What did Greece do with all the money?

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What did Greece do with all the money? - my daughter asked me this, and I couldn;t even begin to answer - any clues?

Ive no political axe to grind so this isnt meant to upset any Greeks on the forum - its a genuine querie.

Cheers, Neil
 
They made up a lot of dodgy assets. Payments to a loss making rail network were changed into payments for shares - so instead of a loss it showed up as an investment.

Then they then borrowed a lot of money to fund a lifestyle that was unaffordable (early retirement, top class healthcare etc etc).

I cannot understand their mentality - the only way out is to leave the Euro, devalue and a bit of austerity - but they are clinging to the Euro like it's mother's apron.
 

Norm

Guest
I can't remember where I saw that but I read the following earlier:

Let's pretend I have a dog and you have a dog. I sell you my dog for a billion pounds and agree to buy your dog for a billion pounds, but we don't want to swap dogs, so we also agree to rent the other person's dog for a hundred million a year.

We are both in the same actual position before and after the transactions, but we have assets worth a billion and revenues of a hundred million a year, which is enough to make people want to lend us more money.

Swap dogs for crap mortgages or government debt and that's pretty much the situation in Europe and the US in 2007.

As for what Greece has done with the money (which is equivalent to nearly USD300k per person of working age in Greece) and you have 30+ years of a massive state enterprise, a very generous welfare state, inefficient tax collection from a badly designed system and huge tax evasion issues.

As the final layer of icing, the declining competitiveness Greece was experiencing towards the end of the 1900s was an issue when they had their own currency (which devalued hugely from GBP1:GRD250 in Jan '90 to GBP1:GRD320 in Jan '93 to GBP1:GRD530 in Dec '99 - that's a 50% drop) became critical when they joined the Euro and could no longer devalue to improve their export demands.

As an aside, anything the Greek government borrowed in a foreign currency would have interest and principal needing to be repaid in a foreign currency, and that foreign currency was twice as expensive at the end of 1999 as it was at the start of 1990.

BTW, if your daughter still wants to know more details, Neil, she is probably as nerdy as I am :blush: and will enjoy spending an hour or two nosing around the OECD's tables.^_^
 

Norm

Guest
By no coincidence, we bought one in November 2008, just as the European economies tipped over the precipice.

Unfortunately, we didn't look up the word "analogy" until after we'd got him home. :giggle:
 
 

dellzeqq

pre-talced and mighty
Location
SW2
What did Greece do with all the money? - my daughter asked me this, and I couldn;t even begin to answer - any clues?

Ive no political axe to grind so this isnt meant to upset any Greeks on the forum - its a genuine querie.

Cheers, Neil
it left the country. It barely touched base. Loads ended up in German banks, and an awful lot ended up in the London property market. A bond issue by the Greek government would be succeeded almost instantly by a spike in deposits in overseas banks.

Worse still......it wasn't recorded. The previous conservative government simply cooked the books. And then, when PASOK got in the truth came out.

Now, when you go to Spain you can see the money. The roads are just beautiful, the railways make ours look silly and there's lovely public buildings. But Greece - check out the £5M+ property market in London and German banks. And that is why the Greek people are so very angry.
 

slowmotion

Quite dreadful
Location
lost somewhere
I thought that Goldman Sachs came up with a ripping wheeze to show that Greece was in fine shape when it was broke anyway. It never had any money to lose in the first place.
 
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