Probably most of you here on ATS have been following the current economic situation in Europe and are eager to see what is going to happen next.
In 2011, Greece and Italy experienced something that people never expected to happen, their democratically elected head of state were replaced by
unelected technocrat (or banker). What are they doing now ? more austerity measures, more bailouts... in other words, paying a credit card with
another one and at the same time, squeezing the middle class with wages and jobs cut.
I have to say that I am no economist so it's really hard to really understand what it happening. Did Greece really spend that much beyond their mean
on social programs and what not, that they have no choice than to endure those harsh measures ? Well I've been trying to look at some numbers to
understand the situation ... here's what I have found (the stats that I will be using are from indexmundi.com).
Definition of Public debt: This entry records the cumulative total of all government borrowings less repayments that are denominated in a country's
home currency. Public debt should not be confused with external debt, which reflects the foreign currency liabilities of both the private and public
sector and must be financed out of foreign exchange earnings.
Country 2004 2005 2006 2007 2008 2009 2010
Greece 112 106.8 104.6 89.5 97.4 113.4 144
As we can see for Greece, public debt have been over 100% of the GDP for a while now. Now let's take a look at the
Definition of Debt - external: This entry gives the total public and private debt owed to nonresidents repayable in foreign currency, goods, or
services. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms.
Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Greece 41.9 57 63.4 63.4 65.51 67.23 75.18 301.9 86.72 504.6 552.8 532.9
I find these numbers very interesting. In one year, from 2006 to 2007, the external debt quadrupled. Noticed how the public debt as a ratio of the GDP
stay relatively stable, even decrease between 2006 and 2007.
The same thing is happening for Italy
numbers are even more astonishing.
As I previously stated, I am no economist and there might be a logical explanation for those numbers.
Any thoughts ?