The 16-nation eurozone must have the option of removing one of its members from the club if a country persistently breaks its fiscal rules, German Chancellor Angela Merkel said Wednesday.
At the end of 2008, the lowest ratios of government debt to GDP were recorded in Estonia (4.6%), Luxembourg (13.5%), Romania (13.6%), Bulgaria (14.1%), and Lithuania (15.6%). Nine Member States had government debt ratios higher than 60% of GDP in 2008: Italy (105.8%), Greece (99.2%), Belgium (89.8%), Hungary (72.9%), France (67.4%), Portugal (66.3%), Germany (65.9%), Malta (63.8%) and Austria (62.6%).
The chancellor added that the current rules in the European Union's Stability and Growth Pact were no longer sufficient to deal with the current crisis, which she described as the euro's "greatest-ever challenge."
1997 59.7 1998 60.3 1999 60.9 2000 59.7 2001 58.8 2002 60.4 2003 63.9 2004 65.7 2005 68.0 2006 67.6 2007 65.0 2008 65.9
Heads of state and government agreed at the March 2005 Summit to revise the EU's Stability and Growth Pact reform. Under the revised rules, member states must still keep their public deficits under a 3% GDP/deficit ratio and their debts under a 60% GDP/debt ratio. However, the pact's rules have been made more 'flexible' across a range of areas. For example, member states will avoid an excessive deficit procedure (EDP) if they experience any negative growth at all (previously -2%), can draw on more "relevant factors" to avoid an EDP and will have longer deadlines if they do move into an EDP. ... In essence, big countries such as France and Germany have won concessions making the pact more 'flexible' in various parts, adding up to a considerable relaxation of the rules. In return, countries such as Austria and Netherlands have won references to "enhanced surveillance, peer support and peer pressure". The two thresholds - 60% for the debt and 3% for the deficit - remain unchanged.
However, the pact's rules have been made more 'flexible' across a range of areas. For example, member states will avoid an excessive deficit procedure (EDP) if they experience any negative growth at all (previously -2%), can draw on more "relevant factors" to avoid an EDP and will have longer deadlines if they do move into an EDP.
...
In essence, big countries such as France and Germany have won concessions making the pact more 'flexible' in various parts, adding up to a considerable relaxation of the rules. In return, countries such as Austria and Netherlands have won references to "enhanced surveillance, peer support and peer pressure".
The two thresholds - 60% for the debt and 3% for the deficit - remain unchanged.
It is really, really hard to take Germany seriously at all on this. The brainless should not be in banking -- Willem Buiter
I mean Excessive Debt Procedure. The brainless should not be in banking -- Willem Buiter
So, since they were fudging numbers, I can't really say that it's a total shock that the deficit went from 100% to 120% in that period.
I assumed that things were much worse (in terms of the level of deception). I realize now that the deception is actually the level of deficit in the annual budget, but total budget should be a much bigger concern than annual budget. I believe they jumped from 7% to 12.7% in the annual budget, and that's where the anger arose. A 6% annual revision adds about 15 billion euros to the federal deficit, so 15 billion would be the level of deception.
Something is really really funky in all the numbers. You can't simply add the new debt from 2009 to the previous debt from 2008 to get to the current debt level. Either the degree of trouble for Greece was obvious in plain sight in previous reporting, or the current numbers that we're working with now are off. There's definitely something wrong there.
1997 96.6 1998 94.5 -2.1 1999 94.0 -0.5 2000 103.4 +9.4 2001 103.7 +0.3 2002 101.7 -2.0 2003 97.4 -4.3 2004 98.6 +1.2 2005 100.0 +1.4 2006 97.1 -2.9 2007 95.6 -1.5 2008 99.2 +3.6
So, the numbers are funky.
I really will give up on this. I think what happens is as warren Buffet said, "When the tied goes out, we see who is swimming naked." 100% debt to GDP is ok when your economy is growing. When times get tough, it's a scandal.
