In the fall of 2007, when the U.S. economy first seemed in peril, I began answering reader queries here on the Business Desk. I still do so occasionally, but this page has expanded to include posts from eminent economists, "far-flung correspondents," and a variety of voices that have intriguing and/or useful things to say about economics, broadly defined. Please feel encouraged to respond to any and all of them.
What Part Did Olympics Expenses Play in Greece's Financial Crisis?
City & State:
Question: I may have missed it, but what part did the expense of the Olympics play in Greece's financial crisis? I realize that there were many benefits including infrastructure, but it all had to be paid somehow.
Paul Solman: It's an issue that's still being debated. Here's part of an AP story from June by Derek Gatopoulos, ending with the preeminent sports economist in America, Andrew Zimbalist. Knowing him and his work, I'd bet on his analysis:
The games cost nearly $11 billion by current exchange rates, double the initial budget. And that figure that does not include the major infrastructure projects rushed to completion at inflated cost. In the months before the games, construction crews rotated around the clock, using floodlights to keep the work going at night.
The tab for security alone was more than $1.2 billion.
Six years later, more than half of Athens' Olympic sites are barely used or empty. The long list of mothballed facilities includes a baseball diamond, a massive man-made canoe and kayak course, and arenas purpose-built for unglamorous sports such as table tennis, field hockey and judo.
Deals to convert several venues into recreation sites -- such as turning the canoe-kayak venue into a water park -- have been stalled by legal challenges from residents' groups and Byzantine planning regulations.
Criticism of the Olympic spending has sharpened in recent weeks, after parliament launched an investigation into allegations that German industrial giant Siemens AG paid bribes to secure contracts before the 2004 Games.
A former transport minister has been charged with money laundering after he told the inquiry that he had received more than $123,000 from Siemens in 1998 as a campaign donation.
International Olympic Committee president Jacques Rogge said linking the debt crisis to the games is "unfair." He argues that Athens is still reaping the benefits from its pre-games overhaul of the city's transport systems and infrastructure.
"These are things that really leave a very good legacy for the city ... There have been expenses, of course. You don't build an airport for free," Rogge told The Associated Press in Lausanne, Switzerland.
"Had Athens still been outmoded, the economy would have been much worse probably than it is today."
Greek Olympic officials insist the scale of the country's dire financial problems -- and its staggering national debt of $382 billion -- are is simply too big to be blamed on the 2004 Games budget.
Some financial experts agree.
"Put in proper perspective, it is hard to argue that the Olympic Games were an important factor behind the Greek financial crisis. It is, however, likely that they contributed modestly to the problem," Andrew Zimbalist, a U.S. economist who studies the financial impact of major sporting events, said in an email....