Greece Caught Underreporting Its Budget Deficit By Nearly 50%

Tyler Durden's picture

There was a time about a year ago, before the second Greek bailout was formalized and the haircut on its domestic-law private sector bonds (first 50%, ultimately 80%, soon to be 100%) was yet to be documented, when it was in Greece's interest to misrepresent its economy as being worse than it was in reality. Things got so bad that the former head of the Greek Statistics Bureau Elstat, also a former IMF employee, faced life in prison if convicted of doing precisely this.

A year later, the tables have turned, now that Germany is virtually convinced that Europe can pull a Lehman and let Greece leave the Eurozone, and is merely looking for a pretext to sever all ties with the country, whose only benefit for Europe is to be a seller of islands at Blue Aegean water Special prices to assorted Goldman bankers (at least until it renationalizes them back in a few short years). So a year later we are back to a more normal data fudging dynamic, one in which Greece, whose July unemployment soared by one whole percentage point, will do everything in its power to underrepresent its soaring budget deficit.

Case in point, on Friday the Finance Ministry proudly announced its budget deficit for the first eight months was "just" €12.5 billion, versus a target of €15.2 billion, leading some to wonder how it was possible that a country that has suffered terminal economic collapse, and in which the tax collectors have now joined everyone in striking and thus not collecting any tax revenue, could have a better than expected budget deficit. Turns out the answer was quite simple. According to Spiegel, Greece was lying about everything all along, and instead of a €12.5 billion deficit, the real revenue shortfall is nearly double this, or €20 billion, a number which will hardly incentivize anyone in Germany to give Greece the benefit of another delay, let along a third bailout as is now speculated.

To quote Greg House: "Everybody lies"

From Spiegel:

The gap in the Greek national budget is greater than previously expected. According to a preliminary Der Spiegel finding, the troika of European Commission, European Central Bank and International Monetary Fund reported that the government of Prime Minister Antonis Samaras is missing currently around 20 billion euros - nearly twice as much as last admitted. Only if the funding gap is closed, the next EU tranche will be transferred to Athens.

What is well-known is that for all intents and purposes Greece has already stopped trying:

That Greece can bridge the financing gap on its own seems unlikely. The already adopted austerity program has encountered great opposition in the population. In one published study in Athens on Saturday 90 percent of survey respondents declared that the new reform package go almost exclusively to the detriment of the poorer sections of the population. Only 33 percent also believe that the new cuts in the social network can not solve the country's problems would be. Nevertheless, 67 percent of respondents argued that Greece remains in the euro zone.

But at what cost? Already 8000 people in Athens alone have to resort to soup kitchens to find some food in a country in which there are virtually no opportunities left to make a living.

Sure enough, in a world in which no politician has any credibility left, it took Greece a few short hours to issue its canned response to the allegation that it has been making up numbers all along... as usual. Per Dow Jones:

Greece's finance ministry late Sunday refuted a report in a German magazine claiming that Athens must cover a 20 billion euros ($26 billion) budget shortfall--twice previous estimates--in order to satisfy international conditions for emergency aid.

Now we just need two more denials to have no doubt that every number out of that particular economic basked case is a lie. Which we don't now. Don't forget: this is what the Greek Finance Ministry looks like:

And the kicker of course is that as reported on Friday, Europe is now desperate to not rock the boat ahead of the Obama reelection, because as Reuters reported all of Europe wants to give Obama a second term. Which makes sense: in a world of wealth redistribution, it will be only fair that America, which has taken the place of China as the world's growth dynamo, and where fund flows out of Europe have pushed the S&P to a few percentage point shy of all time highs, will repay its reelection debt to Europe for avoiding reality as long as possible, by "sharing" US taxpayer funding, from those who for one reason or another still pay taxes, with its European proletariat cousins and bailout all of Europe's insolvent countries on Uncle Sam's tab yet again, starting just after November 6, 2012.

Because it's only "fair."

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
knukles's picture




(Never trust a Greek bearing amyl nitrite)

JLee2027's picture

The entire World lies...about financial or economic or political matters...all the time. Not some of the time on some things, but all the time on all those things. Astonishing. 

This must end soon. And very badly.

bank guy in Brussels's picture

Yer right about the lyin' everywhere

Was having a conversation 10 years ago with other bankers, as the euro currency notes were being introduced, that this whole European and USA credit thing was going to blow up 'soon' ...

10 years later, here we still are ...

By God they sure can float the game a loooong time

Don't count the money printers out yet. Even gold guru Jim Sinclair is thinking 2015 or so ...

grid-b-gone's picture

We don't know the time, but we know it's PM.

markmotive's picture

The EU is facked!

Hugh Hendry said it best when he went head-to-head with Joseph Stiglitz:

Crisismode's picture

Hugh has them both by the balls and neither one of these liars will admit it.


cynicalskeptic's picture

They've got experts kickig cans down the road - the guys whop can pull off 90 yard field goals.... but eventually the whole mess DOES collapse.  

I was waiting almost a decade for the housing bubble to blow.  Paid points to get a rate still over 8% (and put 20% down) when we bought but a few years later they were giving out 4% adjustables with NOTHING down....  Saw people buying larger houses who had a fraction of our income.  WTF?!?!  How in hell was THAT going to work out? - it wasn't but it took a hell of a long time for that obvious fact to become clear.

boogerbently's picture

Govt. officials being dishonest???

I have a hard time believing that....surely there's been some mistake.

Wait until the documented "understating" of our banks positions hits the fan.

grid-b-gone's picture

Even in the U.S., and even if the CBO is relatively honest and conscientious in their estimates, lobbyists, staff members with bias, bias of data presented to the CBO, purposeful deception, and failure to fact-check every assumption, probably mean the U.S. has also underestimated the severity of its financial condition.

One would hope it is nowhere near 50%, but Greece has seldom been a world leader during the past 1,750 years, so someone must be keeping an even bigger lie.

EscapeKey's picture

And you think this is any different to any other time in world history?

The only difference this time around is the internet, which enables people to fact check, and discuss openly, without need of a centralized ministry of truth.

No fucking wonder they want to shut it down. Oh sorry, the want to make it "free", meaning those who pay for an opinion are free to post it.

Ar-Pharazôn's picture

"centralized ministry of truth"


i think we will soon see this in SSEU and USSA

vast-dom's picture




Al Gorerhythm's picture

Eurozone members will need to dump as much toxic waste into that mess before letting them go.

max2205's picture

Can life on earth get any stranger

JohnKozac's picture

wait until the Germans get a hold of all those Greek 10oz gold bars.......

unrulian's picture

Can Greece afford gold plated tungsten?

cynicalskeptic's picture

Spray painted pig iron - anything that provides the illusion will do (just ask the caretakers at Ft. Knox)

Rogue Trooper's picture

Wow... just in.

The Prez: Get me Prof Holdren on the line... now!

Some Westwing Secretary: Who?

The Prez: For fucks sake, Holdren, John Holdren, my Chief Scientific Adviser dude, this is fuck'n important...

.. ten minutes later.

Holdren: Mr President, erm, thanks for asking me to call you, what a surprise, this is first time you have even spoke to me.... is this a social call?

The Prez: STFU.. and listen! I need you to give me the power to create and produce Gold... lot's of Gold.  Like Ben can with his QE stuff, which is not having the effect on the Economy that he has been promising me.  Errr what it called, that right, Alchemy!

Holdren: I'm on it.... I'll form a special investigative committee and project.. won't be cheap though. Can I be the Gold Tzar?

The Prez: Sure, and get the cash from Ben, here's the number, but be quick about...HANGS UP!

Several months later, at a cost of $1,234,345,678,998.98 ... success!

monopoly's picture

This is all so absurd. How can the people be so fucking stupid to not see what is going on. This is not rocket science, just plain math, common sense and a little research. Yeah, I know, I crossed the line for many citizens. 

Oh well.

jtmo3's picture

Who has said no one sees what's going on? The bankers know and are profiting from it. The traders know and are profiting from it. The politicians know and are profiting from it. The people know they're getting it in the ass but the former have more and better bullets. So...where do we go from here?

Ar-Pharazôn's picture

banksters, politicians and big trader are perhaps 5% of the population (and this is a large estimate)


rest, 95%, doesnt really have a clue on what's going on.


They think that politicians has the magic wand to solve everything.

Meremortal's picture

So you admit you have no idea what is going on. That's a start.

falak pema's picture

when the nation state becomes a dark pool. Mission accomplished by the Oligarchs. "This land is totally ours as nobody will want to salvage it."

How dystopia of "free-fixed" markets and criminal oligarchs, sitting as elected phony leaders, over forty years, since ousting of military junta, has converted an agrarian and sub industrial economy into no man's land. No country for old men nor young men.  

Its an example to ponder, first world to third world in the lapse of two years, with forty years of hiding the rot under the oligarchy-crony government blanket.

magpie's picture

"From Goldman Sachs to Golden Dawn in Sixty Seconds"

agent default's picture

Golden Dawn: Now in a city near you:


magpie's picture

Not in walking distance from each other, i hope.

agent default's picture

I sincerely hope they are in walking distance from GS. 

MsCreant's picture

How do you say "Sieg Heil" in Greek?

CompassionateFascist's picture

You say: "thanks for the medical supplies".

prains's picture

From Goldman Sachs to Golden Dawn to Golden Shower, piss always flows down hill, everybody needs to just drink up 




Zola's picture

Socialism is a disease of the mind

LawsofPhysics's picture

"fascism" is a disease of the mind. - fixed.

There are many families that came before yours, they want their rent, now pay up.

Al Gorerhythm's picture

Isms are a disease of the mind. Period. Except for mine, that is.

akak's picture

There's no "ism" like 'US Citizenism'.

Make me laugh!

TheFourthStooge-ing's picture

US citizenism is the ismest.

This just in's picture

That depends on what the definition of ism is.

LMAOLORI's picture


ROFL +1 for the clinton reference

There is little difference between the ism's other then the means used (violence,voting,collusion) to arrive at the Totalitarian goal

jimmytorpedo's picture

In Clinton's case it would be  'Jism'

NoClueSneaker's picture

.... what leaves us with cannibalism as ultimate monism .... assisted with primitivism ... I'll stay with authism ....

Meremortal's picture

"...they want their rent, now pay up."


They get nothing.