The great EU conjuring trick

Telegraph
"In 2004, with Greece a member of the euro, the conjuring trick was becoming transparent. A new, centre-right government was elected, with Peter Doukas appointed Budget Minister. “I asked the senior staff of the ministry to give me details of the budget that had been passed the previous December,” says Doukas. “I said don’t worry about persecution or anything, just tell me the true story.” The difference between the published deficit and the real one was huge. “[It] was about 7 per cent of GDP. The budget said the deficit was 1.5 per cent. The real shortfall was 8.3 per cent.” Under the Maastricht treaty, member states must keep their budget deficits below 3 per cent of GDP.

So what did he do? “I said we should start chopping down the budget. But the answer I got at the time was: 'We have the Olympic Games in a few months and we cannot upset the whole population and have strikes and everything just before the Olympic Games.’” To meet the deficit, Greece borrowed and borrowed. Banks queued up to lend. The markets did not believe there was a risk of default because Greece’s currency was locked into that of Germany."