Greece Special
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Welcome to More or Less. Every week we produce a podcast, whether we're on air or not. So if you never want to miss a programme, subscribe. This week, Tim Harford presents a Greek myth special.
Hello, and welcome to this special edition of More or Less, in which we'll try to sort statistical truth from myth in Greece, using news stories and gems from our archive. Can it be true that the Greek government failed to collect almost 90% of all tax due in 2010? Or that the Greeks work harder than anyone else in Europe? We'll answer those questions, amongst others, and bring you something you rarely hear in public when the state of the Eurozone is being discussed.
This story is so ridiculous.
The sound of a German laughing. But first, let me take you back, very far back, because here on More or Less we're always looking for the perfect analogy to help clarify complicated things, and the Greek economic crisis is pretty complicated. The good news is we think we've come up with exactly the right way to describe the whole sorry business, as Homer's Odyssey.
What is the 'Greek myth special' and why investigate Greece's statistics?
And the even better news is that Charlotte MacDonald is here to help.
Yes, so where shall we start?
Well, let's start with the Trojan horse. Sure. So the original horse, great big hollow wooden statue and inside the Trojan horse there's this Greek attack squad and they are smuggled into the city of Troy.
And what has that got to do with the debt crisis?
Okay, bear with me. So this goes back to the late 1990s and the creation of the Eurozone and the Greeks... They wanted to get into Troy. Now they want to get into the Eurozone. And to get into the walls of the Eurozone, the Greeks need to convince the European Union that they've met various troublesome rules about inflation and their deficit and government debt and so on.
These are rules about how much a country can borrow in any given year, that kind of thing?
That kind of thing, yeah. And the trouble is they're pretty hard to satisfy if you're an economy like Greece.
You're not suggesting that the Greeks managed to smuggle themselves into the Eurozone in a giant wooden horse?
Well, metaphorically, yeah, they kind of did. Instead of calling Odysseus, they called Goldman Sachs. And they asked Goldman Sachs to structure this clever financial deal that put a lot of Greek borrowing off the books. Was that illegal? No, no, I think it was legal. It was just cunning, like Odysseus. And in any case, it wasn't just Goldman Sachs. It's been reported there were all kinds of tricks that the Greek government were using to make their macroeconomic statistics look nice and trim and healthy. And when was this discovered? In late 2009, George Papandreou came to power in Greece and he announced this bad news. The Greek deficit wasn't 3.7% of GDP, which was pretty manageable, as his predecessors had claimed.
It was almost four times bigger. And that made Greece's debt look completely unsustainable too.
Didn't anybody notice?
Well, not many people, it seems, which I guess is a bit like the Trojans. I mean, it always struck me the Trojans deserved a bit of the blame for the whole Trojan horse thing. I mean, this wasn't actually the most subtle plan in history. And some people would say, you know, when it comes to the modern Trojan horse, the European Statistics Agency, Eurostat, could have been a bit sharper about finding out what was going on. And so perhaps should the banks who were lending all this money to Greece.
So I've got it, I think. The Greeks smuggled themselves into the Eurozone inside a Trojan horse of off-balance sheet accounting and the crisis broke when people finally found out.
Exactly. So let's introduce our next character to the story. The Cyclops, the one-eyed giant who trapped Odysseus' men in a cave, planning to eat them for breakfast. Odysseus then stabbed the Cyclops in the eye with a red-hot sharpened steak, which has got to hurt.
No!
But what have you got in mind for the modern-day equivalent of a blind, enraged colossus?
You have to ask. That's easy. The international bond markets.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–1:17
2
What is the 'Greek myth special' and why investigate Greece's statistics?
1:17–7:41
3
How did Greece allegedly use off‑balance‑sheet deals to enter the Eurozone?
7:41–18:11
4
Why did international bond markets treat Eurozone countries as the same risk?
18:11–28:04
5
Did access to cheap euro‑zone credit turn Portugal, Ireland, Greece and Spain into 'PIGS'?
28:04–30:18