Thanks to all of you on Twitter who helped me gather the data. It did take quite a bit of googling. Most of the data used are official figures from the Greek Finance Ministry and one of the interesting things is that the data is not given out in a logical and easy to find way, which tells you quite a bit in itself, but thanks to Google, once you get the right search term, it can all be found.
So what’s the gist of this article? Simple. It’s about Greece’s primary budget surplus. If you don’t know what that is, it simply means they are bringing in more money than they are paying out (a good thing) BUT, BUT, BUT!!! That’s before they pay their debts. So think of it like this: Our friends to the south, the Greeks, are making money, sitting down at the end of the month to a nice glass of Ouzo and saying, “right-ho then, time to pay our debts, I’ve got plenty of money left over, how much do I owe?”
Then reality sets in, because they owe a lot. Or as Cilla Black likes to say, they owe a lorra-lorra-lorra money.
The reason the primary surplus is so important is because if the Greeks have a plus sign in their piggy bank at the end of each month, then it means they should be able to pay their debts if we just stretch and fiddle the debt terms somewhat… well kinda. Read on.
What I’ve done is place all the numbers month-by-month (not the way the Greek Finance Ministry presents them) showing how much of a primary surplus (or deficit) they made month-on-month in 2014 AND compared that to the targets set out by the Greek government (all the links to the relevant data can be found by clicking here)
So what do we learn from the charts below? Well, three things
- The official targets are worth absolutely nothing.
- Greece will never, ever be able to repay their debts.
- The current status quo is an utter disaster.
The Targets are a Joke
Below is a chart showing by how far the primary surplus targets were missed month-on-month in 2014. Look at the swings in the targets versus the actual outcome. Only in one month were they even close, the biggest swing was in May 2014 with a cumulative over performance in the outcome of 240% (a good thing obviously) only to be followed by a cumulative under performance in outcome the next month of 211% (a bad thing). What’s the point of having targets if you’re missing them by over 200% from one month to the next?
More worryingly, it shows that the government has absolutely no idea of how much money it has coming in. Zip, nada, nothing. Predicting earthquakes is easier than predicting Greek public finance inflows.
The Debts That Cannot be Paid
Let’s move things on to this year, 2015. I did try to find the month-by-month estimates for 2015, but found it an exercise in futility, which I lost. The Greek Finance Ministry does however publish the overall estimate for the 2015 primary surplus, which they’ve given as €5.798 billion. The problem with this figure is that:
- It does not give a monthly breakdown of the estimates
- (More importantly) We’ve already established that the estimates are of no use
- The overall estimate for 2015 is optimistic to the extreme
- The January-February reported outcome figures for 2015 are already behind the 2015 estimates.
So what I’ve done is use the outcome figures from 2014 and compared those to the repayment schedule in 2015. Yes, I know it’s a bit apples and oranges, but my argument is that using the historical ‘real’ numbers from 2014 is a more realistic approach than the estimates for 2015. The point here is to give an overview of how dire the financial situation is.
What I do want to stress is that even the reports regarding the repayment schedule for 2015 differ. I’ve used what I found as the worse case scenario from Startfor Global Intelligence, but you could also use these from CNBC or these from the Wall Street Journal. Please also note that the figures ignore January and February as the repayment data begins from March.
I know, I know, I’ve ignored some important stuff here, such as the ability to roll over debt. Also, it’s completely possible that I’ve gone all Reinhart and Rogoff and there’s a mistake somewhere in the Excel spreadsheet I’ve used. If you have the time and ability please feel free to check it, correct it, further expand on it. All the data in this article, including the spreadsheet, is available on this webpage. Knock yourself out.
The main point of this article is that however you shake the numbers it’s obvious that Greece is unable to repay its debts and the ongoing policy of the Troika, which has now been going on for half a decade, is based solely on what is known as Escalation of Commitment, which is when you make a purchase/investment and it turns into a dud, but because your ego gets the better of you, you can’t admit the mistake and instead keep adding to the mistake. Anyone who’s ever bought an Alfa Romeo will know what I’m talking about.
The only conclusion to this sorry saga is that what is being done now is just not working and it's the Greek people who suffer for it the most. It is inevitable that at some point events will overtake the institutions and the system will crack.