Eurozone government deficit and debt (graphs).
Is there any reason to panic about the Eurozone government deficit? No, there isn’t. The hysterical German economists are wrong – there is no reason to cut the pensions of European octogenarians at all. Not at all. The consolidated deficit (% GDP) is not that high and declining rapidly (graph 1) and consolidated Eurozone government debt (% GDP) is actually decreasing (graph 2).
Graph 1. Consolidated government deficit, Eurozone, 2-quarter moving average, source: ECB.
Graph 2. Consolidated government debt, Eurozone, source: ECB
The decrease is probably partly a blip – but so was the increase, as the increase includes hundreds of billions used to bail out the banks which were not included in the government deficits (!?) but which are included in government debt. But again: there is no reason to panic. The hysterical German economists and the millions of people which are superfluous in the fire-sector (Finance, Insurance, Real Estate) might however retrain for a future oriented sector: care for the elderly, as that’s what an economy really is about. Destitution is not necessary, in Europe, not even to bail out the banks.
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One way, or another, the octogenarians have to be looked after. Better they do it themselves with financial support, than having them crowd out precious hospital space.
The problem with this argument (no need to panic) is the key word of «consolidated»…
There is nothing «consolidated» about current European policies… National governments have to borrow from commercial banks (thanks to a brilliant idea of Giscard d’Estaing that passed on to artcle 123 ot Lisbon Treaty…). So governments have to borrow from «the markets»… At ever higher rates. Borrowing money (from the «markets»…) at the mercy of rating agencies, with money that, in the mean time and literally fled the countries that now need to borrow…
In the case of Portugal, the total amount of capital flight (over the last two years) is now equivalent to approximatelly 45% of this country’s GNI. Personally I have already been «robbed» of some 15% of my pension (just in current cash terms in my bank account, never mind the increase in all kinds of costs and expenses). And the saga continues… Unemployment is now over 14%. An historic first – EVER – and set to continue to grow…
But there is no reason to «panic». I just wonder how far will they «stretch the rope»…