Eurozone’s sovereign debt not a problem anymore?

José Manuel Barroso, President of the EC, participated in the European Parliament plenary session. He said that an essential element of a larger package of action to respond to the sovereign debt crisis includes a strengthening of the European Stability Mechanism. (EC Audiovisual Services).

José Manuel Barroso, President of the EC, participated in the European Parliament plenary session. He said that an essential element of a larger package of action to respond to the sovereign debt crisis includes a strengthening of the European Stability Mechanism. (EC Audiovisual Services).

Understandably sovereign debt statistics for Eurozone and the EU have become most crucial over the past five years, not only for the implicated countries but also for the global financial community. Until recently a bad spell over Greece’s prospects concerning its government debt could send all and every world market to a downwards spiral. And this despite the fact that the country’s tiny economy represents only around 2% of Eurozone’s Gross Domestic Product (GDP).

Eurozone debt stable

As a result it was not without good reason that the financial community of the planet learned with relieve that Eurozone’s overall government debt as a percentage of GDP appeared stable during the third quarter of 2012. This aggregate measurement of government obligations for the entire Eurozone compared with relevant statistics in other economies of similar structure, like the United States and Japan are not at all alarming.

On the contrary Eurozone’s government debt is well below the 100% of the GDP benchmark at around 90%, while Japan’s similar statistic is at least the double. In the US this crucial percentage has recently climbed above the benchmark and continues in an upwards course, given that the Obama administration is constantly asking the Congress for higher debt ceilings.

Why then Eurozone’s debt was so crucial? The reason is that for one thing the Greek debt as an absolute number was well above €300 billion. When in December of 2009 the country said it couldn’t honour its obligations without help, it set the alarms all over the world. Almost all major banks were exposed to Greece directly or indirectly. If the other Eurozone governments and the European Central bank had not undertaken the largest part of it, the world could have fell into a new abyss, worse than the grate credit meltdown which followed Lehman Brother’s collapse. Incidentally Lehman’s bankruptcy left a gap of “only” $120bn.

Why EU debt differs?

On top of that there more elements which make the European debt more risky. In Japan the country’s government debt is financed mainly by the huge internal savings. So at the end of the day those trillions yen of sovereign obligation is an internal affair of Japan. The Tokyo government and the Bank of Japan can take measures to contain any problem to fix any problems with it. As for the US, the six American war fleets on the oceans of the world and the economic supremacy of the country have in a way imposed a global acceptance of the US debt paper and all dollar values. As a result there are many willing investors to lend money to America.

Turning to the recent Eurostat announcement about Eurozone’s debt, markets considered it as reassuring. In detail, according to the European statistical service “at the end of the third quarter of 2012, the government debt to GDP ratio in the euro area (EA17) stood at 90%, compared with 89.9% at the end of the second quarter of 2012”.

Eurostat announcement continues as follows, “Due to the involvement of EU governments in financial assistance to certain Member States, and in order to obtain a more complete picture of the evolution of government debt, quarterly data on intergovernmental lending (IGL) are also published. The share of IGL in GDP at the end of the third quarter of 2012 amounted to 1.7% for the euro area.

The highest ratios of government debt to GDP at the end of the third quarter of 2012 were recorded in Greece (152.6%), Italy (127.3%), Portugal (120.3%) and Ireland (117.0%), and the lowest in Estonia (9.6%), Bulgaria (18.7%) and Luxembourg (20.9%)”.

 

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

Stopping antimicrobial resistance would cost just USD 2 per person a year

Parlamentarians to “break up” with reality in the Google antitrust case

EU’s guidelines on net neutrality see the light although grey areas do remain

The US banks drive the developing world to a catastrophe

“Health and environment first of all”, EU says with forced optimism after 7th round of TTIP talks

Germany readies to pay for the Brexit gap in EU finance

China Unlimited Special Report: The trip to China

COP21 Breaking News_03 December: UNFCCC Secretariat Launches Forest Information Hub

Time to be welcome: Youth work and integration of young refugees

EU to negotiate an FTA with Japan

Ukrainian civil war: Is this the beginning of the end or the end of the beginning?

Turkey to let EU alone struggle with the migrant crisis while enhancing its economic ties with Russia instead?

IQ scores have been falling for decades, new study finds

“As German Chancellor I want to be able to cope with the merger of the real and digital economy”, Angela Merkel from Switzerland; the Sting reports live from World Economic Forum 2015 in Davos

EU-Turkey relations: Will Turkey manage to revive the EU accession process talks?

Armenia should take vigorous measures against entrenched corruption

Virtual Doctor: a core part of modern healthcare?

‘Jerusalem is not for sale’ Palestinian President Abbas tells world leaders at UN Assembly

G20 LIVE: G20 Leaders’ Communiqué Antalya Summit, 15-16 November 2015

Eurozone: Inflation plunge to 0.4% in July may trigger cataclysmic developments

World response to AIDS epidemic at a ‘critical juncture’

On International Youth Day the European Youth Forum calls for true youth participation

Time is running out to protect Africa’s forests

EU Commission: Growth first then fiscal consolidation

Plastic Oceans: MEPs back EU ban on polluting throwaway plastics by 2021

Chinese economy to raise speed and help the world grow

Why social working cultures are happier and more productive

Remembering Kofi Annan

Half of all mental illness begins by the age of 14

EU to increase spending and improve delivery of education in emergencies and protracted crises

An alternative view of Globalization 4.0, and how to get there

UN says ‘many humanitarian achievements’, one year after ouster of ISIL from Mosul

The movement of anti-vaccers: taking humanity back 200 years

Apple’s tax avoidance scheme remains as creative as their new iPhone

Europe turns out more jobs this summer

Politics still matter in the US but not in Europe

Mali: Presidential elections critical to consolidate democracy, says UN peacekeeping chief

Youth and Participation: are the people rising up in Spain? 


Legal Manager – 2050

How to provide health education and thus create better health systems

Road injuries leading cause of death for the young, despite safety gains: UN report

UN condemns ‘heinous’ suicide attack on education centre in Afghanistan

The shrinking Arctic ice protects us all. It’s time to act

New skills needed for medical students in Industry 4.0

Transition between education and employment: how the internship culture is threatening the foundations of our education

Eurozone: Retail sales and inflation point to recession

Why do medical curricula shouldn’t neglect the Sustainable Development Goals

Why medicine is relevant to the battle against climate change

Fisheries: Commission proposes measures to conserve stocks of deep-sea species in the North-East Atlantic

Syria: Guterres concerned over reported attacks in Idlib, calls for ‘full investigation’

Discovering Europe: Free EU rail pass for 18 year olds

Want a fairer society? This economist says he has the answer

The banks first to benefit from the new euro trillion ECB plans to print

These European countries produce the most plastic waste per person

Storms and snow in Lebanon worsen plight for Syrian refugees

Better protection against non-cash payment fraud

Can big events really go plastic-free? A water capsule made from seaweed may be the answer

‘Collective amnesia’ over causes of global financial crash – human rights expert

Superbugs: MEPs advocate further measures to curb use of antimicrobials

Why are the Balkans’ political leaders meeting in Geneva this week?

UN chief appoints Luis Alfonso de Alba as Special Envoy for the 2019 Climate Summit

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s