Poor Greeks, Irish and Spaniards still pay for the faults of German and French banks

From left to right: Mario Draghi, President of the European Central Bank, Olli Rehn, Vice President of the European Commission. ("The Council of the European Union" photographic library, 27/01/2014).

From left to right: Mario Draghi, President of the European Central Bank, Olli Rehn, Vice President of the European Commission. (“The Council of the European Union” photographic library, 27/01/2014).

Government deficit decreased substantially in the third quarter of last year and reached -3.1% of the GDP in Eurozone. This is just one decimal point away from the 3% benchmark, set by the Treaty of Maastricht and the strict EU economic governance Regulations (the famous ‘two’ and ‘six’ packs). The gap between government income and spending skyrocketed during the crisis years of 2008 and 2009 reaching levels above 7% of GDP.

Then, as from the last quarter of 2010, the deficit started to recede continuously and last year almost reached the 3% limit, as provided by the above mentioned EU laws. No need to mention that the austerity policy enforced by Brussels to all the EU member states has undermined the political and social structures in many EU countries, particularly in the south of Eurozone. Let’s follow those developments more closely.

Today Eurostat, the EU statistical service, published an update of its quarterly government finance statistics. According to this source “EU-27 and Euro Area-17 general government deficit (seasonally adjusted) decreased significantly since the fourth quarter of 2010, to stand at -3.5 % of GDP and at -3.1 % of GDP respectively in the third quarter of 2013. However, for the EU-27 this represents a slight increase of 0.1 percentage point of GDP compared to the previous quarter. For the EA-17, a decrease of -0.2 percentage points is recorded”.

Eurozone imposes austerity

The different directions the deficit followed in the EU-27 and the EA-17 has to be attributed to the fact that the Eurozone countries have applied more strict austerity measures than the rest of the EU member states. Obviously the reason is that the relevant legislation obliges the euro area countries (‘two pack’ regulations) to comply more quickly and thoroughly with the targets set than the rest of the EU (‘six pack’ regulations).

At this point, it has to be reminded that four euro area countries, namely Greece, Ireland, Portugal and Spain have been borrowing from the European Financial Stability Facility. This financial support came on the condition that the four countries apply severe austerity measures to reduce government deficits. Italy and other EU countries were also obliged to apply severe fiscal austerity through the ‘excess deficit’ procedure, which enforces compliance with the 3% of DGP deficit limit. As it has become apparent by now, those EFSF loans were not used to support the unemployed southerners, but to subsidise the German and the French banks.

On an individual country level, Eurostat found that “In the third quarter of 2013, twelve Member States recorded an improvement in their government balance relative to GDP with respect to the same quarter in 2012. These are: Belgium, the Czech Republic, Denmark, Ireland, Greece, Croatia, Lithuania, Luxembourg, the Netherlands, Romania, Slovenia and the United Kingdom”. The same source explains that, “The largest decreases with respect to the third quarter of 2012 are recorded in Greece (+10.0 percentage points of GDP, influenced by capital transfers to support banks in 2012Q3)”.

Taxpayers recapitalise the banks

In most cases the fiscal deficit problems and the government’s over- indebtedness were recorded in countries where their governments were politically forced by Brussels, Berlin, Paris and the European Central Bnak to underwrite and repay the debts of their banks. Ireland is a negative example of this politically enforced undertaking of private bank debts by the country’s taxpayers. Obviously the reason was that those Irish, Greek, Spanish and Italian bank debts were owed to German and French financial groups like Deutsche Bank, Credit Agricole and BNP Paribas.

In conclusion, the taxpayers of impoverished countries like Greece, Spain, Portugal and Ireland are still repaying at par value all the imprudent, almost crazy loans and ‘investments’, of a handful of German and the French banks. Unfortunately nobody tells the truth to the German and the French public opinion and let the people of those countries blame and accuse the ‘lazy southerners’ and not the greedy bankers for the financial crisis.

 

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

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

Chart of the day: This is what violence does to a nation’s GDP

This is why mountains matter more than you think

Gender equality and medicine in the 21st century: an equity unachieved

Tax Inspectors Without Borders making significant progress toward strengthening developing countries’ ability to effectively tax multinational enterprises

Britain aligns with EU rivaling US on trade and Iran, abandons bilateral ‘Midsummer Night’s Dream’

Ahead of street protests, UN rights chief urges Guatemalan Government to respect democratic freedoms

Why we need a Paris Agreement for nature

How Cameron unwillingly helped Eurozone reunite; the long-term repercussions of two European Council decisions

Partnerships key to taking landlocked countries out of poverty: UN Chief

Why Sweden’s cashless society is no longer a utopia

EU job-search aid worth €9.9 million for 1,858 former Air France workers

Eurozone: In vicious cycle of disinflation and unemployment?

How to beat gender stereotypes: learn, speak up and react

UN court increases sentence of former Bosnian-Serb leader to life imprisonment

These are the regions where people have most faith in their schools

EU Budget 2019: focus on the young, on migration and innovation

More than 3,400 classrooms damaged or destroyed by Cyclone Idai in Mozambique, says UN Children’s Fund

Will Boris Johnson’s victory lead to a no-deal Brexit or is there still time?

The rise of techno-nationalism – and the paradox at its core

EU Justice Scoreboard 2019: results show the continuing need to protect judicial independence

These Dutch microgrid communities can supply 90% of their energy needs

Draghi drafts a plan to donate more money to bankers, the era of ‘money for nothin’ is flourishing

COP25: Developing nation’s strike hard

EU attempts to make new deal with Turkey as relations deteriorate

Myanmar: Conflict resolution at ‘total standstill’, military commanders must answer for crimes against humanity

Refugee resettlement: ‘Tremendous gap’ persists between needs, and spaces on offer

Venezuela: Parliament recognises Guaidó, urges EU to follow suit

Worldwide terror attacks have fallen for the third year in a row

Alcohol abuse kills three million people a year, most of them men – WHO report

Future EU farm policy: Agriculture MEPs urge fair funding, no renationalisation

UNICEF warns of ‘lost generation’ of Rohingya youth, one year after Myanmar exodus

MWC 2016 LIVE: Zuckerberg warns mobile industry not to ignore the unconnected

ECB: Reaching the limits of its mandate to revive the Eurozone economy

MEPs take stock of the EU’s foreign, security and defence policy priorities

Is “Sustainable Development” a concept that integrates Health Literacy and Health Policy as a global health action?

New Zealand has unveiled its first ‘well-being’ budget

Access still an obstacle to reaching stricken communities on Indonesian island: UN agencies

5 ways you can protect insects if you live in a city

Commission approves emergency measures to protect eastern Baltic cod

5 surprising ways to reuse coffee grounds

As COP25 goes into the night, Guterres calls for more climate ambition

18th EU Eco-Innovation Forum in Barcelona shows the way for Europe’s new Environmental policy

International Court of Justice orders Pakistan to review death penalty for Indian accused of spying

How to create a world where healthcare is a right, not a luxury

EU legislation protecting home buyers approved in Parliament

The US + Britain trivialize mainland Europe, NATO and the EU

Most US students aren’t learning about climate change. Parents and teachers think they should

Capital transaction tax on Ecofin table

The hostilities in south and eastern Ukraine resume; where could they lead?

Macron’s Presidency: what the young generation’s expectations are

Pledging ongoing UN support during visit to cyclone-hit areas, Guterres praises resilience of Mozambicans

Summer 2019 Economic Forecast: Growth clouded by external factors

Primary Healthcare vs Specialization Careers, how to promote PHC to the Young Health Workforce?

Social Committee slams the 28 EU leaders for false promises

Localized microfactories – the new face of globalized manufacturing

Miguel Arias Cañete European Commission

EU should invest more in climate and not sit back on its laurels and watch

Smokers who quit one month before surgery reap benefits: UN health agency

State aid: Commission approves €300 million public support for the development of ultrafast broadband network in Greece

Commission criticised member states on blocking financial transaction tax

Our food system is no longer fit for the 21st century. Here are three ways to fix it

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