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The Record of Olympic Economics

from BATR:

As the world economy plunges and the financial markets debate the future of EU, the London Olympics provide a pretext to take a holiday and party all night. The latest example of excess and self-absorbed haughtiness, promotes an agenda of internationalism. The spirit of the games is less about sportsmanship than promotion of indoctrination. The cost to produce such an extravaganza approaches sums that necessitate a bailout from the IMF.  The cost to produce such an extravaganza approaches sums that necessitate a bailout from the IMF. The article, Winner’s curse? The economics of hosting the Olympic Games, illustrates a disturbing cost for hosting the Games.

“The complete official budget, initially pegged at $3.8 billion for the Games, has nearly quadrupled, and some estimates from British media have set the total cost at as high as $38 billion.

The 1996 Summer Olympics in Atlanta cost $2 billion US. Hosting costs grew to $4.8 billion in Sydney four years later. Athens is estimated to have spend between $15 billion and $32 billion on hosting the 2004 Olympics.

And, at $42 billion, the 2008 Beijing Games are widely thought to be the most expensive ever. Chinese authorities have declined to release the official figures needed to confirm that figure.”

The notion that global comradeship is built through athletic competition is the message behind the quadrennial event. Seldom if ever does the TV viewing audience question the enormous sums required to conduct the amusing circus. So, what does the financial community say about the effect of these sports events, especially in these trying times? The analysis in the Guardian, Will the Olympics get the economy growing again? Don’t bank on it, provides some answers.

“Citi’s Michael Saunders is frank in his assessment: “In our view, the Olympics are likely to be very entertaining. But the Games are not an economic policy.”

Saunders has examined the data from 10 Olympics held between 1964 and 2008 and found that although growth tends to rise in the runup to the tournament, the effect starts to fall away even before the Games begin – and afterwards, growth tends to be weaker.

The trend is explained by the fact that many of the positives that come from the Olympics (such as jobs created during the construction phase) are out of the way long before the opening ceremony, while negatives (such as lost productivity as Britons stay glued to their TVs) come during and after the Games. The anticipation of extra revenue from foreign visitors, economists say, also fails to take into account visitors who might have come to the UK anyway and just change the timing of their visit.”

Yet in an even more in-depth report, Olympic Economics, The Pre-Games Show, the notorious ‘Vampire Squid’ of international banksters produces a lengthy analysis.
“Goldman Sachs has put out a 39-page report (PDF) on the subject (plus, somewhat incongruously, athlete interviews). The bank’s analysts conclude that games in Munich (1972) and Montreal (1976) lost big bucks, while Los Angeles (1984), Barcelona (1992) and Atlanta (1996) “each made a profit.”

Breaking even or making a profit certainly goes a long way to justify the immense expense. However, when governments absorb the losses and cost overruns to produce the symbolic script of worldwide “good will”, the propaganda budgets get a bump from their countries treasuries.

So who benefits from the Olympic “Passion Play” process and how does it work in the bidding competition? Andrew Zimbalist, write in Atlantic magazine.

Read More @ BATR.org

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