(SOUNDBITE OF SONG, "ONE DAY")
KATERINA MARGARITOU: (Speaking Greek).
CHANA JOFFE-WALT, HOST:
Hello, and welcome to PLANET MONEY. I'm Chana Joffe-Walt.
ALEX BLUMBERG, HOST:
And I'm Alex Blumberg. Chana, welcome back.
JOFFE-WALT: (Laughter) Thank you very much. Good to be back.
BLUMBERG: Today is Friday, December 16. And that was Katerina Margaritou in Athens you heard at the top of the podcast. And, Chana, you are just back from maternity leave. And in true Chana Joffe-Walt fashion, one of the first things you did is you went (laughter) to Greece to do a big, long story, a big, long, impressive story, which is coming up right now.
And you focused on specifically one fascinating building in Greece, in Athens, 46 Peiraios St., where you could argue that the European financial crisis began and where you could also argue it will reach its final act. Now, the final act could be a slow, sober, steady recovery. Or the final act could be full-scale fiscal implosion which could swamp the entire global financial system.
JOFFE-WALT: And what I found when I hung out at 46 Peiraios St. is that which final act it's going to be comes down to office politics. It is, like, the most high-stakes case of office politics you've ever witnessed.
BLUMBERG: That's coming up. But first, our PLANET MONEY indicator with our own Jacob Julius Goldstein, who is also back from a big trip. You were just in China.
JACOB GOLDSTEIN, BYLINE: I was. It was super interesting, but I'm delighted to be back.
BLUMBERG: We're delighted to have you back.
GOLDSTEIN: OK. Today's PLANET MONEY indicator - 387,750. Every week for the past four weeks, an average of 387,750 people have filed for unemployment insurance for the first time. This indicator - people typically call it initial claims, I think - it's a good measure of basically how many people are getting fired or laid off every week. And this number this week that just came out, it's actually the lowest it's been since the first part of 2008.
BLUMBERG: If I recall correctly, the first part of 2008 is not a time that we necessarily want to be comparing ourselves to.
GOLDSTEIN: (Laughter) OK. So it's not a super-high bar that we're setting, but this number is getting better. It's going down. Month after month, we see it keep improving. And even though 387,000, that sounds like a lot of people to be filing for unemployment insurance for the first time every week, there is this huge churn in the labor market where, every week, hundreds of thousands of people get fired or get laid off, and hundreds of thousands of people start new jobs.
So even if you go back to the boom years of the aughts when unemployment was super low, you see that about 300,000 people were filing initial claims for unemployment every week. So yeah, we are definitely still above that level now by a good margin, but the number is coming down. And it does look pretty promising.
BLUMBERG: What happened to you in China, man? You're not the Jacob Goldstein I remember.
GOLDSTEIN: You know, I've got to say, I feel like this pessimist schtick is kind of a bad rap I got. Right? I mean, I started this job in February of 2010. I come in twice a week and say what's going on in the economy. Obviously, it has not been a good time. So I come in. I report bad indicators. But, you know, things seem to be getting better. I'd like to think the indicator's going to start getting brighter.
BLUMBERG: All right. Well, I'd like to think that too. OK. Thanks so much.
BLUMBERG: All right. So to understand why this office, 46 Peiraios St., why so much is riding on what happens there, it helps to remember what happened last week, last Friday specifically. European leaders came out with what they were billing as the definitive solution to the crisis in Greece and to the crisis in Europe in general. It was a pact which has to be ratified.
But if it is ratified by all the European Parliaments, it would make Europe look a bit more like the United States. Europe would have a stronger central authority, and the individual countries would have to abide by that central authority's rules, especially when it comes to their budgets. So Spain or the Netherlands or Germany or whoever would all have to get their budgets approved by technocrats at the European Union.
JOFFE-WALT: Yeah. So that pact raises a lot of questions, basic questions like, how is that going to work? Because if you think about what they're proposing, from our perspective, that means President Barack Obama is going to submit the budget of the United States to some sort of federation headquarters somewhere. And not only that, but if the federation doesn't like our budget, you know, they could come in and insert their people in our country and start running things the way that they wanted.
BLUMBERG: And that's basically what the governments of Europe are proposing, right? How is that going to work?
JOFFE-WALT: And that question is how I ended up in Greece. Greece, in many ways, is already living in this new world. The technocrats are already there because the Greeks were the very first to get in trouble. A few years back, it all started in this building that I visited, 46 Peiraios St., where the crisis began.
KONSTANTINOS SKORDAS: Well, the elections were on 4 of October, 2009.
JOFFE-WALT: This is Konstantinos Skordas. He works at 46 Peiraios St., which is the Hellenic Statistical Agency.
BLUMBERG: The Hellenic Statistical Agency, they gather all the government data and stuff. They put out reports. And they say how much the Greek government is spending and on what.
JOFFE-WALT: Exactly. And they do lots of things. But among other things, this agency prepares a very important number important to our story, and that is the government deficit relative to GDP. And in 2009, the new party, the socialist PASOK party, came in after that election. And they were about to say something very shocking about this number.
BLUMBERG: Yeah. I remember this. They had just taken power. And they came out and said something like, remember how the last guys in government told you the deficit for 2009 was somewhere around 6 percent? Well, they were wrong. The number's actually twice that.
SKORDAS: Everyone here in Greece said, what number is this? It's outrageous, this number. How - what happened?
JOFFE-WALT: So what did happen? I don't understand.
SKORDAS: Nobody knows. Nobody knows.
JOFFE-WALT: But you guys work at - you guys work in the statistics office.
JOFFE-WALT: So, I mean, it just - it seems like, why would you - you're the first people I would expect would know that, would not be surprised by that because you work here.
SKORDAS: Yes. But the people here who were - worked about this model said we did our job very correctly.
JOFFE-WALT: At this point, one of Skordas' colleagues who's sitting in on the interview, Konstantinos Paschalidis (ph), taps my shoulder and jumps in.
KONSTANTINOS PASCHALIDIS: We...
JOFFE-WALT: Sorry, say it again. Start again.
PASCHALIDIS: We were very worried about this. Everyone in Greece cheated, you know? That the...
JOFFE-WALT: That you guys cheated.
PASCHALIDIS: Yeah. Yeah. Yeah.
SKORDAS: Cooking the numbers. Cooking the numbers.
JOFFE-WALT: Did you cook the numbers?
SKORDAS: No. I believe no. But I don't know what the politicians did.
JOFFE-WALT: Alex, let me paint a scene of what's going on in here. So I am sitting with Skordas in this tiny room in the corner of the first floor of the building. And this is the office of the union employees in the buildings. The employees are all unionized, and they have their own little corner office in the very back of the building. And it is, like, full of smoke. It is incredibly smoky. There's tons of people in the room crammed into this tiny room.
BLUMBERG: So it's sort of like a break room a little bit, but it's also...
JOFFE-WALT: It's - no, it's like a VFW bar is what it feels like. (Laughter)
JOFFE-WALT: But it - it's like people are - keep cramming themselves in. And as we're talking, like, the - everybody knocks on the door. And they either get accepted into the room or not accepted into the room. And while we're having the interview, we have this whole audience of men watching us and, like, commenting as Skordas is continuing to answer my questions.
And when he says this thing - when he says, I don't know what the politicians did - this is wildly popular (laughter) with our audience. There's lots of heads shaking and sort of shifting in seats and people blowing smoke to the ceiling, just saying, like, oh, yeah, yeah. The politicians? They played with the numbers.
BLUMBERG: But this number, this changed - the one from 6 percent to 12 percent. This was a much more dramatic change than had happened in Greece before. And it set off a pretty dramatic chain reaction. The people all around the world who loaned money to Greece got spooked, not just about Greece but about some other countries in Europe that also use the euro. Maybe they weren't to be trusted either. And, you know, it set off a continent-wide wave of distrust otherwise known as the European debt crisis.
JOFFE-WALT: Which pretty much brings us to the present, so to that grand plan to solve the crisis. In essence, send the technocrats to supervise in the various countries and, when needed, to take over. This is the plan that they announced with lots of fanfare last week. And it's the plan that's been underway in Greece for over a year. So to understand if it has a real shot at rescuing Europe, it helps to look at Greece, which is a real test case, and to look at the Greek technocrat in charge of fixing this agency.
ANDREAS GEORGIOU: My goal is to make this a competent, boring institution and not to be in the limelight, actually not to have to give an interview like this one.
JOFFE-WALT: Andreas Georgiou is the man in charge of executing the rescue plan in Greece. He's a no-nonsense numbers guy. He is that kind of guy that (laughter) opens an interview by telling you that he would prefer that you disappear.
BLUMBERG: (Laughter) Right.
JOFFE-WALT: He's quite shy. And remember we mentioned this high-stakes game of office politics? It is more like an office war with Georgiou, Andreas Georgiou, the technocrat on the one side - he's this guy sent by Brussels, the capital of the EU. And on the other side of the battle lines, Konstantinos Skordas, the Greek union guy, the old guard, and all that entire crew in that smoky office on the first floor of the building.
BLUMBERG: And the idea - right? - is that these two sides were supposed to work together, right? The technocrat and the old guard - the technocrat was going to come in with, like, the new Brussels way of doing things. And the old guard was supposed to sort of give them - give him the numbers. And they were all going to work together and build this statistics office back up, make it the kind of place where the number doesn't suddenly double overnight.
JOFFE-WALT: That was the idea, and it lasted exactly one day - August 3, 2010.
GEORGIOU: Well, things appeared to be difficult, actually, in some areas from the very beginning.
JOFFE-WALT: The difficulties Georgiou, the technocrat, is talking about all boiled down to this. He thought, here I am. I have arrived. I am the chief reformer. I have been put in charge. Skordas and everyone in the old guard said, not so fast. Georgiou thought, I'm going to come in. I'm going to start poring over the books and get to the bottom of that deficit number. It's how I'm going to spend my very first day.
But instead, he winds up in a meeting with Skordas and the others that goes on all day long. Georgiou, the technocrat, could not believe how long this meeting went on. But Skordas, the old guard - just listen to how he remembers it.
SKORDAS: The time was very little. I couldn't understand what kind of person he was.
JOFFE-WALT: Day two, Georgiou got to the numbers. He got to do what he had come to the statistics office to do - to look at the government numbers and figure out what was going on, and specifically, to look at that 2009 deficit number. Georgiou was going to spend all of day two settling the matter. He would calculate the true government deficit number. So he sits down. And within minutes of sitting down with the data, Georgiou realizes he's going to need a lot more than one day.
GEORGIOU: Yes. In order to be able to count what is the deficit and the debt, you have to know what you're counting. You have to know which institutions belong in this concept called government. So that was, for example, an open question.
BLUMBERG: (Laughter) Wait. What do you mean, an open question? I thought it's either part of government or it's not part of a government, right? That seems to be pretty straightforward.
JOFFE-WALT: No, but that's the thing. First, he found a national train company that wasn't included in the government numbers, and he couldn't figure out what was going on there. Then he found a national TV company that wasn't documented anywhere, then an agricultural insurance program that was left out. There's a tourism organization, an electric bus company.
GEORGIOU: We found out 17 institutions, large institutions, were left out.
JOFFE-WALT: Why would they have been left out?
GEORGIOU: I do not know. But this is the situation what I found. In principle, this should not happen.
BLUMBERG: So in other words, it sounds like Georgiou, the technocrat, is checking the old guard's work and finding that they didn't do a very good job.
JOFFE-WALT: Yeah. But he does feel like he can sort out the true number. He can apply his Brussels-based procedure and figure out what the actual numbers are. And finally, at the end of last year, Georgiou and his staff had a new deficit figure to report to Eurostat, to the European statistical agency, for the 2009 government deficit - final number, 15.8.
BLUMBERG: So wait. So the original number's 6 percent. It gets doubled to 12 percent or something. And then I think they raised it again after that to 13 percent. And then he's coming in and saying it's almost 16 percent?
JOFFE-WALT: Yes, he is. But to be clear, Eurostat, the European-based statistics agency, says this is actually true. This number is the real, grown-up, European number. They praised Georgiou's methodology. The thing is, the hundreds of people who work beneath Georgiou's seventh-floor office, though, the old guard, did not feel the same way.
SKORDAS: Everybody said, oh, what number is this? We expected to discuss this matter. Some peculiar words he told to us. And we had a lot of questions about it.
JOFFE-WALT: This is the moment where those office tensions erupted into actual fighting. And the fighting took place in a meeting of the statistics office governing board. Skordas, who you just heard, the old guard guy, he was 1 of 7 people who were on this board. They were something like a board of directors. And there was a lot of fighting over the role of this board.
Skordas and the rest of the Greek board members wanted the board to be involved in anything that got reported about Greece, and they wanted a say in the number before anyone talked to anyone in Brussels.
BLUMBERG: Certainly before anything goes to Eurostat, which I'm gathering is sort of like the principal or something. (Laughter)
JOFFE-WALT: Exactly, yeah. They wanted to discuss long before that happened. They wanted to debate. And they wanted to vote on the number. And Georgiou saw this as a threat to his independence. He said, you don't get to vote. This is not how it works.
GEORGIOU: They would want to approve this figure. They would vote yes or no whether this should be released to Eurostat.
JOFFE-WALT: What would have happened if they voted no?
GEORGIOU: I do not know. I never allowed it to happen. I refused, actually. I explained that this was not consistent with the principles under which statistics in advanced economies are being compiled.
JOFFE-WALT: And did that work? Did that convince them?
GEORGIOU: No, it didn't. It was a matter of contestation. But then something happened which was absolutely shocking.
JOFFE-WALT: Georgiou says a few weeks after he sent the new deficit number to Eurostat, one of his staff members, a union colleague of Skordas, sent him a note and asked to see him.
GEORGIOU: And presented me with a document that only existed in an email communication between me and my lawyer through my personal email. And I said - I didn't say that he has hacked into my emails. I said that this is the product of a criminal act. And the answer that I got was that things like that happen.
JOFFE-WALT: What? Things like what happen?
GEORGIOU: That things that are in my personal email could find their way around, said things like that happen in Greece. And I told him that, you know, they don't happen in my country, or at least they shouldn't happen in my country.
JOFFE-WALT: And, of course, that is really what this whole thing comes down to. What should happen in Greece? What does it mean to be Greek? And who gets to answer that question? Because you have Georgiou, a Greek citizen who hasn't been in Greece for a long time, who kind of brought in the European vision. And on the other hand, there's Skordas and the old guard who have worked here for decades. And they feel like they should get to have a say in, you know, what gets said about Greece to the rest of the world and what gets reported.
I did try to get in touch with the person Georgiou has accused of hacking into his email. The guy's lawyer said he wasn't going to talk and that he denies everything Georgiou just said. Georgiou went to the police, though, and the police agree. Someone did hack into his email.
GEORGIOU: The police characteristically said, this person who - the intruder enters your email more than you do.
JOFFE-WALT: Just to show you how bad things have gotten, Alex. When I asked Skordas about the email hacking, he denied that it was his colleague, his union colleague. And he also denied that it happened at all.
SKORDAS: I don't know a lot of much about this emails. I don't know. I don't believe something like that. I don't believe.
JOFFE-WALT: Why not?
SKORDAS: Because it's too difficult. Who would do - would something like that? I don't believe that someone stolen his emails.
BLUMBERG: All right. So at this point, this process - sending in the technocrat to bring everyone in line - this process, which is at the center of the plan to rescue Europe, seems to be going pretty badly, right? The technocrat is dismissing the old guard he's supposed to be working with. The old guard is distrusting the technocrat, saying, you know, the hell with you and your fancy Brussels ways. Tension is giving way to outright hostility, which is giving way to cybercrime.
JOFFE-WALT: Yeah. It actually gets worse. So after the alleged email hacking, that was the end of the board. Georgiou changed the law. So he got rid of several people who were part of the board. That led to strikes. So you have these, like, statistics office workers walking around on a picket line, striking against Georgiou.
BLUMBERG: And just so I understand, this is, like, economists and, like, the budget wonks and stuff like that. They're all in a union, and they...
JOFFE-WALT: Yeah. Mathematicians.
BLUMBERG: ...They're all outside his office, picketing.
JOFFE-WALT: Exactly. And, at one point, actually occupying the building and shutting the doors so nobody could get in and go to work. That happened too. And then we have our beleaguered technocrat who's had his email hacked. His staff launched two strikes. And then he gets a phone call.
GEORGIOU: Well, the first thing that I heard was I was asked to provide documents.
JOFFE-WALT: Asked by who?
GEORGIOU: I was asked by the prosecutor for economic crimes.
JOFFE-WALT: The prosecutor, Georgiou says, explained that the office planned to clarify that contested 2009 deficit number. And Georgiou immediately sent over 75 boxes of documents that explained how he calculated the number.
GEORGIOU: And a few weeks after that, I got another letter asking me to appear in front of the prosecutor. And to his - to my surprise, I - they asked me where my lawyer was. And I asked why I needed a lawyer. And they explained to me that I was being invited as a suspect, not as a witness.
BLUMBERG: Wait a minute. He's been accused of a crime?
JOFFE-WALT: Yeah. He accused someone else of a crime, and now he's being accused of a crime. He's being investigated. And if he's charged, he could potentially face a life sentence.
GEORGIOU: Potentially under something called breach of faith against the state.
JOFFE-WALT: So Georgiou's being investigated for being - basically being in cahoots with Eurostat and European leaders and deliberately trying to make Greece look bad by reporting an inflated deficit number so that the European authorities would have a justification to come into Greece and take over and kind of run things the way that they want to run things.
BLUMBERG: If this were a police procedural, I would ask, what's the motive?
BLUMBERG: I mean, does he have a motive?
JOFFE-WALT: Well, he's on the technocrat's team. So if he has a particular way that he wants Greece to run and it's the technocratic vision, then I suppose he could want to make the number look really high so that they could say, you need bailout. And you have to have austerity.
BLUMBERG: I see. Right.
JOFFE-WALT: And you have to do it the way that we want.
BLUMBERG: Right, right. OK.
JOFFE-WALT: But the - I mean, the weird thing about it is that Georgiou is also Greek, right? He's a technocrat, but he is Greek. He was born in Greece, although he's been away for a long time. But he talks about taking this job as fulfilling a sense of patriotic duty.
GEORGIOU: It feels really surreal to hear these things. To be honest with you, it is so absurd that sometimes it is difficult to get angry.
BLUMBERG: So if what is happening in Greece is a test case for the rest of Europe, it's not looking good. I mean, you send in the technocrats, they get ignored, resented, harassed and possibly thrown in jail for the rest of their lives.
JOFFE-WALT: Or, if you're - if you see it from the old guard's perspective, you have outsiders coming into your country who don't want to do things your way. They don't even want to be involved with you, really. And they're coming and taking over your country.
JOFFE-WALT: OK. So meanwhile, there's an actual statistics office that's supposed to be producing numbers. Right? This office war takes a huge amount of time and energy. When I was there, Georgiou, the technocrat, he was preparing his testimony for the office of economic crimes. And he was sitting at his computer for hours to do that.
So there's nobody left in your office?
GEORGIOU: No. It's - now it's just me and my computer. And getting ready to go home, packing my bags because actually I need to do still a bit more work tonight. I will need to take some of my work home.
JOFFE-WALT: You're taking work home?
GEORGIOU: Yes, I am.
JOFFE-WALT: Have you noticed what time it is?
GEORGIOU: It is four minutes to midnight.
JOFFE-WALT: Totally normal for you?
GEORGIOU: (Laughter) Unfortunately.
JOFFE-WALT: At the moment, the war between the technocrats and the old guard has gone back to a cold one. They've each sort of dug into their floor of the building, plotting, resenting and definitely not working together. Here's Skordas, the old guard, talking about Georgiou.
SKORDAS: He behaves like I'm not existing. I know that the relationships between him and Eurostat are very good. Eurostat - but Eurostat wants to rule every service. Why?
JOFFE-WALT: Why not?
SKORDAS: Why not? Because each country is independent. It's not - we are not part of the Eurostat. We are part of - we are a service of Greece. We are not service of Eurostat.
GEORGIOU: To me, there is no Greek statistics versus European statistics.
JOFFE-WALT: Again, this is Andreas Georgiou, the technocrat.
GEORGIOU: It's all European statistics. There is not us and them. We are not sitting on opposite side of the table.
BLUMBERG: Although, for the moment they do appear to be on opposite sides of the table, right?
JOFFE-WALT: They're not at the same table.
BLUMBERG: No. So, Chana, when the European leaders met in Brussels on Friday to make their big, huge announcement about how they're going to save Europe with this new pact and how part of that pact was going to be making individual countries fall into line more with a European model, you know, that's already in the works in a lot of these countries at the top levels.
Mario Monti, the new prime minister of Italy, he's a former European commissioner. And in Greece, there's also a new technocratic prime minister from the European Central Bank. So that's what's happening at the high levels. But if what's happening on the ground with Georgiou at 46 Peiraios St. is actually the test case for this new strategy, I mean, is it working? Is Georgiou winning?
JOFFE-WALT: I think if he goes to jail for treason, I think we can say, no, it's not working. But I mean, maybe. If he sticks it out, if he stays at the statistics agency, it could, down the line, potentially reform and work.
BLUMBERG: After all he's been through, is he going to stick it out?
JOFFE-WALT: He - so I asked him. He said - immediately he says yes. But then he sort of came in with the modifiers, saying, yes, as long as I am the chief statistician, and yes, as long as we follow the European rules, I will stay.
(SOUNDBITE OF SONG, "ONE DAY")
SHARON VAN ETTEN: (Singing) You don't want to see. You don't want to show.
JOFFE-WALT: I think that does it for us today. We would love to hear what you thought of the show. You can send us email at email@example.com.
BLUMBERG: Or you can find us online, npr.org/money, or find us on Facebook or Twitter. I'm Alex Blumberg.
JOFFE-WALT: And I'm Chana Joffe-Walt. Thanks for listening
(SOUNDBITE OF SONG, "ONE DAY")
VAN ETTEN: (Singing) Oh, one day I'll be fine with that. Oh, one day I'll be fine with that.
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