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The New European Normal... Is Squiggly

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Via Lars W at Cornucopia blog,

Eurostat just updated their statistics for government debt to GDP for 2011, so here is an updated graph over Belgium, Italy, Greece, Portugal, Ireland, Spain, France, UK, Netherlands, Germany and Sweden and the development of their gross government debt to GDP from 1996 to 2011.

Countries not matching the new Merkozy-limit of a maximum of 3% budget deficit were Greece, Ireland, Portugal, Spain and... France.

But we can forget the old euro convergence criteria of 2% deficit and at most 60% debt to GDP.

In simple terms - countries need to be in the lower left quadrant (green) and yet the PIGS are rapidly heading in the exact opposite direction (upper right orange quadrant) missing both debt and deficit convergence criteria.

{click chart for larger version}

The economy of Italy seems stable at the moment, so the only countries still having serious troubles with exploding government debt during 2011 were Portugal, Italy, Greece and Spain.

So forget PIIGS at the moment. It is spelled PIGS, for real this time! Until of course it deteriorates once again.


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