The price of profligacy has to be shared by all

As I sit down to write this,  Naadam is round the corner, and the FIFA World Cup is at the tantalising semi-final stage. I hope I shall be forgiven for being a little “playful” myself and taking liberties with the format even though I start with something more in keeping with the general tenor of this column.   

In the past few days I have read several reports of Mongolian politicians and officials referring to the situation in Greece. This country’s ties with the European Union are strong,  particularly attitudinally, but I wouldn’t suppose Greece would be much on a Mongolian’s mind if it did not expose the vulnerability of the global financial system and thus posed a threat to the profligate populism of the politician here.

Just what did happen in the cradle of Western civilisation that could yet be the mother of all crises? The Greek GDP is just two per cent of that of the European Union, and it is ironic that it should hold the latter to ransom. It is not just its high trade deficits or the high public debt at 115 per cent of the GDP, but its lies about these that are responsible for Greece’s predicament. Let it not be forgotten that the country had fudged its accounts on the ‘expert’ advice of the consultancy Goldman Sachs, and had shown a budget deficit of below three per cent to join the euro club in 1999. In 2004, it came clean about the past, but continued with fudging its accounts. In October 2009, a new government came to power which made the startling disclosure that the deficit was 12.7 per cent. Afterwards came the bombshell — the actual deficit was 13.6 per cent. Greece lost more than its credibility; its bonds were downgraded to junk status.

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