Tuesday, April 26, 2011

European Debt Once Again Front and Center

Don't call me the Brett Favre of bloggers yet. I'm not officially back, but getting the itch and may post here and there (and likely more to be a long form post - we shall see). Not sure why the below is my first entry back (nothing epic or new about the below), but it piqued my interest as restructuring seems FINALLY likely to happen (thank goodness, especially for the individuals of Ireland who are currently in a severe downward spiral).

Bloomberg details the history of the liquidity solvency problem in the European periphery:

Today’s data brought the debt crisis back to where it started. Greece last year obtained a 110 billion-euro lifeline from European governments and the International Monetary Fund. Ireland followed with a 67.5 billion-euro package and Portugal is now negotiating for 80 billion euros in aid.
A bail out for Portugal? Must mean that things are improving (i.e. the bailouts helped) Greece and Ireland... or not.
Greece’s debt ballooned to 142.8 percent of GDP, the highest in the euro’s 12-year history, the EU figures showed. Ireland’s debt surged the most, by 30.6 percentage points to 96.2 percent of GDP.

What is interesting (to me) is that debt levels in Germany are almost (or at least in the ball park) of Portuguese and Irish levels at 83% of GDP. While Ireland is WAY over their heads with a death spiraling economy, Portugal has actually been relatively lockstep with Germany; Germany's GDP and public debt levels have grown 2.7% and 32% since 2007, Portugal's 1.9% and 39%.

Source: Eurostat


  1. Welcome back!

    (And hooray for RSS feeds...)

  2. Welcome back Jake. We have missed your insight and charts.

  3. People fantasize now about Germany because they kept their unemployment rate low. But the government actually subsidizes these jobs. It's a smoke screen.

  4. Jake,

    Welcome back, and nice post. I like your observation about Germany. Any chance of modifying your figure to include Germany as well?

  5. @jrm

    People applaud Germany because the gov't subsidizes job creation/maintenance. It's intentional and well known. The question is why doesn't the U.S. do the same? If you're going to run a 10%/GDP deficit, you might as well try at least a little job creation.

  6. Kosta- I'll put together a follow up post on Germany GDP, but to respond to your comment:

    "People applaud Germany because the gov't subsidizes job creation/maintenance. It's intentional and well known."

    I don't think this is a good thing. Previously outlined here: