Great graphic of the EU crisis via the Beeb:


Click thru for enlarged version with full text:

What really caused the eurozone crisis?
BBC News, December 22, 2011

Category: Bailouts, Credit, Data Analysis, Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

13 Responses to “What Really Caused The Eurozone Crisis?”

  1. Christopher says:




  2. Haigh says:

    Blaming a financial crisis on greed is like blaming gravity for the crash of an airplane.

  3. jus7tme says:

    PRIVATE DEBT caused the 2007-2011 Eurozone crisis. And the samwe is true for the rest of the world.

    Repeat after me: PRIVATE DEBT was the cause. Not the public debt.

  4. Christopher is correct. Excessive greed is to blame. There is no need for constant loans, borrowing and re-financing. There was a German village in the news very recently because the village made $5.5million a year just from selling back its ‘green’ energy to the national grid. If a village can make so much money surely a country can – not even including national resources.
    So to say ‘Blaming a financial crisis on greed is like blaming gravity for the crash of an airplane’ is not really correct. It is more the fact that the aiplane crashed due to the engine breaking because it has not been maintained by an engineer because of corruption where those in a position of power have failed in their fiduciary duties of care. I think that would be more correct.

  5. stonedwino says:

    Germany had a higher standard of living, higher wages to begin with, along with an extremely good social safety net within the original EU. As the larger southern European nations joined the EU and switching from their original currencies to the Euro, inflation took hold. There was a race to try and get everyone and everything within the EU up to German standards, but the discrepancy in the internal economies of the above indicated EU nations could only be bridged so much. Germany held onto their standards, safety net and jobs, without massive internal inflation, taking advantage of the export driven economy they have become, while the rest of the EU countries are net importers. Voila! The charts are there to explain it all, but you need to know how it all started and evolved to really understand what all the charts are telling you.

  6. benjimagoo says:

    So let me have a crack at displaying my ignorance.

    The fall out from cutting spending is, as per the beeb going to cause people to reign in spending thus deepen the recession.

    What exists by way of an EU collaboration on pricing of labor? If for example Germany is selling more competitively priced products due to lower labor costs, could they then put up the costs of their labor in line with the Spanish?

    I’m finding it difficult to express my idea here, however the crux of point I’m making is that an inharmonious labor wage sector seems to be the main concern, does anyone have any information on how you can have a balanced single economy in Europe when labor costs are so varied between member states?

    I’ll get my coat.

  7. willid3 says:

    obviously it was the CRA, Freddie and Frannie. or the Obama administration. or democrats.

  8. Futuredome says:

    Yeah, but high private debt was pushed by high invester savings. Let the ones with the savings force you into debt. The basics of the supply sided economics, which yes, represents Austrian economics as any. They however, believe in a different way to handle the overaccumalation of debt than their ideological siblings, the monetarists, who are forced to create loose monetary conditions to support the financial framework. Yet, both believe in the capital owner and its financial minons over all other.

    It is like hedgefund managers and their oversavings creating commodity bubbles. Instead of the government just raising capital gains to suck out the liquidity and getting some benefit from it, the Austrian solution would be to force the debtors to liquidate creating a condition of asset deflation and cash returns. That way, the hedgefund manager is forced to liquidate his positions and sit on cash allowing it to raise in value, busting the commodity bubble. This is the basis why supply-sided economics doesn’t work. Whither thy laborer? It is why that solution is completely insufficient and anti-country. The larger the economy grows, the stronger the deathknell will be. On one hand, the liquidity is supported by a endless supply by central banks pushed into unproductive means, on the other, liquidity is cut and the lack of money causes productive resources to be wasted.

    It is why supply sided economics needs to be abolished. Unless you do that, you will be left with 2 choices, neither being any good. Which is why Europe and its fluffy cousin the United States are in trouble.

  9. Moss says:

    The bankster controlled system is dependent on credit expansion. That is how ‘Growth’ occurs, pulling forward consumption. Now that we have massive deleveraging by the private sector the public sector levers up…. picks up the slack or the whole system collapses in a heap. Austerity is then pushed by the bankster controlled authorities so the sovereign debt held by the banksters does not also collapse. A circle jerk of bankster controlled credit. I do believe the US deficit just crossed 100% of GDP.

  10. stonedwino says:

    Germany disintegrates Republican myth, that Corporations and Unions can work together in such a way that both profit, and you find this conclusion where….hmmm? In 2010, Germany produced more than 5.5 million automobiles; the U.S produced 2.7 million. At the same time, the average auto worker in Germany made $67.14 per hour in salary in benefits; the average one in the U.S. made $33.77 per hour. German wages have been so high for years that during the recent downturn labor was ok with lower increases to wages given how well the average German does…try that one on for size.

  11. tmccart says:

    What about massive sovereign debt borrowed from other irresponsible governments and banks that can’t be serviced or rolled over (refinanced)

    It’s the height of naeviety to ignore the evidence, let the US government off the hook and blame “greed”! You’re not doing yourself or your fellow citizens any justice whatsoever with these simplistic solutions. Governments have failed you, period!

  12. victor says:

    @stonedwino: please dont forget that TOTAL US auto production in 2010 was 7.8 million of which, true, less than 1/3 were automobiles, so what’s your point? The US auto industry has been the epitome of the toxic combo of bad management AND bad unions with the results we are all aware of. There are plenty of US unionized industries that are doing just fine, see Boeing, GE’s US plants, all US refineries, all defense contractors, etc.

    What caused the Eurozone crisis? Certainly, similar to here in the US, their mammoth banks played a major role: BNP Paribas, HSBC Holdings, Deutsche Bank, Barclays PLC, Royal Bank of Scotland Group, Credit Agricole SA each with assets larger than the GDP of their countries!, larger than our “too big to fail” banks. A bankster is a bankster and nothing but a bankster (rhymes with gangster) regardless of geography.

  13. JimRino says:

    I’m calling this a GS orchestrated “crisis”, a back-door bailout of Insolvent Banks.
    How it played out:
    - Raise National Debt Fears, call Greek debt a crisis, 150% debt to 1 year GDP.
    Compare that to GS itself with 33 leverage to capital ratio, or MF Global’s 100 to 1, or 10,000%.
    Solve the “problem”:
    - Lend the insolvent banks an Unlimited amount of 1% money.
    - “Require” the banks buy now high interest rate National Debt.

    “Crisis” resolved.
    Tax Payers Bail Out the Banks!