Greece Starts to Reduce Its Budget Deficit – Starting to Claim Victory in Its Fiscal Policy

A Couple of More Victories Like This and the Country Will Surely Be Destroyed

The Idiocracy that passes for European economic policy has imposed harsh fiscal conditions on Greece, and now that policy is supposedly showing results in that Greece’s fiscal condition is improving.

ATHENS—Greece's fiscal discipline efforts appear to be paying off, according to budget data released Monday that showed the country turning last year's steep deficit into a surplus, potentially bolstering its case for further debt relief from international creditors.

Wow, a surplus, well that must be encouraging.  WAIT not so fast.

The Greek Finance Ministry reported a primary surplus—which excludes interest payments on debt as well as local government and social security spending—for the first seven months of the year.

The surplus reached €2.6 billion ($3.47 billion) against a deficit of €3.1 billion a year earlier.

Oh yes, there is a surplus if you don’t count all the spending.  Gosh, what a great way to achieve a budget surplus, just don’t count everything.

And what has been the cost of this policy?  Pretty high and pretty horrible.

Greece expects the economy to shrink by 4.2% this year, though government officials have indicated that a stronger-than-expected tourism season this summer could provide some relief. The country's jobless rate hit 27.6% in May.

But Europe had promised that if Greece would get its fiscal house in order there could be some debt relief.  WAIT, not so fast.

However, Germany's finance ministry stuck with its steadfast rejection of further debt relief for Greece, following a weekend report in the news magazine Der Spiegel that said the German central bank expects a new Greek aid package will be necessary by the beginning of next year, at the latest.

The Bundesbank declined to comment on the report.

With nationwide elections in Germany next month, a spokesman for the German finance ministry told reporters "a second haircut [on debt] is out of the question."

Greece is still mired in deep recession, making it more likely that it will need more loans or further debt relief next year despite an improving fiscal outlook.

Germany's refusal to talk of a debt reduction for Greece has put it at odds with the International Monetary Fund, which was a partner in Greece's €173 billion bailout, along with the European Union. Without additional euro-zone financing, the IMF argues that Greece might not be able to pay back its loans to the fund.

So Greece improves its fiscal situation, its economy is in shambles, its people are suffering, youth unemployment is near the 50% level and now Germany, who controls European policy will not go along with further debt relief which was promised earlier. 

It’s hard to see how any worse economic policy could have been developed for Greece.  And if anyone wants to get a copy of the plan it is available at your local Idiots ‘R Us.