Transcript Euro Slides
Europe’s problem is that it has more than one Greece. Greece’s problem is that it is alone. Andrew Coyne Worse than the 1930’s [Eurozone is black] GDP is gross domestic product, or output Eurozone: still not recovered after 8 years [1999 is year euro began; 2001 for Greece; crisis began 2008] Eurozone unemployment: EA19 European Union: EU28 http://ec.europa.eu/eurostat/news/news-releases, 1/16 Rising Debt/GDP in Eurozone But Iceland wasn’t in the euro, and canceled its application after the crisis. Poorer states are subsidized by richer Surplus states [greenish] vs deficit states [reddish] German Finance Minister Wolfgang Schäuble [Would you want to ask this man for a loan?] Robert Mundell and family at his Italian villa Pre-crisis—smaller G/GDP than Germany [red]: Portugal [grey], Ireland [yellow] and Spain[green]; not so bad Greece [black] Debt ratios before and after 2007-8 crisis Despite austerity and repayments, debt burden rises Balance of payments: Germany [black]; Ireland [orange]; Spain [light green]; Portugal [green]; Greece [red] Real GDP growth/capita Germany [darker blue] among lowest until crisis German trade balances: euro launched 1999 Interest rate convergence post-euro German trade surpluses exceed 6% limit World trade falls during crisis 2015 IMF projections for Eurozone crisis economies: austerity not a success M= million jobs Source: IMF April 2015 Rogoff and Reinhardt on debt—corrected [R and R claim: rates of debt/GDP more than 90% slow growth; they don’t] Britain’s public debt during industrialization Troika: International Monetary Fund [lending agency], European Commission [EU executive body], and European Central Bank Goldman alumni in EU roles They are 4 of 12 Presidents of Fed. Res. Banks, too. Goldman Sachs Alumni Greek output change, before and after bailouts Greek Debt Ratio: 177% in 2014 [an all-time high] 2015 bailout, over 3 years— Note that €50B comes from Greece itself. Headline: Ever wanted to own a Greek island? Experts predict government 'fire-sale' to sell off islands worth millions to raise funds Syriza—a chance for reform Greek GDP [constant prices] adjustment programs: predictions vs actual The future is also at risk in Greece: the investment rate [red] has plummeted In 1953, Hermann Josef Abs, center, signed an agreement that effectively cut West Germany's postWorld War II debt in half. Associated Press Larger German surpluses [red] outside Eurozone Deficits outside euro limits [3%] 2008-2015: Neither France or Germany always within limits Debt/GDP ratio Limit is 60% Germany 74.5 France 95.5 Real GDP change: late 2014 relative to 2007 peak High employment Eurozone government surplus—IMF 2014 [Revenue exceeds spending, excluding interest payments, when unemployment is low]