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Victoria Mindova

A series of changes have started in Greece due to the beginning of the crisis and after the Greeks have suddenly found that they are close to bankruptcy. One of these changes was the introduction of strictly economic terms, familiar to experts and financiers, in the vocabulary of ordinary people. Suddenly they all became financial analysts and economists. It is easy to answer the question "How did this change come and how was it brought in Greece?"
 
After the Prime Minister George Papandreou came out and said, "There is no money and we are sinking like Titanic," all the Greek media news left behind cross-party fights and scandals, and there began a daily survey of the macroeconomic indicators of the country to details, which were of almost no interest to the average Greek until recently. The first news was about how Greek bonds are sold, about the movement of the stock exchange index or what changes the Government plans, before it itself issues an official statement about them. Remarks such as "These credit agencies are to blame for everything" or "Now they think of the size of our foreign debt and raised the spread" could be heard in the buses and underground, in the market and the shop, at work and even on the beach. Even a 92-year-old friend of my mother-in-law told me one day: "Any such speculators as Moody’s-toodis ruined Greece."

So, the new Greek slang began to take shape about a year and a half ago and terms like spread index, foreign debt, deficit, credit rating agency, controlled bankruptcy and other previously unheard words have become part of the everyday speech of the Greeks. If we have to look at things from scratch, we have to go back to the early months of George Papandreou ruling, who, having taken the power in the autumn of 2009 found that there is no money. Contrary to his election promises. What does it mean that there is no money, asked the Greeks themselves, who have been living in a well-maintained financial ease in the last ten years. They did not ask why we have money or where it comes from. Just we're rich, and this is it. Yes, but no.

Without examining why people in Greece lived in the delusion that they have money if they produce a lot less than they consumed, we come to the first term, which slapped the Greeks at the beginning of the crisis. Budget deficit which is the difference in the revenue and expenditure of a country. In the beginning before the crisis it was thought that its value was close to the permitted rate for the euro area countries, or about 3% of the GDP. After searching a little, it turned out that maybe it was about 7% of the GDP actually. Skipping several stages of surprise, we come to the final disclosure of the European Statistical Office (Eurostat). In November last year after a long examination of the Greek papers, Eurostat found that the deficit for 2009 was whole 15.4% of the GDP, or five times greater than the rate established in the union (3%). So, the Greek authorities have hidden the truth for the local finances under the carpet for a long time so as to please Brussels.

So, the protruding thread of the inaccurate data about the budget deficit began to unravel the vest of the Greek economy. Countries that collect less revenue than they need should borrow. In our case, Greece sells government bonds for a certain period of time for which it receives the necessary loans to cover the gaps in the budget. As part of the 16 countries using a single currency – the euro – the interest rates on these loans are compared with the interest rates on loans to Germany. The difference between the two interest rates is called spread. It began to grow rapidly and the Greek lending rates came close to those of credit cards, almost 11%, when Germany could borrow money at an interest rate of about 3%. So, while the spread of Greek government bonds acquired monstrous dimensions, the libido of the Greek government got completely low.

Greece fell into disgrace with the capital markets, which are not different than banks, investment or pension funds availing a large amount of money and they want to multiply it by investing in various securities for a shorter or longer period of time. Such securities are the Greek government bonds, which unfortunately ceased to be attractive to potential investors due to the above troubles. To guarantee the interests of investors that lend money to various organizations or countries, the global financial system has established the credit rating agencies such as Moody's, Fitch and Standard & Poor's. Unfortunately, they were not very profound in forecasting the global economic crisis in 2008, when Lehman Brothers collapsed in the U.S., which made them much more careful afterwards.