years?