Real-World Economics Review Blog

Debt: Where did it come from? (chart of the day)

from David Ruccio

As the BBC explains,

There was a big build-up of debts in Spain and Italy before 2008, but it had nothing to do with governments. Instead it was the private sector – companies and mortgage borrowers – who were taking out loans. Interest rates had fallen to unprecedented lows in southern European countries when they joined the euro. And that encouraged a debt-fuelled boom.