Tuesday, February 16, 2010

Cooking the books

The New York Times:
New questions emerged Monday about the reliability of Greek statistics — this time over its austerity package — prompting the European Union to call for further measures to ensure that Greece pulls out of its budget crisis.

Olli Rehn, the European commissioner for economic and monetary affairs, said Monday that there was “a clear case for additional measures” beyond those that Greece indicated were needed to reduce the country’s huge budget deficit this year.

...Although the Greek situation was “the most egregious example,” [Simon Tilford, chief economist at the Center for European Reform in London] added, “it is not as if there have been no other examples of governments massaging public finances.”

In 1997, France cut about half a percentage point from its deficit with the help of a windfall transfer of 37.5 billion French francs from the state-run France Télécom. In return, the government took on long-term pension liabilities of civil servants at the company.

A German taxpayers’ watchdog group charged the government in 1997 of masking the size of its budget deficit by using one-time items like the sale of state assets and hiding liabilities in off-budget accounts. Without these, it said, the deficit would have been 5 percent of G.D.P. Instead it came in at 2.7 percent.

“Fiddling the books has become the order of the day,” Karl Heinz Däke, president of a lobbying group of German taxpayers, was quoted as saying at the time by Reuters. “The German government and other European countries are hiding their cards from the public.”
Just another reminder that Enron-style accounting is just as applicable -- if not more so -- to governments as evil corporations.

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