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Uh Oh: Greece To Miss New Deficit Targets

The ink is hardly dry on Germany’s assent to the last bailout package, but Greece is already signalling that more money is needed — and fast.  The new and improved deficit targets set by the IMF and the European Union won’t be met, not this year and not next.  From Reuters:

(Reuters) – Greece will miss 2011 and 2012 budget deficit targets set by the EU and the IMF, according to figures published by the finance ministry on Sunday after the cabinet adopted the draft 2012 budget.

The budget deficit will reach 8.5 percent of GDP this year, missing a 7.6 percent target. It will be brought down to 6.8 percent of GDP next year but will still miss the bailout target of 6.5 percent of GDP.

“Three critical months remain to finish 2011, and the final estimate of 8.5 percent of GDP deficit can be achieved if the state mechanism and citizens respond accordingly,” the Finance Ministry said in a statement.

What Via Meadia finds most interesting in that statement is that the Greek Finance Ministry isn’t promising to achieve the 8.5 percent deficit for 2011.  That’s a best case scenario if everything goes right.  Knowing the Greeks, it probably won’t.

I wonder if the speechwriters have started work on Chancellor Merkel’s next speech to the Bundestag explaining the need for still more money for Greece.  It will need to be good.

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  • Corlyss

    Raise your hands, all of you who are surprised by the news Greece needs more money than they admitted to. Anyone?

    Greece has been lying about how much they need (want) since May 2010. They just don’t want to face the electoral music.

    Mrs. Merkel, that call’s for you.

  • Peter

    “The ink is hardly dry on Germany’s assent to the last bailout package, but Greece is already signalling that more money is needed — and fast.”

    This is news only to those who wait to read/hear the news in the MSM.

    Greece will default in the not to distant future.

  • Eurydice

    Well, tax collectors have been fired and the rest aren’t showing up for work. The public haven’t received their tax bills, which were due out in June, and nobody can tell when the bills will go out. Additional property taxes will be added to everybody’s electric bill, but electric company workers are refusing to cut off anybody’s power for non-payment of taxes.

    The reason none of the Greek government’s plans will work is because they aren’t really plans, just random ideas they’re tossing off the top of their heads. Every time something needs to be done they reshuffle the cabinet – so they end up with the minister of tourism running the navy or the minister of agriculture in charge of education. Or they appoint new ministers – there must be 43 of them by now – and most don’t know why they are there or they have no budget with which to get anything done.

    Basically, the various financial targets that Greece has to meet are based on the notion that Greece actually has a government, rather than a bunch of highly paid Keystone Kops. The Greek public is well aware of this, which is why the ministers are afraid to leave their homes or offices for fear of “eating the yogurt” (Greek yogurt sticks to clothing much better than the runny American kind). Still, I think at this point Greeks would much rather ingest their yogurt than throw it – they want to do what they can, but nothing is making any sense.

  • Luke Lea

    Bernanke will bail us all out in the end.

    Look for a reprise of the 1970’s in America (and of the 1930’s in East Asia?)

  • bob sykes

    Greece has a long, sordid history of multiple defaults. It’s built into their culture.

    If you want a horror story, read Reinhart and Rogoff’s “This Time is Different.”

  • Eurydice

    @Corlyss – yes, lying and more lying and political games. But another issue is that the Greek economy is shrinking faster than they can cut the budget. So, they can be utterly truthful and austere and frugal, but that won’t help their economy to grow – they’re just chasing percentages.

    There’s an old Greek folk tale about a farmer who tries to save money by starving his donkey. As soon has he teaches the donkey not to eat – worst luck! – the damn thing dies on him.

  • Pete

    “It will be brought down to 6.8 percent of GDP next year”

    SPOILER: It won’t.

  • Corlyss


    Granted, but is that a reason for EU nations to go on pretending that they can go on paying for Greece’s sins ad infin. or that they will abandon their sovereignty to save the shirt-tale cousin from itself? It’s something of the tail wagging the dog in several ways. The collective graybeards need to let Greece and the foolish banks that bought her debt wash out of the system before they can start to recover. All they are doing with their crisis meetings, followed by swift inaction, is lowering the credibility of each successive announcement of pending action to save the Eurozone. At this point the markets testify daily that nobody believes them any more.

  • Jim.

    Honestly, what can anyone offer Germany to get them to keep throwing their money down this rat-hole?

    What could you offer someone to be the last person to die in someone else’s war? What could you offer the Germans to hand their last penny to the Greeks before their inevitable default?

    The time for countries to cut their losses has come.

  • Eurydice

    @Corlyss – No, you’re right, that’s not a good reason for the EU to continue pretending (although, I will argue that the EU nations gave up their sovereignty when they gave up their currency). But the EU has been pretending ever since the beginning – it pretended that all the members had reached the entry targets (none did, not even Germany), it pretended that countries with a history of bailing out their banks (like France) wouldn’t want to continue doing so, it pretended that the waste and profligacy in Greece would just go away, no matter how much evidence to the contrary, it pretended that the rich countries could dump their products on the poor countries without there being some eventual accounting.

    My point about Greece is that the country is moving from being an issue of economic security to one of physical security. The country is becoming unstable – no element of government is working, including the police. Perhaps I’m being a catastrophist, but I don’t see the EU being ready to deal with an armed revolution in its midst. I don’t know what this means as far as the bailout is concerned – I think that money alone is not the answer if the EU is to keep a faltering member in the union. And if they kick out Greece to let it sink on its own, what does that mean for the EU as a sovereign institution with global responsibilities?

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