Tuesday, May 4, 2010

Interesting Facts About Greece

In the light of the bailout package being more or less confirmed, I thought I would share with you some interesting facts about Greece and its economy.

A little reminder about the 110 million Euro bailout package first here

Fact 1: Greece has the lowest retirement age of anywhere in the EU at 61, this will be increased to 63 by 2015 apparently.

Fact 2: Greece imports 13% of the arms exported by Germany. Not a lot of people know this, but after the US and Russia, Germany is the third-largest exporter of arms in the world, at 11%, so that's a pretty massive expenditure. Incidentally, Turkey imports 14% of German's arms exports, so make of that what you will.

Fact 3: 95 percent of taxpayers declare annual income of less than 30,000 Euros. That's tax evasion on an absolutely monstrous scale.

I could go on and on, but you get the idea. The austerity package the Greek Government are forcing through (see here) is both crippling and laughably inadequate. Furthermore, every other austerity package of this nature has been accompanied by a sharp devaluation in the currency, which helps to soften the blow. There are problems with devaluation, most notably the risk of inflation, but it does reduce the debt burden. Greece of course can't do this, so they really will be on the hook for the lot, which is ridiculous.

Either Spain or Portugal will be next, and the EU have set a very dangerous precedent with this bailout. The market is unimpressed, which is why the Euro is below 1.32 against the Dollar, and even falling a bit against the very weak Pound. If the market believed the bailout package was anything more than a finger in the dyke, we'd see the Euro higher, but it doesn't. Neither do I.

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