Here’s an angle on the Greek financial crisis I hadn’t considered: Victor Matheson, The a member of the Sports Economist group blog, argues that one reason the Greeks wound up in such deep financial trouble is that they went deep in hock to pay for the Olympics:
Greece’s federal government had
historically been
a profligate spender, but in order to join the euro currency zone, the
government was forced to adopt austerity measures that reduced deficits
from just over 9% of GDP in 1994 to just 3.1% of GDP in 1999, the year
before Greece joined the euro.
But the Olympics broke the bank.
Government deficits rose every year after 1999, peaking at 7.5% of GDP
in 2004, the year of the Olympics, thanks in large part to the 9
billion euro price tag for the Games. For a relatively small country
like Greece, the cost of hosting the Games equaled roughly 5% of the
annual GDP of the country.
Of course, the Olympics didn’t
usher in an economic boom. Indeed, in 2005 Greece suffered an
Olympic-sized hangover with GDP growth falling to its lowest level in a
decade.
That would certainly follow the pattern of crazy
civic development projects in which stadiums and museums are supposed to
somehow substitute for everything that is missing in the local
economy. But the governments in question don’t usually end up in receivership.
Fun
Olympic factoid of the day: the television news yesterday reported
that the Whistler ski complex had essentially been developed in the
hopes of the area someday scoring a winter Olympics. I have no idea if
this is true, but it seems both plausible and deeply troubling.
