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 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

5 technologies that will forever change global trade

Tokyo 2020 Olympics: from cardboard beds to recycled medals, how the Games are going green

This company is breeding millions of insects in the heart of London

EU, Latin America and the Caribbean: Partnering for prosperity, democracy, resilience and global governance

‘Critical test’ for North Korea’s Government as civilian suffering remains rife, warns UN rights expert

‘Everyone needs to do more’ to help suffering Venezuelans, says UN Emergency Relief Coordinator

How close is Eurozone to a new recession which may trigger formidable developments?

Why a global recession isn’t inevitable

State aid: Commission opens investigation into proposed public support for Peugeot plant in Spain

Compensation for damages by the State for infringement of EU law: the European Commission refers Spain to the Court of Justice for its rules on the compensation for damages incurred by private parties

3 reasons why most Africans aren’t on the internet – and how to connect them

Court of Auditors: EU budget money is there to be spent not to create value

We must stop a devastating ‘battle to the end’ in southwest Syria, declares UN envoy

We need to talk about failure in the social sector

How music can help children with autism connect

How much more social deterioration can the EU people endure?

The scary EU elections result and the delayed Council’s repentance

A ship with containers at the port of Rotterdam. (Copyright: European Union. Source: EC - Audiovisual Service. Photo: Robert Meerding)

US follows the EU in impeding China market economy status in WTO

World Migratory Bird Day highlights deadly risks of plastic pollution

Libyan authorities must shoulder the burden to support country’s ‘vulnerable’ south

MEPs: Juan Guaidó is the legitimate interim President of Venezuela

Is it impossible to place the banks under control?

3 ways we are making an impact on plastic pollution

How income-sharing agreements can improve access to education

Ebola: EU provides an additional €30 million to tackle the outbreak in the Democratic Republic of Congo

Climate Change Revolution: by-laws for the world

Living to 100: why we should plan for more sushi, chocolate and work

Parliament backs measures to cut e-commerce VAT fraud

Coronavirus: Member States agree on an interoperability solution for mobile tracing and warning apps

Coronavirus: Commission presents practical guidance to ensure continuous flow of goods across EU via green lanes

This Chinese megacity is building a massive car-free district

‘No steps taken’ so far to end Israel’s illegal settlement activity on Palestinian land – UN envoy

Postal workers in France are helping elderly people fight loneliness

Tuesday’s Daily Brief: sexual violence in conflict, a malaria vaccine trial, updates on Libya, Ebola in DR Congo, Sri Lanka and Mali

The technological revolution has changed the way of saving lives

10 technology trends to watch in the COVID-19 pandemic

Colombia: ‘Terrible trend’ of rights defenders killed, harassed; UN calls for ‘significant effort’ to tackle impunity

Spirit unlimited

Stop wars disguised as peace missions

A Europe that Protects: Commission calls for more efforts to ensure adoption of security proposals

This Kenyan company makes fuel from human poo

Coronavirus: Commission receives first preliminary application for support from the EU Solidarity Fund for health emergency from Italy

European Union: From financial consolidation to deeper political division

Romanian Presidency priorities discussed in committees

Why rich countries are seeing more poverty

UN gender agency hails record-breaking number of women in new US Congress as ‘historic victory’

How digital can transform healthcare in Asia for millions of people

MEPs call for concrete details and novel tools to address the economic crisis

‘Ground-breaking innovation’ needed in cities, where battle for sustainable development will be won or lost, says UN agency chief

The end of Spitzenkandidat: EU leaders concluded unexpectedly on EU top jobs

An enlightened response to COVID-19 can avert the climate emergency

Can the Notre-Dame fire freeze the ‘Yellow Vests’ uprising?

Changing how we produce and consume: New Circular Economy Action Plan shows the way to a climate-neutral, competitive economy of empowered consumers

Myanmar: Departing UN rights expert still hopeful for democratic transition

Ebola cases rising in DR Congo, but UN health agency cites progress in community trust-building

How companies can lead purposeful action in the skilling revolution

Lorenzo Natali Media Prize 2019: winners of EU’s development journalism award unveiled

We have solutions to crime. We just need to scale them

Venezuela: ‘A worrying destabilizing factor in the region’, Bachelet tells Human Rights Council

As north-west Syria violence reaches ‘horrifying’ new level, UN relief chief says ceasefire is only option

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