My reply to Chris Giles celebration of the eurozone bailouts in the Financial Times

@ChrisGiles (Financial Times) decided to have some fun by celebrating “The astonishing success of Eurozone bailouts”, using Greece as the poster girl/boy of that exercise in futility, the EU’s most spectacular failure. With such friendly scribblers, Europe has no need for sworn enemies!

His evidence? That Greece, the basket case of the euro crisis, reported GDP per head growth between 2019 and 2024 of “more than 11 per cent”. Seriously? Has he never heard of that cruel phenomenon called a ‘dead cat bounce’ (i.e., even a dead cat will bounce significantly if dropped from a great height)?

Had he allowed his readers a longer view, the dead cat bounce would have become evident: GDP per capita remains 16% below its 2008 level – the only EU (or indeed OECD) country not to have caught up after the 2008 crisis.

Had he also taken an interest in real wages, Mr Giles would have noticed that Greece has managed to break another bleak record: real wages are languishing at a sad level 22% below their 2008 level, with Hungary a distant second (-18%). To add insult to injury, Greek wages (in PPP terms) have managed not only to remain at the bottom of the eurozone league table but to beat Bulgarian wages in the race to the bottom of the equivalent EU table.

Mr Giles also thought it a good idea to take a swipe at my claim that Greece remains in debtors’ prison. He must have been feeling confident that his readers would never get to see the actual data. Per head income in Greece is now more or less where it was in 2002: at around €19k. Back then, however, debt per head amounted to €15k (€13.5k public and only €1.6k private debt). Today, with the more or less the same income, every Greek is saddled with, on average, a €64.6k debt (€38.7k public και €25.9 private). In aggregate, public and private debt is close to €800 billion (€405 billion public and €380 billion private) while national income struggles to reach €230 billion. [Nb. Only the delinquent debts of citizens to the tax office, social security, banks and vulture funds amount to a whole GDP, i.e. €230 billion. Additionally, in a country of 10 million souls, 1.1 million homes and business premises have been foreclosed by the funds that bought the distressed mortgages from the banks and are being auctioned off.\

If this is not debtors’ prison, what is?Last, but certainly not least: Mr Giles has missed out on perhaps the worst aspect of the EU bailouts’ spectacular failure: the wave of universal austerity that the Greek bailouts unleashed (hitting in turn Ireland, the Iberian peninsula, Italy, France and, finally Germany itself), coupled with tremendous money printing by the ECB, created the forces that are now devastating Europe’s industrial heartlands: Universal austerity ensured that aggregate demand was too low for corporations to want to invest in productive capacity. And ECB largesse (also known as Quantitative Easing) allowed Big Business to make money by buying back their own shares, rather than investing. The result? Fifteen years of an investment strike that has led to Europe missing out on a whole technological revolution (green energy, batteries, EV, cloud capital, AI etc.). Greece’s bailouts, in short, spearheaded catastrophic policies that are, today, rendering Europe a failed economic bloc.

To conclude, Tacitus-like @ChrisGiles is treating his FT readers to a celebration of the eurozone bailouts when, in reality, they created a desert and proceeded to call it peace. With such friendly scribblers, Europe has no need for sworn enemies.