A few months ago we reported that unlike in any other Banana Republic, where the natural bias is to fudge one's numbers higher to make the economy look better and get the stock market to rise, in Greece even the traditional banana metrics are upside down. To wit: "Greek newspaper Eleftherotypia reports that according to a just terminated member of the Greek Statistical Authority, Greece artificially misrepresented its 2009 15.4% deficit number to Eurostat in order to obtain aid from the EU and IMF." Sure enough, two months later even this absolutely bizarre story has been confirmed. The FT reports that "The head of Elstat, Greece’s new independent statistics agency, faces an official criminal investigation for allegedly inflating the scale of the country’s fiscal crisis and acting against the Greek national interest." Not surprisingly, the man who allegedly cooked the books is none other than a 20 year former IMF employee: precisely the kind of guy who knows just what buttons to push to get the US-funded organization to dole out capital. "Andreas Georgiou, who worked at the International Monetary Fund for 20 years, was appointed in 2010 by agreement with the fund and the European Commission to clean up Greek statistics after years of official fudging by the finance ministry." And just because someone needs to be made a scapegoat, if convicted Georgiou may face the same sentence as Madoff: "Mr Georgiou is due to appear before Greece’s prosecutor for financial crime on December 12 to answer the charges. If convicted of “betraying the country’s interests”, he could face life imprisonment." Well, that's fine: the man should rot in hell for not learning that "minus" is not really "plus" - surely no greater ex-capital punishment crime exists. Yet we wonder - will the same life sentence follow all those others who are found to have betrayed their countries interest and inflated numbers higher thus not getting US taxpayer-funded bailouts? Because when it comes to Europe, it is now every many for himself (as the soon to be faded rumor du jour of a €600 billion IMF-funded bailout of Italy confirms)... all the way to Joe Sixpack's wallet.
More from the FT:
“I am being prosecuted for not cooking the books,” Mr Georgiou told the Financial Times. “We would like to be a good, boring institution doing its job. Unfortunately, in Greece statistics is a combat sport.”
The investigation follows a public dispute over the 2009 budget deficit figure. Under Mr Georgiou, the figure was revised upwards from 13.4 per cent to 15.8 per cent of gross domestic product – a record for a eurozone member state. The revised figure was accepted without reservation by Eurostat, the Brussels statistical service.
The prosecutor cites a claim by professor Zoe Georganta, a senior statistician who was sacked along with other members of Elstat’s board by Evangelos Venizelos, the finance minister, earlier this year. According to Ms Georganta, the 2009 deficit was exaggerated by Elstat “so it would become larger than that of Ireland and Greece would be forced to adopt painful austerity measures”.
Elstat was established in August 2010 in an attempt to bring Greek statistics into line with EU standards. Before then, a committee of finance ministry and central bank officials came up with an annual budget deficit figure to be reported to Eurostat, based on numbers provided by the government statistics office. The finance minister was personally responsible for approving the final figure.
Since Elstat was set up, Eurostat has dropped its warnings about the reliability of Greek data on the public finances – formerly a regular footnote in Commission statistical reports. According to revised Eurostat data, Greece would have failed even to gain admission to the eurozone in 2001 because its deficit was too large.
Oh please: the guy is former IMF brass - if anyone wanted to get him thrown in jail, he would simply need to crash at the presidential suite at the Sofitel New York for one day and the rest is history.
Yet with all the we wonder: there is hardly any doubt that the latest Greek deficit numbers which probably are in the 20%+ area are fake. So had Greece not received the incremental funding and loans that this misrepresentation supposedly facilitated, just how much worse off would Greece be (after all recall that under the Keynesian canon any spending always and forever equals a boost in GDP). So, uh, shouldn't Georgiou really be preparing for his sainthood ceremony instead of wondering if he will spend the rest of his life in jail?