Home > Eurozone Crisis > Meanwhile, in Europe… (22). Government deficits, large and small (chart).

Meanwhile, in Europe… (22). Government deficits, large and small (chart).

from Merijn Knibbe

The leaders of the Eurozone countries have decided to maximise the structural national government deficits to 0,5% of Gross Domestic Product. Didn’t they learn anything from recent history (graph)?

Larger version here

P.S. – the 2010 Irish deficit was thirtysomething.
P.P.S. The 9,5% deficit in Germany in 1995 is double checked, p. 864. The German deficit in the first half year of 2011 is estimated to have been 0,6%, much lower than a year before which was mainly caused by a large increase in taxes combined with export led growth.

  1. December 9, 2011 at 4:58 pm

    I think the term “GDP” is highly suspect. Does it include all the domestic financial toilet paper?

    • Alice
      December 10, 2011 at 10:47 am

      No it doesnt Helge – you know the answer to that….we delete petrol from the index of inflation and we delete financial toilet paper from GDP…we also delete the loss of full time jobs and their replacement with part time or casual jobs from the index of “wellbeing”….

      We, as economists, and as media, in short tell buckets of lies….or at least some do to get ahead.

  2. Wasabi
    December 9, 2011 at 5:04 pm

    German and French bankers seem intent on completely crushing the Euro Zone working class and most of the middle class. This seems to be class warfare clear and simple. Isn’t there some way that the 99% can rise up and resist in this class war? Why is the left so passive? Could you explain that? And aren’t sane European economists severely criticizing this voodoo economics madness in the mass media? Sorry to ask questions, but it’s hard to comprehend why the majority of people in the Euro Zone are allowing this economic warfare and reign of unreason to happen.

  3. merijnknibbe
    December 10, 2011 at 4:27 pm

    1. I guess I could have been clearer about these graphs: housing bubbles and busts and banking bail outs explain the recent changes in government deficits in countries like Spain and Denmark and Ireland. What we have to do is to prevent bubbles (and to mitigate the consequences of the busts, in stead of aggravating them), instead of focusing on fine tuning the deficit – which won’t work anyway (see the graph). It’s a real world, and not a DSGE world, after all.

    2. In todays The Economist an excellent article (Briefing. Lessons of the thirties, pp. 68-70) which compares the situation of the twenties and thirties in Europe with the present day situation: same players, same roles (though reshuffled) same actions, same mistakes. It’s almost creepy.

    Let me say this once again: solving 23% unemployment in Spain takes investments, not savings.

    • December 12, 2011 at 8:43 pm

      It’s simple to prevent the most important bubbles: those in the land market. Collect the rent for public benefit. That leaves nothing to speculate on (since bricks and mortar are perishable and reproducible) and might channel investment into productive activities rather than churning the, mostly second-hand, property market.

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