Athens and after

Financial Times
November 11, 2011

Investors had two numbers to fret about this week. Unfortunately, they sweated over the wrong one. The world stopped as Italian borrowing costs headed over 7 per cent and into bail-out territory. But that was a technical and rather meaningless development: on Friday, the yield had fallen back to 6.5 per cent without anything much changing. No, the really troubling number came from Athens, where it was announced that the official unemployment rate is 18.4 per cent.

Given the dodgy record of Greek statistics, it should be assumed that the real unemployment rate is above 20 per cent. The official rate refers to August, when tourism, and therefore employment, is at its peak. The situation will surely be worse in December. Investors and policymakers need to consider the implications of that.

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