“Exploding debt in 2012 at 340.6 Billion Euros, compared to an initial estimation of 316 Billion Euros; these numbers where revealed by the Greek Statistical Authority (ELSTAT) and the General Accounting Office to Eurostat, during the interim Excessive Deficit Procedure.

The same data show that the deficit for the year 2012 is expected to be around 13.4 Billion Euros, a target level that will most likely be achieved through heavy public spending cuts. Specifically, from a central government perspective, the deficit target is set at 11.4 Billion Euros.

GDP is also projected to decline to 194.7 Billion Euros, from approximately 232 Billion Euros (the GDP before the ΄΄invasion΄΄ of the IMF in Greece).

Furthermore, according to data of ELSTAT, the deficit in 2011 was 9.4% of GDP or 19.7 Billion Euros – with the deficit in 2010 being 10.7% (approx. 24 Billion Euros), and 15.4% in 2009 (approx. 36 Billion Euros).

In its statement, ELSTAT admits that the deficit and the public debt surpassed expectations, partly because additional government expenditures were found, and because the Agency revised the levels of the GDP. And because GDP is the basis for measuring debt, the debt levels have increased!”

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Regardless of the above lightly formatted text (published by media), in general, the year by year increase in public debt of a country can be found, if the year-end deficit (loss) is added to the previous year’s total debt. With this in mind and using as our source the debt report of the Greek Ministry of Finance, we get the following:

TABLE I: Development of the central government debt, approximate budget deficits, year to year public debt increase (in million Euros)

*PSI: 105,973 Million Euros

Source: Debt report, budget draft 2013 (Greek Ministry of Finance)

As seen in Table I, in 2009, just before the invasion of the IMF, the Greek debt increased by 36.453 Billion Euros – that is, by as much as the “swollen” deficit had increased, which was determined by the then newly formed government (following irrational processes).

The next year however, although the deficit dropped to 24 Billion Euros (it has been revised so many times that it is hard to find the exact number – but it’s certainly possible), Greece’s debt increased by 41.7 Billion Euros. Furthermore, in 2011, although the deficit of the country was 19.7 Billion Euros, its debt increased by 27.7 Billion Euros.

The year 2012 now, was known for the notoriously criminal debt write-off (PSI), amounting to around 106 Billion Euros – at least as publicly announced. Therefore, compared to 2011, the debt in 2012 should normally decrease by 106 Billion Euros, and increase by the years (2012) deficit – that is by 11.4 Billion Euros.

As a consequence, the total debt ought to stand at 273.405 Billion Euros (367,978 – 105,973 + 11,400) rather than at 340.6 Billion Euros announced by ELSTAT or 343.3 Billion Euros according to the budget – a huge difference, amounting to 69.8 Billion Euros!

Now, baring in mind the reduced GDP that was announced (194.7 Billion Euros), the total debt (343,2 Billion Euros according to the budget) will almost reach 176% of GDP – when before the IMF (2009) and the debt write-off (106 Billion Euros), the total debt was at 129.4% of GDP (113.0% in 2008, compared with a GDP of 232.9 Billion Euros).

Perhaps we should note here that, because of the dependence the general government revenue has to the levels of GDP (revenue of 52.85 Billion Euros, compared to a GDP of 215.09 Billion Euros – 25% of GDP), only due to the drop of the GDP by 38.1 Billion Euros compared to 2008, approximately 9.52 Billion Euros in revenues are lost annually.

Adding on top of that the government expenses that are piling up due to the recession (unemployment etc.), the total revenue losses will compound to more than 15 Billion Euros – a loss that comes as a consequence of the imposed austerity policies (policies that accomplish only one purpose, the substantiation of an economic genocide).

To carry on with our discussion on public debt, it is obvious that its disproportionate increase compared with the deficit of the country, is due to some specific causes – causes that need to be publicly announced by the Greek government so that all its citizens can be aware of them. Unfortunately, as usual, this has not happened.

If we take a look at the budgeting program of 2013, we will see that the public debt of 2012 was burdened (in addition to the deficit of 13.3 Billion Euros) with 11 billion Euros in losses of local governments and other governmental bodies, with 49 Billion Euros from the recapitalization of banks, with 3.5 Billion Euros from the repayment of expiring liabilities to the private sector, as well as with various other amounts to meet the needs of the first quarter.

The Greek citizens therefore, in 2012, paid 49 Billion Euros  to Banks (a total of 109.1 Billion Euros have been approved for the Banks through the FSF) and 11 Billion Euros to social funds, as well as various other amounts, for which they were completely unaware of. These facts fully justify that with the PSI, Greece «put a bullet to its own feet».

To sum up, up until January 2012, Greece has received a total of 73.2 Billion Euros (20.3 Billion Euros from the IMF and 52.9 Billion Euros from the Member States) – while waiting for the «doze» of shame (31.5 Billion Euros). Against this amount, the damage done to the country because of the recession, unemployment, income reductions, the stock market collapse, business bankruptcies, falling prices in properties and so on, has surpassed in value the amount of 800 Billion Euros.

It is obvious, that based on the above handlings, the public debt of Greece will never be viable - as it will grow over time and at will, with the help of the Chicago fella’s. Under this context, to vote on 11.5 Billion Euros in austerity measures, while taking on debts of 49 Billion Euros to recapitalize Banks (and 60.1 Billion Euros more to come) is a reasoning that defies intelligence.

Without expanding further into details, from the concentrated information of this article we can see Greece being completely looted by the IMF – with the artful use of statistical data, manipulation and propaganda. We also realize what could happen to Spain or Italy, if the IMF was to invade, and use the same methods it used on Greece.

Precisely for this reason, both Spain and Italy avoid it by all means. On the contrary, the Greek government in 2010 allowed the IMF to enter without any resistance, making it the Trojan horse for the invasion of the Euro-zone (while today’s government continues tolerating the invaders, adopting the submissive policy of «bowing»).

THE METHODS OF THE IMF

From one of our older articles, we recall the IMF’s attitude towards the invaded countries – which are being abandoned like juiced out lemon-cups, after their public and private properties have been plundered.

“The Asian «tigers» in 1997, were forced to seek «help» from the firefighters of the IMF, who of course worked to the benefit of the country that caused the fires. As natural, the «Fund» reacted positively at start, and provided the demanded loans – since the true purpose behind this act, was to protect banks, pension funds, investment funds, private speculators etc., that had invested in the Asian real estate bubble, from going bankrupt. These investors later on (after getting liberated from their former destiny) put all «bets» in the «bursting» of the bubble, a move that would cause a sharp devaluation of the Asian currencies.

In agreement with the IMF, the first loans were provided to be used by the governments of Indonesia, Thailand and South Korea, for the repayment of foreign speculators. Shortly after, with speculators having been payed off completely, the «shock therapy» followed. Local populations where forced to follow a catastrophic austerity policy that led to a deep recession. Salaries were cut to extreme low levels, spending on healthcare and education was limited to a minimum, and lending to small businesses was stopped almost entirely.

From South Korea to Indonesia, hundreds of thousands of workers lost their jobs, driven into unemployment, while rules where set that prohibited states from providing any kind of assistance to the affected citizens. Many schools were closed, medicines in hospitals were hard to find, people were dying in the streets, and crime surpassed even the most morbid imagination. At the same time hunger and starvation maxed out. The entire middle class sector – the winners of the previous decade – now ceased to exist.

As always, the weak lower social classes suffered the most, while the looting of private property (buildings, land, etc.), through excessive taxation (a technique currently implemented in Greece), exceeded all expectations. Many utilities «denationalized» (so did the banking system), passing on ownership to foreign multinationals at bargain prices. The cost of living soared, and public property fell into the hands of the invaders – always publicly presented as completely legal and transparent business transactions.

The onslaught of the IMF had finally nothing to envy compared to a conventional war – since it managed to leave behind human wrecks and societies that will never recover from the shock of absolute misery and destruction. In any case, the residents of the wider Asian region, will never forget the torturing they suffered in the hands of the bloodthirsty mercenaries hired by loan sharks, and who do not have any kind of moral barriers when executing the incredible commands of their «shadowy» leadership” (currency effects).

FISCAL POLICY AND GDP

Also from one of our older articles, we note that as far as the debt is concerned, according to the IMF, austerity programs are now having different effects in Europe than they had in the past.  These effects are calculated by a multiplier, that reveals the relationship between the fiscal policy and the respective GDP (that is the effects the policy has on GDP).

In previous years, the multiplier was around 0,5 – an index that shows that when the state cuts spending by 1 Billion Euros, the GDP shrinks (recession) by 0.5 Billion Euros.

Today however, the IMF believes that the multiplier is between 0.9 and 1.7. To elaborate, when the multiplier is greater than 1, the total GDP declines more than the budget deficit does (in the case of Greece, the deficit declined by 25 Billion Euros while the GDP shrank by more than 30 Billion Euros – leading to a vicious cycle that will eventually push the country into bankruptcy, if the implementation of austerity measures is not immediately stopped). Table II will give us some insights:

*Total revenues of Greece are estimated to be 33.3% of GDP, compared with 32.9% in Spain and 29.8% in Ireland.  Note: In the case of Greece, it seems that the IMF had initially estimated a rate of 0.5, but in the process the rate ended up being between 0.9 and 1.7.

The table above reveals to us, that when a policy that focuses on austerity (similar to the one imposed on the Euro-zone members running a deficit) is implemented, the debt to GDP increases over time rather than decreases – a hypothesis that has been documented many times in Greece.

PS: Greece erased (write-off) debts of 106 Billion Euros, thus hurting its image worldwide and scaring away investors without any real benefit, since most of the debt erased came from its interior – Greek banks, social security funds, private investors and other Greek organizations.

Due to the debt write-off (PSI), Greece now has to recapitalize its banks and funds – for which it has signed a loan agreement, equal to the amount of 109.1 Billion Euros (more than the 106 Billion Euros of the write-off).

Furthermore, if the recapitalization is done through the ESM, then it is very likely that Greek banks will end up in foreign hands, and in the process will transform into small branches selling financial products – along with the dismissal of thousands of bank employees. If this is not the zenith of stupidity, how else can it be described?

Athens, 26.11.2012

Translation of original: Dennis Viliardos

    Vassilis Viliardos is an Economist and an Author of several books on the Greek economic crisis. He has earned his Economics degree in ASOEE (Greek University of Economics) and in Hamburg, Germany.  He lives in Athens, Greece.