Topic
That's one looming disaster scenario as Greece, crushed by debt from hosting the 2004 Games, threatens to topple international lenders.
Greece could pull other nations down.
Labour economist Jim Stanford focuses on workers, not paper wealth.
And government's new number, $4 billion, is based on a seven-year-old 'best case' scenario that hasn't panned out.
How business saved the Games by turning them into a tightly controlled, billion dollar advertisement.
As tales of 2010 glory dominate the media in balmy Vancouver, a very different Olympic-related story is unfolding on the other side of the Atlantic. The fragile recovery of the global banking system is now threatened by a potential default by debt-laden Greece that could cascade throughout the EU, and the world.
Greece's crushing debt problems can be traced back to the 2004 games, which cost the smallest nation to ever host the Olympics a whopping $15 billion -- double what was originally predicted.
In 2002, the Greek deficit was a manageable 1.4 per cent of GDP. But as pre-Olympic spending kicked in one year later it had more than doubled to 3.2 per cent -- well above the limit for Eurozone members.
'Throwing acid'
Even as Greece was seemingly bankrupting itself hosting the games, the International Olympic Committee (IOC) President Jacques Rogge admonished the nation for "overly ambitious and lavish spending."
A Greek newspaper at the time characterized Rogges's comments as "throwing acid" at the nation, and pointed out "much of what is now presented as decisions by Athens was, to a large degree, dictated [by the IOC]." They also warned "the Olympic legacy could prove even more painful if we are to believe the projections of experts" and costs would "confirm the most ominous forecasts."
Six years later, the Greek deficit has ballooned to 12.7 per cent, more than four times the legal limit set by the EU with no end in sight. Nervous creditors are threatening to jack up already lofty lending rates, making a dangerous situation worse.
Most Germans now favour dumping Greece from the EU rather than a bailing out the nation if it fails to secure refinancing on global equity markets. That would be bad news for British banks, already battered by the sub-prime crisis, that currently hold 20 per cent of Greek bonds. Other debtor nations in the EU such as Portugal and Spain are watching (and being watched) anxiously.
The risk of 'contagion'
In economic circles, this type of unstable situation is called a "contagion" -- similar to what happened in 2008 when bad real estate loans in the US spilled around the world and almost lead to a collapse of the global financial system.
"The real worry is the banking system," said Charles Wyplosz, Director of the International Centre for Money and Banking Studies in Geneva.
"Some European banks hold part of the Greek debt and, if still saddled with unrecognized losses from the sub-prime crisis, some might become bankrupt," warns Wyplosz.
"Contagious debt defaults, along with bank failures, could lead to a double-dip recession in Europe, possibly affecting the U.S. as well. If that were to happen, with the interest rate at the zero lower bound and fiscal policy not available any more, we could face a terribly bad situation."
This chilling scenario illustrates the vulnerability of our interconnected banking system, where a relatively small financial crisis in one country can cascade throughout the world.
Keeping up with the neighbours
In that light, perhaps the Olympics themselves have become a financial contagion -- a dangerous globetrotting debt machine that threatens world security. Hyperbole? Consider the ballooning costs of hosting the Olympics and risks posed each time a massive local debt in incurred, which for a variety of reasons might not be re-paid to the world's bankers.
Beyond the normal crapshoot of global credit markets is the perceived imperative that host cities must provide an unprecedented extravaganza, whether they can afford to or not.
Keeping up with the Joneses has lead many a household to bankruptcy and the same vanity applies when countries aim to outdo each other every Olympic cycle. The massive spending spree by Beijing demonstrates how normally thrifty governments spare no expense when strutting their stuff to the world.
The 2008 games are estimated to have cost $43 billion -- three times more than any other Olympics. Two years later, many of the iconic venues such as the Birds Nest Stadium now sit empty and unused. Only two events were held there in 2009 and the current owners plan to turn the 80,000-seat arena into a shopping center.
While the tab for the Vancouver games will not be fully known until long after the world departs, the city has already seen it's credit rating downgraded when it was forced to step in and bankroll the $1.2 billion Olympic Village, now $250 million over budget.
Other cost overruns such as security and delivering snow by helicopter to Cypress Mountain will add to the hangover. Creditors threatening to foreclose on the Whistler Blackcomb Olympic ski venue in the middle of the games further demonstrates how far the world has shifted since the hey day of bottomless budgets.
The next city to pony up the Olympic tab will be London, where projected costs have already ballooned four times above original estimates to more than $15 billion. Some observers worry they may eventually top $20 billion. Olympic planners are already drastically scaling back facilities due to collapsing support from private partners and the ongoing credit crisis.
Each time such rushed and irrational Olympic infrastructure is built, there is a danger that someone somewhere won't be able to pay their bill when the party is over. In the case of Greece, their Olympic-related debt crisis now threatens to spill into the beleaguered British banking system and perhaps the world. It does not help that the IOC exists in ethereal state of enormous power and virtually zero accountability. The opaque body based in Geneva has a budget in excess of $4 billion yet was recently ranked as the least accountable organization in the world, behind Halliburton, NATO and the International Atomic Energy Agency.
This lack of transparency coupled with enormous sums of money associated with games created conditions where corruption was almost a certainty. Ten members of the IOC were forced to step down in the wake of the 1998 games due to allegations of bribery.
A 2005 investigation of the Nagano games found that city had spent more than $4.4 million to entertain IOC members during the bidding process, or an average of about $46,500 per member. More might be known but the records were burned.
Olympic organizers and sponsors have become supremely adept at self-promotion and there is no doubt they have a great deal to work with. The inspiring and heroic efforts of the athletes are an almost irresistible spectacle that rightly draws adoring audiences from around the world.
But beyond the virtue of sport, perhaps we should ask whether the games as a self-perpetuating franchise have become so commodified, commercialized and occasionally corrupt that they are actually dangerous. Besides being merely exceedingly expensive, maybe the "Olympic Movement" has become a credible threat to global economic security.
As Athenian doves fly home to roost, we will soon see whether their wing beats will result in a hurricane. ![[Tyee]](http://thetyee.cachefly.net/ui/img/ico_fishie.png){kind=small}
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make_up_another...
3 years ago
On Economic Integration
I'm thinking that the Olympics alone are not responsible, but certainly not helpful in Greece's case. There is the larger problem of the Euro. They are restricted in what they can do by being tied to the Euro. They have choices ranging from bad to worse, all of which spell austerity measures. The usual prescription for 3rd world debtors, which is basically giving up some soveignty.
The only way to keep it is to walk away from the Euro, go back to thier own currency and face the economic consequences. It's not a good solution, but it's the one that allows Greece to function as a nation instead of a debt slave.
At least it could serve as a lesson to others on what happens when you effectively give up control for the promise of economic integration.. ahem..nafta..ahem...
I mean, the US didn't become a superpower by negotiating fair trade agreements.
Jeffrey J.
3 years ago
This Concept Gaining Resonance
An excellent article about a concept which is gaining resonance elsewhere. And as Canada faces its own economic pyramid scheme, the $6 billion cost of the Olympics could very well become the straw that breaks the back. See also: "What Bankrupted Greece? It Was The Olympics!"
http://www.businessinsider.com/what-bankrupted-greece-it-was-the-olympics-2010-2
"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."
Great coverage.
Booker
3 years ago
Problem much broader than Olympics
Paul Krugman argues that all of Europe is in trouble because of the adoption of a single currency, especially Spain:
"Greece, of course, is in even deeper trouble, because the Greeks, unlike the Spaniards, actually were fiscally irresponsible. Greece, however, has a small economy, whose troubles matter mainly because they’re spilling over to much bigger economies, like Spain’s. So the inflexibility of the euro, not deficit spending, lies at the heart of the crisis."
http://www.nytimes.com/2010/02/15/opinion/15krugman.html
stver
3 years ago
The Olympics
Maybe it's time to genuinely consider the idea of holding the Summer Olympics permanently in Greece.
It would get rid of all the infrastructure costs, as Greece has built them for them for the 2004 Games; it would eliminate the cronies who fly around the world to evaluate which place should hold the games; and it would enable the athletes to compete in the same facilities every four years, which would be great for evaluating and comparing performances. Most people are watching the events on TV anyway, so for us common folk, it makes no difference where they hold the Games.
So, after Rio, let's put them in Greece permanently.
Dr Alexander
3 years ago
Interesting perspective Mitchell, but Booker...
Paul Krugman? Guys like him are part of the problem.
make_up_another... looks like you have read your history. Indeed, so-called fair trade agreements are usually the beginning of the end for the middle-class.
Irish-Will
3 years ago
Not world economy
Iy may have an effect on our economy. What ensures that it may - is the negative comments.
From Canadians, to foreigners, to TV talk show hosts, to bitter athletes, a few international newspapers including online, and a select few opportunistic journalists including a Canadian freelance type, we need to consider the sources. Well at least that is the high-road Canadian approach.
Complaining and finding fault with the Olympic games is a tradition that goes back decades. It is a reflection of how people are feeling generally, using the games, and in this case the good natured Canadians to vent frustration on.
As Canadians we have a reputation for being polite and easy-going, as it reflects our nation's general approach to...well, everything. We are passionate about our individual cultural heritages, and take huge pride that we are a country of forward-thinking people, with innovative ideas and exceptional talent.
People complain when Canada doesn't do enough. They complain when Canada does to much. Remarks from the UK are particularly insulting to me as it is their wars, their monarchy, their mistakes, that Canadians support, usually without reserve. Canadians are also very generous not only with their time and resources, but with also doing what they can for countries like Haiti in their time of need.
Rest assured that what goes around comes around, and in 2012, London and England will be on the receiving end of remarks. Chances are, they will discover that Canada will not join in with the remarks made then by others. Why? Because Canadians is better than that.
I'm Irish, and being an emigrant to Canada who has adopted the majority of good Canadian virtues, I have remained in touch with my inner Ulster man as outspoken and opinionated. So that in mind - I say to the complainers, whiners and opponents, "shag-off!!!!"
Copernicus76
3 years ago
A few further questions...
Nice piece however I would draw your attention to some points you make:
QUOTE: “Most Germans now favour dumping Greece from the EU.”
QUESTION: When you say most Germans, are you talking about the people, the government, or the banks? The link points to the story which says: “A national bankruptcy in Greece would have a serious impact on Germany, where many banks have invested heavily in the high-yield Greek treasury bonds—after borrowing the money to buy the bonds from the European Central Bank (ECB) or other central banks at rates of 1-2 percent. Making money doesn't get much easier—as long as the Greeks remain solvent.”
QUOTE: “The 2008 games are estimated to have cost $43 billion -- three times more than any other Olympics. Two years later, many of the iconic venues such as the Birds Nest Stadium now sit empty and unused. Only two events were held there in 2009 and the current owners plan to turn the 80,000-seat arena into a shopping center.”
QUESTION: The mass media seems to be suggesting that China is the one country that is already out of the global recession. Seems silly to be using China as an example when in fact their communist regime is a disparate comparison to Greece, Vancouver, Turin, Sydney.
Reading from the other links it appears that sketchy banking practices, massaging of figures to secure EU admission and perhaps the financial viability of the Olympics is more to blame for Greece’s burgeoning debt however it is also pointed out that “Next year they expect the economy to return to grown, albeit modest.”
Growth is good right? Even modest growth?
I am flummoxed however in how you finished the piece with your suggestion that the Olympics Movement may be “a threat to global economic security”. If could possibly outline a further case for this I would be very interested in reading it.
Warmest regards
bfearn
3 years ago
Olympic $$$
How governments spend billions of dollars matters and hosting a little more than a week of games for that amount of money is not a good way to spend tax dollars simply because games are unproductive and have no lasting value. Of course governments could never pull this type of expenditure off if the taxpayers were told the truth. Tragically the politicians always underestimate the true costs, the media supports anything which will improve their bottom line and many taxpayers shut off their critical thinking and buy into the charade. Citizens who support taxpayer funded expenses like this simply fail to see what could be done with these vast sums. How a free university education for 400,000, or day care for 200,000 kids for 10 years, or a real good start to high speed rail, etc. etc. Olympic supporters nned to think before they blindly support anything that reeks of patriotism.
Kalindi
3 years ago
I think it is time for a
I think it is time for a serious , organized group of citizens to work on dismantling or reorganizing the IOC, which is full of corrupt businessmen anyway (see Vancouver article about Australia's kangaroo flag, or what was tacked on to it anyway). This intention will be to drastically lower the financial expenditure required from the Olympics, resulting in simpler venues and simpler plans, but still maintaining the concept of the atheltes.
I think that the earlier person's comment that the olympics should be held only in one place is a brilliant idea. . .
here in vancouver the majority of the citizens cannot see atheletic events anyway.
if during the time of the olympics various cities choose to set up cultural expositions , then why not, it could be come part of the worldwide effort, without the crippling expense of bidding and building.
demotto
3 years ago
As long as
As long as the Bankster Gangsters are permitted to create money out of thin air and we the people are gullible enough to borrow the fictitious money and pay interest on it which is nothing more than the theft of our labour the debt can never be paid off as the money to pay the interest is never created. The only way under the current system to actually get rid of the debt is to discharge the debt by accepting the Bills so the accounts can be zeroed. Unfortunately people will continue to borrow money created out of nothing simply by our promise to pay which is the only thing of value in a so called loan. All the Bankster Gangsters are is a middle man for us to access our credit as all money is only by the credit and good faith of the people. Carrying on as we are will lead to the enslavement of us all. Wake up people. They hide none of this from us we are just not educated enough to glean the reality of it out of all the Acts and Statutes. This is by design. I CARE NOT WHO IS IN GOVERNMENT AS LONG AS I CONTROL THE MONEY. Just one of the truths the Bankster Gangsters of the world have spoken.
edh
3 years ago
The games are no longer for
The games are no longer for the athletes. Although the athletes spend a good part of their life to train and qualify,it's the politicians and organizers who cost the most. Sure the athletes are impressed by all the beautiful sites and grandiose puffery, but they are there to compete and they know it. They are a small cog in the overall olympic picture. The big cogs are the politicians and the organizers who are using the athletes to stage their grand show. Contracts to this friend or relative etc etc etc.
Jerry Munro
3 years ago
The Fly In The Ointment...
When all capitalist countries opted for the corporatist version of globalization. under the influence of Neocon (neo-liberal) economic assumptions, which in this country included the Liberals, and even the NDP (in practise), given up was the right of each country to protect its own economy and jobs with tariffs, foreign ownership restrictions, and control of their own resources, and monetary policy. The consequence of which is only now becoming clear. Being that as other aspects of this Neocon view of the world and economics resulted in radical income declines for the masses and entire industry losses, especially for the advanced capitalist countries, with increasing reliance on the cheap labour of the Third World for the manufacture of real "goods", all countries of this same world were thrown into instability and steep overall decline.
And once this process was begun, because of the dynamics and regulatory regime of this globalization, no individual capitalist country was allowed/ able to act independently to protect its own national economy as they historically had, and the national interest of its own citizens, or is severely restricted. (Amerika, of course, occupying its special Empire privileged position, has "more or less" been exempted, if not entirely spared either.)
The end result has been, that when one or more, especially pivotal national economy went down, again especially Amerika, with bursting housing bubbles, financial system corruption, and/or interest rate and currency destabilization as other consequences, all countries of the capitalist world have or are in the process of going down likewise. Each, under the diktats of the regulatory regime of this new global capitalist economic order, especially for fear of offending Amerika, Germany, Britain or France, like Greece currently, is powerless to react in self defence. At least so, without breaking ranks and earning the ire and isolation of the entire global capitalist system.
So their is evolving a great overwhelming sense of helplessness out there, which works right down to the individual working masses citizenry as well. And it will be so until eventually, under threat of a great working class revolt, one or more capitalist country is forced to break ranks.
And when that happens, the entire global system upon which capitalism has gambled its claim to the future, will begin to unravel and implode.
Watch for it. It will be the opening break opportunity into an alternative future for "the common people", if the organizational means and level of understanding be there. (There is, or has always been a fly in the ointment, of course. Which keeps bringing us back, again and again. to this question of the "level of understanding" of the ordinary citizenry.)
Jerry Munro
3 years ago
North America's Ukraine
Most likely, I suspect, the Olympics is more likely to destabilize BC's economy, and perhaps flowing therefrom, Canada's economy. But then, we are about on a level with Greece anyway, though our potential is greater, had we governance with balls/ovaries. Though really, politically and in terms of our economic dependence, we are more comparative to the Ukraine vis a vis its relationship with Russia. Or Tibet with China.
Dr Alexander
3 years ago
Irish-Will, you feel the likes of myself should "Shag-Off"?
I don't blame you. However, I can just imagine how rough-shod politicians and corporations would be running over all of us if we did not complain.
I am happy for your contentment. In fact, if you are so content with everything, then feel free to pay off my portion of Olympic-related debt.
That would make me content. The we would be two happy lads in contentment together. Perhaps toasting our contentment with a Guinness. I would even let you pay for mine.
Dr Alexander
3 years ago
The Olympics and the Global Economy
The IOC, in their arrogance would probably like to believe that they are so big that they can fail countries.
Actually, it is quite astounding that, in this day and age and present economic conditions, any city (and involved country) would actually want to host the Olympic Games given the enormous down-side for most of the populace.
At any rate, with regards to tanking the global economy, quite seriously Mitchell, Goldman-Sachs is doing a good enough job of that.
mopled
3 years ago
On the IOC...what an elitest outrage.
In the last four years (2005-2008), the International Olympic Committee (the owners and controllers of "Olympics, Inc.") generated nearly $6 billion of revenue. For the next cycle, revenues are on track to be significantly higher, with Vancouver already doubling Turin for domestic sponsorship.
It's enough to make you look twice at the IOC, which is based conveniently in tax-haven Switzerland.
Although the IOC is a non-profit organization, employment ("membership") in the organization is a cushy job with many benefits.
Where does all that money come from and go? Is anyone making a profit? And who put the IOC in charge anyway?
http://www.businessinsider.com/olympics-inc-inside-the-business-of-the-ioc#technically-the-international-olympic-committee-is-an-organization-that-promotes-olympism-it-makes-more-than-1-billion-a-year-doing-it-1
There are 13 pages of text.
vancurber
3 years ago
Greek Debt
Greece's debts are 400 billion, of which 15 billion is due to the olympics. That would assume that this money was just burnt, and created not economic activity that offset the payments. Clearly the olympics did not cause their current economic problems as the olympics happened 6 years ago. Also, Vancouver's olympics created worthwhile infrastructure like the Canada line and a new convention centre, and an improvement to a dangerous sea to sky highway. Reports show that BC's economy will grow 3% + this year, mainly due to the olympics.
newphorik
3 years ago
Make Greece a Permanent Home
Make Greece a Permanent Home To The Olympics
New group started on Facebook.
freebear
3 years ago
The global economy will undo the global economy..
and the greedy and relentless pursuit of more and more!
dorothy
3 years ago
Ah, yes, the understanding, devil and the details and all that..
"There is, or has always been a fly in the ointment, of course. Which keeps bringing us back, again and again. to this question of the "level of understanding" of the ordinary citizenry."
You are so right, unfortunately, or we would not be seeing this one again and again:
"Governments could never pull this type of expenditure off if the taxpayers were told the truth."
This is my query: Who rations the truth? Who prevents us from knowing it? No one. We know it in our bones. We know it from History. And we know it from our grandparents.
Oooops. Most of us don't have grandparents. They are out there doing their own thing, jetting. And most of us don't know History. It ain't in the curriculum anymore, at least not mandatory as it should be. And as for bones - a staggering number of people can't stick a twig into a turd without ruining them both.
EDUCATE, EDUCATE, EDUCATE. If there is anything I believe that it is the one and only way out of the mess we're in.
Jerry Munro
3 years ago
Reality starts the morning after...
"...and an improvement to a dangerous sea to sky highway. Reports show that BC's economy will grow 3% + this year, mainly due to the Olympics." Vancurber.
Again, this is like the claimed six billion or so people who are going to watch and be influenced by the Olympics. This is all speculation on paper. (This system of Casino Capitalism often plays with and uses paper like it was reality.) There is no way they can really "know" this with any reliable degree of accuracy. It is as much about complex speculation, like the Stock Market Casino.
Likewise, this +3% growth based on the Olympics. This is all again based on paper assumptions, none of which is really knowable or certain, certainly not with certain accuracy yet. What makes economic science such a near voodoo science, often later proved wrong or with disastrous miscalculations is that there are so many goddamn variables, like predicting the weather, that muddies real predictability to the micro level. (Meteorology, for example, is only "reasonably", even then, accurate, to about three days out.
Trends, or a main line of development, can certainly be predicted more accurately, but even then, it's all about like trying to read tea leaves or the pattern of scattered chicken entrails in the dust more often.
As for the end outcome of the minimal "infrastructure" developments coming out of the Olympics, a more jaundiced view is called for, I think. There has been yet no dramatic change to the main line of crisis development within capitalism, no really greater numbers of lasting "good", non-minimum wage, something better than freebie "volunteer"jobs has been created.
The stagnation and greater trend line of economic decline that was there before the Olympics, and still even largely exists across the entire system during the games, is still going to be there the day after. Except for the "debt" hangover, of course, the size of which we will begin to truly see and feel only the morning after this ruling class piss-up. For now, "the system" is still high on all the "magic smoke" it has taken in over the course of the party still going on. And which has influenced and is still influencing the capacity for objectivity of its brain.
It is tending to see what it wants to see. (Especially when it is "The Public" that will have to pay for any real fuck-up at the end anyway. More corporate welfare, which is what this has really always been about.) Which is the underlining risk of almost any business venture.
Business in trouble needs a Carrot approach, while the working class in trouble needs a Big Stick.
Reality starts the morning after, not during the reefer madness of the party.
Jerry Munro
3 years ago
Dorothy...
"EDUCATE, EDUCATE, EDUCATE. If there is anything I believe that it is the one and only way out of the mess we're in."
I agree.
Though, in the same breath, the way in which most ordinary folks with busy lives get educated, is less sitting at a desk in a "formal" educational setting, than by real life that impacts on them directly, and in ways they cannot ignore. Which is where, especially, large scale movements of people "acting in concert" at specific targets and in specific ways to challenge the system, and that draws their attention ( again in ways they cannot avoid), has a powerful role to play.
High drama or comedy? :-)
On the lawn of the Art Gallery, isolated and cut off, where basically, people's protests can be and largely are ignored, does not qualify as anything other than a kind of "feel good" gratification for the participants. It impacts and educates "the masses" next to nothing at all.
The heat is going to have to be turned up by degrees, spreading the reach of its flame, to change that. Which even non-violently done, in the Gandhian sense, is going to challenge participants comfort zones, certainly more than currently. For mass education effect, I think, we are going to have to look outside the box of "offically sanctioned" protests, especially those placed and of a non-challenging form designed to "extinguish" or at least "control and render harmless" the flame of resistance. (About which "official" trade union leadership and the NDP knows a thing or two, at least in my long experience as a trade union rank and filer.)
Education, especially political and economic education, is NOT best found in a sterile classroom setting, in my view, though some doubtless helps, but in the course of "struggle" with life and its issues.
Now, I have things I really must do. That I cannot ignore. Ta, ta. :-)
dorothy
3 years ago
The grind - and not the one on Grouse
"Education, especially political and economic education, is NOT best found in a sterile classroom setting, in my view, though some doubtless helps, but in the course of "struggle" with life and its issues."
No, and it was my track, too. I am even talking about something so mundane as never laying away the broken record role. I have never shut up about this kind of thing for a few decades now, at work, in the family, in all and sundry community volunteer settings. Also tried to teach by example, acing all I can of what I do and then sharing the underlying philosophies when people query. It is a LONG haul, that.
I think the only other alternative is learning things the hard way, and that just stinks as an option. You can tell that I believe in the one person at a time thing, and also what reasearch has found, that utterings gain in credibility, when they appear to come from several independent sources, rather than through massive efforts by one agency. Worth remembering. You can use the whispering gallery atrategy (inspired by the ancient hypogeum on Malta, where it is said that something whispered in one direction will come back at you from the other side eventually). It is indeed gratifying when a colleague says "somebody else was saying that too", when you're pretty sure that 'somebody' had it from somebody who had it from somebody else, who had it from you.
I've read my Machiavelli...it's just a drop in the bucket, but that is how rivers start, by a lot of drops adding up. I don't think this can be done solidly without some patience. We aren't just looking to have a new set of figureheads put in place in the same rotten sructure, but to change a culture from the ground up.