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STOP THE PRESSES!!! Greek Deficit is 40% of Budget…

4 March 2010 1,392 views 5 Comments

I know I said I would stop publishing on InvestorGeeks. However, I saw something that I would like people to comment on. Because I think it is very important, I would like as many people as possible to comment to say whether I am right or wrong. If I am wrong I will delete this post…

I have a habit of looking at the budgets of countries to understand whether or not the country is doing its thing properly.

Well I just looked at the Greek budget and what I saw scared the holy crap out of me. And anybody who buys Greek bonds is asking to have their money taken away from them. I say you buying a Greek bond is FOOL!

Take a look at the following link:

Then look at page 19:

ScreenHunter_01 Mar. 04 12.52

I see Tax Revenues of 91 billion, with a grand total of about 102 billion. What scares the crap out of me are the borrowing lines; 38 billion and 6 billion. In other words 44 billion of the revenue is from borrowing money. If somebody wants to say I am reading this wrong, PLEASE TELL ME. But as I read this it means 44 billion of the 102 billion revenue is money that needs to be paid back eventually. In other words Greece is borrowing 40% of budget!

I say WTF!

For comparison look at the Canadian 2009 budget. The Canadian budget has a maximum borrowing of around 10%. That is ok, and sustainable.

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5 Comments »

  • Chris said:

    So is the U.S. (even before health care reform gets passed)

    http://www.cnsnews.com/news/print/53246

    more specifically:

    http://www.whitehouse.gov/omb/assets/fy2010_msr/10msr.pdf

    # 4 March 2010 at 4:40 pm
  • Christian (author) said:

    Well, actually not quite…. The US is at 30%. Not to say that, that is better. I find that just as outrageous…

    # 4 March 2010 at 6:45 pm
  • Jason Coleman said:

    Without looking into it any further, I would follow up as I would with a business that is borrowing a lot.

    1. Do they borrow this highly every year or is this a new thing?

    2. What are they spending the borrowed money on? Is it an investment that you agree with?

    If they are borrowing just to keep things running, I would be concerned, but if it’s to build a new rail system (out of my ass) or something else that would be beneficial down the road, that would be okay. They might be getting an incredible interest rate for that money. Might as well borrow now.

    I’m also one of the crew advocating governments spending as much money as possible during a depression… as long as it’s on things that will help the economy now and in the future (infrastructure, technology, education).

    # 5 March 2010 at 10:19 am
  • Christian (author) said:

    This argument of being able to borrow so to build infrastructure is absolute crap! Sorry to be blunt, but it is crap. Let me give you an example in Switzerland.

    In the Kanton Zurich they just finished the West Umfahrung. This is a ring that connects highways. It took Switzerland an entire 15 years. Or how about the http://en.wikipedia.org/wiki/Gotthard_Base_Tunnel. This project was started in 1993, and will probably be finished in 2016. Do the math, that is 23 years.

    You may think, wow that is a super long time and almost pointless. In fact it is very interesting to see. The total cost is 9 billion USD, stretch that over 23 years you pay 393 million per year. Any country can handle 393 million per year.

    Now compare that to http://en.wikipedia.org/wiki/Great_Belt_Bridge. This cost around 4 billion dollars and had to be financed and from reading the article they say it will take around 30 years with interest to pay back the lenders.

    So who is better off? Switzerland or Denmark? I would argue Switzerland because they will be able to run a profit and use it for other things. Switzerland last year ran a profit even though most countries are running huge losses. And Switzerland has very low taxes.

    Keynes did promote going into debt during hard times. I can understand that. However, Keynes also said that people should pay more taxes during good times. Also understand that at the times of Keynes governments were running profits….

    # 9 March 2010 at 4:49 pm
  • WS said:

    It’s quite funny that you pick the Great Belt Bridge as an example. That bridge will turn out to be a money machine for the danish state in the future because of the toll charge. The current forecast is that the debt will be paid in 25 years – not 30 as originally estimated.

    When the debt is paid the estimate is that the danish state will receive 2 billon dkk in revenue from the toll charge each year.

    Previously it took an hour to cross the Belt by ferry – now you can cross it in your car in 10 minutes.

    Thats what I call a good investment with benefits for the state and the soceity.

    # 19 March 2010 at 2:52 pm