I'd arrived in Athens just a few days earlier, exactly one week before the next planned riot, and a few days after German politicians suggested that the Greek government, to pay off its debts, should sell its islands and perhaps throw some ancient ruins into the bargain. Greece's new socialist prime minister, George Papandreou, had felt compelled to deny that he was actually thinking of selling any islands. Moody's, the ratings agency, had just lowered Greece's credit rating to the level that turned all Greek government bonds into junk--and so no longer eligible to be owned by many of the investors who currently owned them. The resulting dumping of Greek bonds onto the market was, in the short term, no big deal, because the International Monetary Fund and the European Central Bank had between them agreed to lend Greece--a nation of about 11 million people, or two million fewer than Greater Los Angeles--up to $145 billion. In the short term Greece had been removed from the free financial markets and become a ward of other states. That was the good news. The long-term picture was far bleaker. In addition to its roughly $400 billion (and growing) of outstanding government debt, the Greek number crunchers had just figured out that their government owed another $800 billion or more in pensions. Add it all up and you got about $1.2 trillion, or more than a quarter-million dollars for every working Greek. Against $1.2 trillion in debts, a $145 billion bailout was clearly more of a gesture than a solution. And those were just the official numbers; the truth is surely worse. "Our people went in and couldn't believe what they found," a senior I.M.F. official told me, not long after he'd returned from the I.M.F.'s first Greek mission. "The way they were keeping track of their finances--they knew how much they had agreed to spend, but no one was keeping track of what he had actually spent. It wasn't even what you would call an emerging economy. It was a Third World country." As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it. In just the past decade the wage bill of the Greek public sector has doubled, in real terms--and that number doesn't take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece's rail passengers into taxicabs: it's still true.
I'd arrived in Athens just a few days earlier, exactly one week before the next planned riot, and a few days after German politicians suggested that the Greek government, to pay off its debts, should sell its islands and perhaps throw some ancient ruins into the bargain. Greece's new socialist prime minister, George Papandreou, had felt compelled to deny that he was actually thinking of selling any islands. Moody's, the ratings agency, had just lowered Greece's credit rating to the level that turned all Greek government bonds into junk--and so no longer eligible to be owned by many of the investors who currently owned them. The resulting dumping of Greek bonds onto the market was, in the short term, no big deal, because the International Monetary Fund and the European Central Bank had between them agreed to lend Greece--a nation of about 11 million people, or two million fewer than Greater Los Angeles--up to $145 billion. In the short term Greece had been removed from the free financial markets and become a ward of other states.
That was the good news. The long-term picture was far bleaker. In addition to its roughly $400 billion (and growing) of outstanding government debt, the Greek number crunchers had just figured out that their government owed another $800 billion or more in pensions. Add it all up and you got about $1.2 trillion, or more than a quarter-million dollars for every working Greek. Against $1.2 trillion in debts, a $145 billion bailout was clearly more of a gesture than a solution. And those were just the official numbers; the truth is surely worse. "Our people went in and couldn't believe what they found," a senior I.M.F. official told me, not long after he'd returned from the I.M.F.'s first Greek mission. "The way they were keeping track of their finances--they knew how much they had agreed to spend, but no one was keeping track of what he had actually spent. It wasn't even what you would call an emerging economy. It was a Third World country."
As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it. In just the past decade the wage bill of the Greek public sector has doubled, in real terms--and that number doesn't take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece's rail passengers into taxicabs: it's still true.
The amount of money made by the average gov't worker is still FAR below par (teachers are making less than 7k a year) and all of these 700k gov't workers added together could not generate anywhere near the amount of debt they have. Simple math should tell Lewis that.
He was lazy in THE BIG SHORT when he didn't put the blame on Dr. Burry. For Lewis, anything legal is valid; there is no ethical question involved.
He apologizes too often for the banks. For one, Germany is indignant at people for not paying back what was loaned, but let's get real. Germans should be indignant at German bankers. When those banks go south, do the bankers return their huge salaries from prior years? No, the debt gets nationalized. Also, you look at Greece, where did the money leant go? Did it go into people's pockets? Look at the military and easily won government projects for your answers. Germany has landed multibillion dollar contracts for Greek airports, the new Athens subway, super Bridges to Nowhere in Greece. And German companies have been caught bribing Greek officials with tens of millions for the approval of multibillion weapons purchases by the Greek military. I tallied up over $150 billion of big projects that Greeks did with Germany over the last decade, and when you consider that Greek debt is $300 billion total with most of it held by France, you can see what the game is. German bankers bribe Greek officials to approve huge projects with German corporations. The German bankers are happy because of their huge salaries, their cozy relationship with businessmen, the Greek politicians are happy with their bribes, and the German industrial worker is happy with his job. Who is unhappy? The German and European taxpayer, the average Greek with a mountain of debt they didn't profit from (and their mindboggling need to maintain useless submarines). It's a scam, a shell game, and Michael Lewis' need to ascribe cultural characteristics gets us nowhere. Greeks fell asleep at the wheel democratically and allowed a culture of corruption in government to kill off the country.
It's the same with his characterization of Germans. Good at making stuff, bad at finance. Like your kooky uncle the master carpenter who spent too much on old growth wood in a down market, and now his kids have holes in their shoes. The reality is that the bad German banking bets were nationalized, but the bankers who made those bets did not return their salary.
So, apparently, it pays to make bad bets, and that's the real reason that Germans are so bad (genetically) at finance.
What tripe.
