Investors had two numbers to fret about last 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.
For starters, it is proof that the Greek economy is deteriorating, not improving. Any chance Athens has of reaching its bail-out targets is therefore that little bit slimmer. Greece has appointed Lucas Papademos, a mild-mannered technocrat, as prime minister. But his mandate is limited in effect to implementing the conditions set by Greece’s creditors. Moreover, his time is short: an election is due on February 19. He is not going to make much difference. Not since Napoleon will a leader have served a more pointless 100 days.