Showing posts with label European Union. Show all posts
Showing posts with label European Union. Show all posts

Tuesday, July 05, 2016

Monday, December 12, 2011


My main source of news, The Christian Science Monitor, recently posted a wonderful summation of the EuroZone economic crisis. As is often the case with the CSM, their analysis is thoughtful and well balanced. Let's take a look at the five graphics they provided. First we have the shadow economy graphic.
When nearly a quarter of your economy is untaxed (as is the case with Greece and Italy), you're going to have problems. Couple this with all the tax evasion that goes on in Greece, for example, and it's both a revenue and spending problem. Next up we have the export issue.

Germany is obviously the behemoth here. Greece is the lowest which is another explanation as to why they are in so much trouble. They aren't selling anything in the global marketplace. To put it simply, they aren't competing. Of course, we also have the issue of public sector size.

And the issue of deficit spending as a percentage of GDP.

Note here the stability of Germany. Finally, we have the main thing that the right in this country focuses on nearly to a fault.

My main point in showing all of these graphics is to stress that it is the summation of all five of these issues (plus interest rates, of course) that is causing the problem. To say that it's simply an issue of spending is ridiculous. Germany, for example has fairly high debt as percentage of GDP but their deficit spending is low and their exports are high. Their shadow economy is much lower as well.

So, it's the whole meal and not just the salad.