Italy's debt has ballooned to 150% of it's GDP, France is heading for 130% in the near future. Whatever happened in the EU, was not Germany's responsibility. Even Greece's debt is way higher than it should be after the Euro zone austerity "cure".
If there had been real austerity and real slashing of the national budgets so that all countries of the euro-zone actually complied with the fiscal pact that says that euro countries should not have a level of debt higher than 60% of it's GDP, then the Euro-zone would actually have some dry powder left to face these uncertain times.
Instead, the only country who seems to try to do something currently is Germany, precisely because it's debt is lower than most Euro-zone countries and therefore it can afford to spend more to try to create growth.
France is running 5%+++ deficit each year and it has not complied with the euro-zone fiscal rules for the last 20 years. Finland has 10% unemployment, Italy is not doing much better.
Where do these countries go from here? Do they cut social services and risk getting ousted in the next election? Do they borrow more and more with not much to show for it? That is the question that is facing these countries and nobody has the answers.
You do realize that the debt/gdp ratio is a ratio?
If you cripple the gdp through austerity policies (killing borrowing to chase the “responsibility dream”) the fiscal multiplier becomes a ruinous curse.
Of course, pissing money into a spending bonfire, driving inflation with excess liquidity, isn’t going to help; bit it’s just as bad as crippling growth by holding it back for lack of capital injection
> You do realize that the debt/gdp ratio is a ratio?
I realize that. I just don't agree that any austerity measures have been taken which was the point of the comment I was responding to.
If real austerity had occurred then the countries' debt to gdp ratio should have been going down for at least a few years in order to get the expenses under control.
Unfortunately, that did not happen as many EU countries including Italy, France and Greece are still not within the EU rules to this very day.
> If you cripple the gdp through austerity policies (killing borrowing to chase the “responsibility dream”) the fiscal multiplier becomes a ruinous curse.
I agree except that these austerity measures as you put it if they ever existed, did not work because the debt to gpd ratio is still increasing in many EU countries.
> Of course, pissing money into a spending bonfire, driving inflation with excess liquidity, isn’t going to help; bit it’s just as bad as crippling growth by holding it back for lack of capital injection
Well Germany doesn't care supposedly. Where that takes us, who knows.
Italy's debt has ballooned to 150% of it's GDP, France is heading for 130% in the near future. Whatever happened in the EU, was not Germany's responsibility. Even Greece's debt is way higher than it should be after the Euro zone austerity "cure".
If there had been real austerity and real slashing of the national budgets so that all countries of the euro-zone actually complied with the fiscal pact that says that euro countries should not have a level of debt higher than 60% of it's GDP, then the Euro-zone would actually have some dry powder left to face these uncertain times.
Instead, the only country who seems to try to do something currently is Germany, precisely because it's debt is lower than most Euro-zone countries and therefore it can afford to spend more to try to create growth.
France is running 5%+++ deficit each year and it has not complied with the euro-zone fiscal rules for the last 20 years. Finland has 10% unemployment, Italy is not doing much better.
Where do these countries go from here? Do they cut social services and risk getting ousted in the next election? Do they borrow more and more with not much to show for it? That is the question that is facing these countries and nobody has the answers.