The eurozone is supposedly in a state of recovery. However, in spite of that recovery, public debt and debt-to-GDP levels are still rising. Austerity is difficult to find in any realistic sense.
Please consider Eurozone Borrowing Rises to Record as Recovery Remains Weak.
The European Central Bank's programme of quantitative easing has pushed down interest rates to ultra low levels, encouraging governments to borrow more in the early part of this year, despite turmoil in Greece.
Across countries that use the euro, average debt to gross domestic product reached 92.9 per cent in the first quarter of 2015, up from 92 per cent in the previous quarter and 91.9 per cent in the same period last year, according to figures from Eurostat, the EU's statistical agency.
Greece remains the EU's most indebted nation, with debt equal to 169 per cent of annual GDP, but Italy, Belgium, Cyprus and Portugal also carry government debt that exceeds 100 per cent of economic output.
The rise in debt comes despite a pickup in the pace of recovery in the eurozone, with the region's economy expanding 0.4 per cent in the first quarter of this year — while the US saw a contraction.
Targets vs. Reality
The “Growth and Stability” pact on which the Eurozone was founded limits debt to 60% of GDP and deficits at no more than 3%.
Average Debt-to-GDP is 92.9% and rising.
Eurostat Data shows Ireland, Greece, Spain, France, Cyprus, Portugal, Belgium, Slovenia, and Finland all exceeded 3% budget deficit requirement in 2014.
France and Spain have been given warnings and extensions on numerous occasions.
Greece Sideshow
By any realistic measure, Greece is just a sideshow for what is to come.
Pater Tenebrarum at the Acting Man blog pinged me with this comment: “The true reason for the bust of Greece and other countries – apart from their truly atrocious socialist policies and abominable corruption – is fractional reserve banking. The euro has of course enabled an even bigger credit boom and bust than would have been the case otherwise, but it is not the fixed exchange rate that is at fault, it is the underlying economic policies and the monetary system as such.”
While the politicians are are scrambling to “save” Greece, please note Italy's Non-Performing Loans Hit a New Record High.
