Most people know by now that the world economy has suffered because of Greek statistics. Let us hope that people discover that the world economy suffered much more because of Dutch censorship of economic science. Both are a failure in integrity in science but theory can be more devastating than data.
This weblog already pays much attention to that Dutch censorship (see “About” above). For this page it suffices to just sketch the comparison of theory versus data. For the remainder, this page provides me with an opportunity to say that Greek statistics provide quite a challenge. The issue isn’t simple. For a sound judgement one must be an expert on Greece and EU statistics and the international treaties involved. I am none of these so that the only thing I do here is to formulate tentative questions.
An important piece of information is Nancy Koehn, “Inside the Greek vulcano“, NY Times August 13 2011, i.e. her review of Jason Manolopoulos, “Greece’s ‘Odious’ Debt: The Looting of the Hellenic Republic by the Euro, the Political Elite and the Investment Community”, Anthem Press. Even if the Greek statistics would have fitted international standards then they would have been misleading. Since consumption based upon debt statistically contributes to GDP and “economic growth”, Greece seemed doing well and was praised by EU leaders.
Another piece of information is that the inclusion of Italy and Greece in the Eurozone was a political decision such that the statistics hardly seemed to matter. France accepted the unification of Germany in exchange for the monetary union. In Holland, parlementarian and former professor of economics Henk de Haan proposed to keep Greece out of the euro, yet minister of finance Gerrit Zalm refused to delve into the statistics (Dutch TV). Zalm already had lost an earlier battle on Italy and most likely regarded Greece as something that had already been decided at the EU level too, so that a sudden veto from Dutch parliament would be embarrassing.
The quality of Greek statistics then is a topic of itself. Schott’s Vocab at the NY Times 2010 entry features Nikolaos Logothetis who is newly appointed at Statistics Ellas (Elstat) to help clean up. However, the new director Andreas Georgiou (with a background of mainly IMF and less in science) fires the newly appointed board in 2011, and Logothetis himself is accused of hacking into Georgiou’s computer.
This piece of drama has three aspects. (1) Mario Draghi, the current ECB president, worked in 2002-2006 at Goldman Sachs, when this bank helped Greece to put debt off-balance, but Draghi denies any involvement. Read here and here. (2) This NY Times article in 2010 reports:
“Greece has been criticized repeatedly for its statistics since it joined the euro zone in 2001, but never more so than this year. A scathing report from the European Commission last month accused Greece’s National Statistical Service, its General Accounting Office and the Finance Ministry of having “significant weaknesses” related to data gathering. It noted “severe irregularities in deficit notifications by the Greek government in April and October 2009” and singled out “the submission of incorrect data, nonrespect of accounting rules and of the timing of notification.”
(3) The new twist is that there is an accusation that the Greek deficit was misstated upwards in 2009, either to create a political climate for austerity or to create a “debt event” such that some investors could cash in (by buying up cheap debt and exercise CDS rights). This blog in September 2011: “Zoi Georganta, professor for Econometrics at the University of Macedonia, spoke to several Greek media on Friday and claimed that Greece’s budget deficit underwent a upward revision in 2009 to 15.4% instead of 12.6% just to force Greece to take the harsh austerity measures.” Andreas Georgiou fired her for thinking so. Apparently, Greek parliamentarians want a probe, see eKathimerini, February 9, 2012. See here for an accusation and a denial of an alleged CDS scam with an alleged link to former Greek premier Giorgos Papandreou. You probably need a law firm to disentangle this web of possibilities and allegations.
I already advised to outlaw the CDS since it is like the printing of money (certainty) which ought to be the monopoly of the Central Bank. These conspiracy theories enhance that idea.