This for me is the most interesting, as it is long term. As you can see Greece had a BIG cost of raising loans before the euro, during the euro just about everyone could borrow at the same rate - never mind their underlying fiscal position! Then after the bust everything went pear shaped and those that had borrowed more than they could possibly pay off have been hit with high interest rates - how stupid of them.
And so now many countries are rapidly approaching the point where default will happen. And good luck to them when that does. The problem is they may take everyone else with them.
The economy is tanking because households are not spending, in fact as we see below everyone is irrationally saving - or maybe it is because banks are charging too much interest - 20% on a credit card is much too much! Especially when the BOE rate is near zero.
But the thing is, it's not government debt which is out of control, although it is bad enough because too much of it is expenses (health, social, education) not investment (roads, trains). Nor is it the finance companies. It is the households and non-financial companies that have huge debts.
So why did Greece and the other go belly up? Relative labour costs! And lack of productivity. Unfortunately the UK is not on this chart, so it is finger pointing at the euro zone, but hey-ho it gives their game away.
Last the relative competitiveness of different countries. The vertical column shows what the exchange rate should be against the euro plotted against the export growth which essential to survive. As you can see Germany has profited greatly by effectively having a too cheap currency and exporting greatly, whereas poor old Italy should have a lower currency and needs to do a whole lot better exporting.So there it is, now we just need everyone to get educated to read and understand these things so we can stop stupid political eurosceptic red-top paper headlines.
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