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.

 

the sting Milestones

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

6 ways countries can prepare for the next infectious disease pandemic

Moves to create a Kosovo army have ‘deteriorated relations’ with Serbia: UN peacekeeping chief

Smart city experts should be looking to emerging markets. Here’s why

3 unexpected consequences of the US-China trade war

China and China-EU Relations in the New Era

Beyond ‘business as usual’. Addressing the climate change crisis

Eurozone at risk of home-made deflation and recession

We need to give voice to ‘We the Peoples’, says UN chief

With Libyans now ‘fighting the wars of others’ inside their own country, UN envoy urges Security Council action to end violence

German stock market is not affected by the Greek debt revolution while Athens is running out of time

Coronavirus: EU guidance for a safe return to the workplace

5 things COVID-19 has taught us about inequality

Pharmaceuticals: Commission refines intellectual property rules

All States have ‘primary responsibility’ to protect against hate attacks

How the ‘California effect’ could shape a global approach to ethical AI

South Korea: A cherished partner for the EU

Where is heading Putin’s Russia?

New Mozambique storm rips off roofs, brings lashing rain as aid response kicks in

UN refugee agency presses States to aid 49 refugees stranded on Mediterranean

Young translators at EU schools – Commission opens registration for 2020 translation contest

Negotiated two-State solution still ‘the only option’ for Palestine: Guterres

UN political chief calls for dialogue to ease tensions in Venezuela; Security Council divided over path to end crisis

State aid: Commission approves €1.2 billion French “Fonds de solidarité” scheme for small enterprises in temporary financial difficulties due to coronavirus outbreak

These are the top 10 global causes of death – but two diseases are in decline

Brazilian health: right or privilege?

Why the minutes and the months matter most to young people during the COVID-19 crisis

Stop cooperation with and funding to the Libyan coastguard, MEPs ask

Statement by the European Commission following the extraordinary meeting of the EU-UK Joint Committee

Why Eurozone urgently needs the ECB to print and distribute at least €500 billion

The remote doctor in the 21st century

Over 820 million people suffering from hunger; new UN report reveals stubborn realities of ‘immense’ global challenge

“France will be there, it will always be there!”, French President Hollande says in a rather disorganised speech; the Sting reports live from World Economic Forum 2015 in Davos

What just happened? 5 themes from the COP24 climate talks in Poland

More bank bailouts at taxpayers’ expenses

EP wants data protection guaranteed before allowing fingerprint exchange with UK

Business growth is key to post-pandemic recovery

A new paradigm for collaboration: mission-based ecosystems

Africa is ‘on the rise’, says UN chief Guterres, urging collaboration for better future

MEPs urge UK to break current deadlock

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

Commission supports Member States in tackling coronavirus hotspots with offer of four million additional doses of BioNTech-Pfizer vaccine to be delivered this month

These 4 companies are turning food waste into cosmetics, clothing and more

Ahead of State of the Union the European Youth Forum highlights lack of action on youth employment

More international support needed to curb deadly measles outbreak in DR Congo

White Coat, Stained red

Gas pipeline in the European Union. (Copyright: EU, 2012 / Source: EC - Audiovisual Service / Photo: Ferenc Isza)

EU Investment Bank approves € 1.5bn loan for Trans Adriatic Pipeline (TAP)

COVID-19 has accelerated India’s digital reset

Commission celebrates the 30th anniversary of the Jean Monnet Activities promoting European studies worldwide

Meet the Seed Warrior: the man on a mission to rescue India’s rice diversity

UN rights chief ‘extremely concerned’ over deadly crackdown on protesters in Iran

Amid COVID-19 constraints, UN women’s commission meets to push gender equality forward

COVID-19, higher education and the impact on society: what we know so far and what could happen

As rural communities age, their public transport is shrinking. It’s time to fix this

Why the future of food must be blue as well as green

The digital revolution will transform the steel industry

ILO: Unemployment to increase by 8.1 million in 2013-2014

Central Mali: Top UN genocide prevention official sounds alarm over recent ethnically-targeted killings

Eco-anxiety during the Pandemic

GSMA Mobile 360 – Africa on 16-18 July 2019, in association with The European Sting

Destroying nuclear waste to create clean energy? It can be done

More Stings?

Advertising

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