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==Sustainability adjustments==
==Index and Glossary==
There is an index to the topics dealt with in the economics articles [[Economics/Related Articles|here]], and a glossary of economic terms [[Economics/Glossary|here]].


The primary budget balance (as a percentage of gdp) required to avoid an increase in the [[public debt]] is given by f&nbsp;=&nbsp;d(g&nbsp;-&nbsp;r) where r is the annual interest rate on the debt; and g is the annual growth rate of nominal GDP (See [[Fiscal policy/Tutorials#The debt trap identity|the debt trap identity]])
See also the  [[Politics/Index|'''index to the politics articles ''']].


:::{|class = "wikitable"
[[User:Nick_Gardner#Methodology|methodology]]
|
! Portugal
! Ireland
! &nbsp;&nbsp;Italy&nbsp;&nbsp;
! &nbsp;Greece&nbsp;
! &nbsp;&nbsp;Spain&nbsp;&nbsp;
|-
| &nbsp;&nbsp;&nbsp;&nbsp;(g&nbsp;-&nbsp;r) &nbsp;2003-2007
|align="center"| -0.2
|align="center"| 2.2
|align="center"| -0.7
|align="center"| 3.9
|align="center"| 1.7
|-
|&nbsp; &nbsp;&nbsp;(g&nbsp;-&nbsp;r) &nbsp;2009-2011
|align="center"| -3.3
|align="center"| -5.3
|align="center"| -3.6
|align="center"| -6.0
|align="center"| -2.3
|-
| Budget adjustment to achieve sustainability (% of GDP)
|align="center"| 3.1
|align="center"| 7.5
|align="center"| 2.9
|align="center"| 9.9
|align="center"| 4.0
|}


Source: Cinzia Alcidi and  Daniel GrosIs: ''Is Greece different? Adjustment difficulties in southern Europe'', Vox, 22 April 2010[http://www.voxeu.org/index.php?q=node/4914]
{|align="right" cellpadding="10" style="background-color:#FFFFCC; width:40%; border: 1px solid #aaa; margin:20px; font-size: 92%;"
|"''The European Union is something ...
very precious, not only for us in Europe, but also for the rest of the world. Because the European Union is, in fact, the result of a project for peace that brought together nations emerging from the ruins of the Second World War. It was the European Union that united them in peace around the values of respect for human dignity, freedom, democracy, justice, rule of law and respect for human rights.''"


===Policy toward Greece===
:Merci Olsson, of Nobel Med, congratulating President Barroso on the award of The Nobel Peace Prize t the European Union, 12 October 2012.
 
|}
:(a) conditional loans at below the market rate of interest;
:(b)sponsorship of a [[restructure (debt)|restructuring]] of the government's debt;
:(c) [[fiscal transfer]]s from other Eurozone countries to Greece;
- in addition to which the Greek government has the option of
 
Option (a) would result in the Greek government's [[default (finance)|default]] because, without external support, it would not then be able to repay its maturing debt. (Further borrowing would only be possible at interest rates that would be so high that it would make matters worse). There would in principle be a degree of [[contagion (finance)|contagion]] of the problem by any country with large holdings of Greek government bonds (but it appears that no other country is in that position
<ref>See the exposure data from ''Barclays Capital'', reported in ''The Economist'' [http://www.economist.com/node/18867023?story_id=18867023]</ref>). There would also be contagion by some of the other ''PIIGS'' countries because the realisation that they could no longer count on financial support from the Eurozone would prompt investors to demand increased [[risk premium]]s. Some contagion by Portugal and Spain has happened in anticipation of a default.<br>
Option (b)serves to avoid immediate default and may provide the Greek government with a long-term opportunity to return to [[Fiscal policy/Tutorials#Sustainability|fiscal sustainability]], depending upon the terms of the loan.<br>
Option (c) offers a similar prospect, depending upon the terms of the renegotiated debt.<br>
Option (d) could enable an immediate return to fiscal sustainability.<br>
Option (e) can be dismissed because it would be so costly for Greece<ref>[http://www.thetimes.co.uk/tto/business/economics/article3156724.ece Sam Fleming: ''Devastating price of euro failure'', Times, 7 September 2011]</ref>  as to be impracticable.
 
===Eurozone economic integration===
As the crisis spread from Greece to the other [[PIIGS]] countries, there was widespread agreement that a choice would have to be made between the abandonment of the euro and the adoption of the centralised control of economic policy. Support in principle for the latter option was expressed by
[[Nicolas Sarkozy|President Sarkozy]] and [[Angela Merkel|Chancellor Merkel]] in December 2010<ref>[http://www.ft.com/cms/s/0/825119d8-0463-11e0-8a3c-00144feabdc0.html#axzz17mftMHoY Gerrit Wiesmann  and Peter Spiegel: ''Merkel and Sarkozy call for deeper union'', Financial Times, December 10 2010]</ref>, and again  August 2011<ref>[http://www.reuters.com/article/2011/08/16/eurozone-highlights-idUSL5E7JG1YQ20110816 ''Highlights - Merkel, Sarkozy news conference'', Reuters 16 August 2011]</ref>, when they advocated the creation of a "true European economic government" - although they had not reached agreement upon more than a limited initial move in that direction <ref>[http://media.ft.com/cms/1e93f294-c8df-11e0-a2c8-00144feabdc0.pdf ''Letter to President van Rompuy'', Financial Times, 17 August 2011]</ref>. There were mixed reactions from other eurozone countries<ref>[http://www.reuters.com/article/2011/08/17/us-eurozone-highlights-idUSTRE77F55Y20110817 ''Factbox: Eurozone reaction to Franco-German integration push'', Reuters 17 August 2011]</ref> and there is likely to be strong opposition, both to the eventual replacement of government debts by "eurobonds", and to the centralised control of [[fiscal policy]].
 
Default by Greece would create a [[shock (economics)|shock]] to the global financial system, raising a danger of financial [[panic (banking)|panic]], but the amount involved is smaller than was involved in the ''Lehman Brothers'' collapse that triggered the [[crash of 2008|2008 panic]].
The economic impact of the Greek crisis is limited by the relatively small size of its economy. The Spanish economy is much larger, making the possibility of a loss of confidence in its government's debt a greater cause for concern.
 
 
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Latest revision as of 04:28, 22 November 2023


The account of this former contributor was not re-activated after the server upgrade of March 2022.


Index and Glossary

There is an index to the topics dealt with in the economics articles here, and a glossary of economic terms here.

See also the index to the politics articles .

methodology

"The European Union is something ... 
very precious, not only for us in Europe, but also for the rest of the world. Because the European Union is, in fact, the result of a project for peace that brought together nations emerging from the ruins of the Second World War. It was the European Union that united them in peace around the values of respect for human dignity, freedom, democracy, justice, rule of law and respect for human rights."
Merci Olsson, of Nobel Med, congratulating President Barroso on the award of The Nobel Peace Prize t the European Union, 12 October 2012.
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