http://www.keeptalkinggreece.com/2012/0 ... tupigidty/
Below is the leaked Greek Debt sustainability analysis, annotated in red by G Jenkins (Swordfish Research Ltd via FT’s Alphaville)
“Strictly Confidential” (It has already appeared on Wikileaks so give away as you like)
“Baseline assumptions…the 2011 outturn was worse than expected…the macroeconomic outlook has deteriorated significantly…Medium term potential growth assumptions have been maintained” (Yes, I know it doesn’t make any sense not to alter the growth assumptions when all the inputs have deteriorated but unless we keep the figures the same then even we can’t fudge this one)
“Fiscal path has been adjusted…still bring Greece to a primary general surplus of 4.5% of GDP by 2014, although additional measures will need to be identified to secure this outcome” (I can’t get it to add up)
“… uncertain whether market access can be restored in the immediate post-programme years…” (I mean, would you lend your own money to this lot?)
“For the purpose of constructing the DSA baseline Greece is assumed to maintain good policies post-programme” (Yeah, knew that one would make you chuckle!)
“…if the primary balance gets stuck below 2.5% of GDP” (which it probably will), “then debt would be on an ever-increasing trajectory” (I am working on the Bail-out III paper this weekend…)
“Debt dynamics under an alternative unchanged policies scenario” (Think of it like alternative comedy…it all becomes mainstream in the end, so this is the more likely outcome. It’s not the wrost case scenario — jeez, you definitely don’t want to see that…)
“The Greek authorities may not be able to deliver structural reforms and policy adjustments at the pace envisioned…” (Hey, can you blame them? They have to live there…)
“Greater wage flexibility may in practice be resisted by economic agents” (Turkeys don’t vote for Christmas…)
“Service market liberalisation may continue to be plagued by strong opposition from vested interests” (Expect more riots…)
This was quickly followed by the EC admitting that its own prediction from last Nov for 2012 is ”markedly” wrong, with economic activity being much weaker than anticipated. The new EC forecasts (23/02/2012 click here ) exploded the numbers in the Greek bail-out deal. So, after years of suffering and having lost its independence, the best the Greek economy can hope for is to be in the same unsustainable place as where it is now.
To inflict this monstrous deal, the Greek Constitution has to be changed to give creditors first priority to take any revenues that “Greek” government can squeeze from its own population. The money to pay these creditors must be placed into ”escrow account” so that it can’t be diverted to other purposes. Any leftover spare cash raise from government revenues will be used to run whatever remains of the country.