It’s true, the Greek economy has several problems. Low productivity, shrinking exports, extended public sector, diminishing primary and secondary sectors.
On top of that, Greece has had two LSE graduates as its most recent Finance Ministers: Prof. Giorgos Alogoskoufis of the New Democracy government (2004-2009) and Mr. Giorgos Papakonstantinou of the current PASOK government. Both, upon taking charge of their Ministry, chose to double the Greek public deficit by changing the way this is measured. In particular they transferred certain revenues to future dates and certain payments to past dates. That way, Prof. Alogoskoufis raised the deficit from 3 to 6% of the GDP and Mr. Papakonstantinou from 6 to 12%. These accounting tricks gave both of them the short-term ability to accuse the previous administrations of doing a lousy job in the economy and blaming them for tough fiscal measures they would have to take. In the long run, however, this infuriated the EU officials who had previously trusted Greek statistics and allowed Greece to accede to the Euro zone, with a deficit lower than 3%. "Fool me once, shame on you. Fool me twice, shame on me".
Moreover, this has made Greece an easy prey for market speculators. As is usual in these cases, rumors are used by speculators to further increase their profit margins. In this case, the eventualities of a Greek default and exit from the Euro zone have been wildly circulated by mass media. Thus, it has now become increasingly expensive for Greece to borrow money on the international markets and far more profitable for lenders to lend to Greece. As these lines are being written the 10-year Greek bonds pay 6.24%, while German ones pay only 3.2%.
Finally, this has made Greece the weak link of the Euro zone for those who do not wish to see the Euro emerging as an international currency that would rival the dollar.
Not trying to shake off Greek errors which made it such an easy target, I would nevertheless like to give an example of "responsible" and "objective" journalism of the mass media, which may be more the rule than the exception.
The Financial Times has launched what looks like an attack on Greece on the issue of economy, with titles like "Greece would ‘draw blood’ for credibility" and with stories like "Greece part of unfolding sovereign debt story", "Darling rules out help for Greece". Today, these culminated to actual badgering of the Greek PM by a FT reporter in Davos, Switzerland. Richard Edgar, actually stalked Giorgos Papandreou, following him around in corridors of the World Economic Forum and filming the chase (the video is here).
I have been more than critical of Giorgos Papandreou and I still am. However, this behavior by the FT reporter is bordering with outright insult toward the Greek PM. Moreover, I think I’m right in assuming that this "gentleman" seriously lacks the nerve (I would use another word) to pull the same stunt with, let’s say, his own PM.
However, is there a back story to all this?
In July 2009, "Floras" (an Athenian bookstore chain) accused "Apollon" (book importers & distributers) for unfair competition, before the Hellenic Competition Commission. In particular, they asserted that "Pearson Education Ltd" (a publisher of English language textbooks for foreign learners) restricted their importer ("Apollon") from passively selling books outside the Greek market ("passive sale" is the sale in which the buyer contacts the seller and not the other way round).
The HCC decided (decision 455/V/2009) that "the relation between PEARSON and APOLLON is not that of a commercial representative, but a contract of distribution between two independent companies, in which APOLLON may only act on its own behalf" (p. 39 of the decision). Considering the share of the Greek market these companies hold, the HCC decided that there was ground for evoking the Greek law on competition (703/77). And since they considered that this might noticeably affect commerce between EU member-states, they also decided to evoke the respective article (81) of the Treaty for the European Union.
In examining the Apollon-Pearson agreement, the HCC found clauses that restrict passive sales outside Greece (the "Territory"), which to their view amounts to hardcore restriction of competition:
3.7 APOLLON shall promptly bring to PE’s attention any information … and promptly forward to PE any orders it receives for Works outside the Territory
4.2 Within the limits determined by applicable laws and regulations relating to restrictive practices, APOLLON shall not without the prior written consent of PE … sell, market or promote the Works outside the Territory during the continuance of this Agreement
These consequent to a sealing of the Greek market from the European one. Consequently the HCC condemned "Apollon" to a fine of 209,089.84 Euro and "Peason" to a fine of 1,434,052.32 Euro.
[Note: Additional cases were reviewed in this decision. "Apollon" was condemned to an additional fine for their relation to another company. The above mentioned fine is only in relation to "Pearson"]
According to one testimony (p. 40), these clauses are implemented in Pearson’s agreements in other EU countries, which might bring about similar decisions against them in these countries. Decidedly this decision by the HCC may have serious repercussions for Pearson, amounting to millions in fines.
-This decision has been appealed and is to be tried on 9 March 2010 before the Administrative Court of Appeal of Athens (section 15).
-"Pearson Education Ltd" is a subsidiary of "Pearson Plc"
-"Pearson Plc" is the owner of the "Financial Times"
I repeat, not disregarding Greek blunders on economic issues, certain reports of big media must be read with a grain of salt.