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Greek railways – a wonderful story of stupidity, corruption and greed!

As it’s the weekend, here’s little tale of disaster and thievery that might entertain you while also helping cast some light on why Greece’s economy is such a total basket case and why the country is doubly or even triply bankrupt.

It’s the sorry story of Greece’s rail network – Hellenic Railways:

hellenic railways 3

Greece’s railways don’t seem to be a textbook example of efficient management. Here’s why:

Hellenic Railways operates at a loss of about $3.8m per day, having accumulated a total debt of $13bn, or about 5% of Greek GDP.

In 2008, the company managed to report a loss of more than $1bn, on sales of just $253 million, a truly incredible achievement that probably ought to go in the Guinness Book of Records as perhaps the worst example of managerial incompetence in human history.

Between 2000 and 2009, the cost of the company’s payroll soared by 50% even as overall personnel decreased by 30%.

The average salary of a rail employee is over $78,000. In the mountainous Peleponnese region, trains manned by drivers being paid as much as $130,000 a year frequently run empty:

hellenic railways 1

For the better part of a decade, Greece has provided sovereign backing to Hellenic Railways, thus allowing it to borrow billions even though the company’s finances are so skewed that it pays three times as much on interest expenses than it collects in revenue. So, although Hellenic Railways only gets $253m a year from ticket sales and goods transport, it has to pay about $750m a year in interest charges. Um, that’s not a great way to run a business! Not even a nationalised one!

As the debt of state-owned enterprises was not counted toward Greece’s official debt, Greece has been able to use the rail system as a means to support employment while not adding to its official debt number; basically an accounting trick to hide debt.

I believe that the railways may be one of the enterprises the Greek government has been told to privatise to raise some money. But this is impossible given the financial situation of Hellenic Railways. The Greek government is aware that only the closure of a substantial number of loss-making routes and large employment cuts (between 2,500-3,500 of the 7,000 staff) will make Hellenic Railways attractive to foreign investors:

hellenic railways 2

I suspect that Hellenic Railways is typical of all State-owned enterprises in Greece – ports, power supply and all public administration.

Are the Greeks havin’ a larf? You bet they are! And they’re hoping Germany, Holland and Finland will pay for this mess. I wonder if they’ll get away with it?

It’s all quite funny really. Buy some popcorn and beer, this farce will run and run. He-he-he-he. Chuckle chuckle. Giggle giggle.

By the way, I wonder where the borrowed $13bn went? After all, Greece’s railway network is pretty small (just 2,554km compared to the UK’s 16,423km). It doesn’t need a lot of trains or stations or track. Of course, a lot went in salaries. But I suspect a considerable proportion of the $13bn flowed into buying new villas, yachts and other baubles for Greece’s ruling elites. No wonder Germany’s Mr Schäuble always looks like he’s got a hyperactive weasel up his ass whenever he thinks about how the Greeks have been fleecing the EU for decades:

schauble

Have a good weekend.

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