Mark Trumbull, a staff writer for The Christian Science Monitor, had an interesting article today about the G8 meeting that opened today at the presidential retreat at Camp David, Maryland. Today’s blog entry is a summary of his piece.
The heads of state will discuss Syria, nuclear proliferation, and worldwide famine issues. But the dominant issue will be the eurozone debt crisis. The recent elections in France (where a socialist won) and Greece (where no party could form a majority) have added urgency to the debt crisis, especially since the Eurozone austerity measures have left the eurozone stagnant or in a recession. Greece may leave the common currency, the Euro. European stocks are down 15 percent in the last two months. Stock markets in emerging market countries are also down.
The American markets have skidded down in May as the Greek parliament has failed to form a majority, but American and German bonds are up as part of a "flight to safety." British Prime Minister David Cameron has given a major speech on the European economy, saying yesterday that the member nations need to work toward both debt reduction and growth.
Vladimir Putin of the Russian Republic will not be at the meeting, but the leaders of Germany, France, Italy, Britain, Canada and Japan will join the host nation, the USA, for two days of meetings. German leader Angela Merkel favors austerity, yet France’s new President Francois Hollande would prefer growth. The leaders need a game plan for Greece’s possible exit from the Euro. Easier lending policies by the European Central Bank or the issuance of new Eurobonds are possible steps that may be considered. British Prime Minister Cameron has also brought up the problem of economic sluggishness: "We all need to address Europe’s overall low productivity and lack of economic dynamism, which remains its Achilles' Heel. Most EU member states are becoming less competitive compared to the rest of the world, not more."
The economies of Italy and Spain are also delicate. China’s economy is slowing. And there is a G20 meeting coming up in another month.
Summarized from:
http://www.csmonitor.com/USA/Politics/2012/0518/G8-summit-Euro-crisis-and-possible-Grexit-overshadow-agenda
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Below: a summary of graphs and
statistics printed with the article
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Debt as a percentage of GDP
Greece 165%
Italy 121%
Portugal 106%
United States 100%
France 86%
Germany 82%
Spain 67%
http://www.csmonitor.com/World/Europe/2011/1202/The-eurozone-crisis-explained-in-5-simple-graphs/Debt-as-a-percentage-of-GDP
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Deficit spending as a percentage of GDP
Highest deficit percentage to lowest
United States
Greece
Spain
Portugal
France
Italy
Germany
None of these nations a running a balanced budget – they are all borrowing
http://www.csmonitor.com/World/Europe/2011/1202/The-eurozone-crisis-explained-in-5-simple-graphs/Deficit-spending-as-a-percentage-of-GDP
= = = = = = = = = = = = = = = =
Interest rates on ten-year government bonds
This figure provides a warning of a possible default if those bonds are paying above 7%. In the last year, Greece has moved from 13.5% to 17.78%. Portugal was at 8.7% in 2011, when Ireland was at 9.6%. At that time, Spain was about 5.5%. Three months ago, Germany was paying 1.83% interest on ten year bonds.
http://www.csmonitor.com/World/Europe/2011/1202/The-eurozone-crisis-explained-in-5-simple-graphs/Interest-rates
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The Shadow Economy
The shadow economy is the marketplace that eludes government management and regulation. It is also called the "underground economy." It includes the black market as well as unrecorded cash transactions, for example, domestic help paid in cash. Here is a list of the percentage of a nation’s economy that consists of the shadow economy:
Greece 24.3%
Italy 21.2%
Portugal 19.4%
Spain 19.2%
Germany 13.7%
France 11%
USA 7%
http://www.csmonitor.com/World/Europe/2011/1202/The-eurozone-crisis-explained-in-5-simple-graphs/The-shadow-economy
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Exports as a Percentage of the Economy
"Does this country have anything that the world wants to buy?" Only Germany does well at this measure.
Germany 41%
Portugal 28%
Italy 24%
Spain 23%
France 23%
Greece 19%
USA 11%
http://www.csmonitor.com/World/Europe/2011/1202/The-eurozone-crisis-explained-in-5-simple-graphs/Exports-as-a-percentage-of-GDP
The heads of state will discuss Syria, nuclear proliferation, and worldwide famine issues. But the dominant issue will be the eurozone debt crisis. The recent elections in France (where a socialist won) and Greece (where no party could form a majority) have added urgency to the debt crisis, especially since the Eurozone austerity measures have left the eurozone stagnant or in a recession. Greece may leave the common currency, the Euro. European stocks are down 15 percent in the last two months. Stock markets in emerging market countries are also down.
The American markets have skidded down in May as the Greek parliament has failed to form a majority, but American and German bonds are up as part of a "flight to safety." British Prime Minister David Cameron has given a major speech on the European economy, saying yesterday that the member nations need to work toward both debt reduction and growth.
Vladimir Putin of the Russian Republic will not be at the meeting, but the leaders of Germany, France, Italy, Britain, Canada and Japan will join the host nation, the USA, for two days of meetings. German leader Angela Merkel favors austerity, yet France’s new President Francois Hollande would prefer growth. The leaders need a game plan for Greece’s possible exit from the Euro. Easier lending policies by the European Central Bank or the issuance of new Eurobonds are possible steps that may be considered. British Prime Minister Cameron has also brought up the problem of economic sluggishness: "We all need to address Europe’s overall low productivity and lack of economic dynamism, which remains its Achilles' Heel. Most EU member states are becoming less competitive compared to the rest of the world, not more."
The economies of Italy and Spain are also delicate. China’s economy is slowing. And there is a G20 meeting coming up in another month.
Summarized from:
http://www.csmonitor.com/USA/Politics/2012/0518/G8-summit-Euro-crisis-and-possible-Grexit-overshadow-agenda
= = = = = = = = = = = = = = = =
= = = = = = = = = = = = = = = =
Below: a summary of graphs and
statistics printed with the article
= = = = = = = = = = = = = = = =
Debt as a percentage of GDP
Greece 165%
Italy 121%
Portugal 106%
United States 100%
France 86%
Germany 82%
Spain 67%
http://www.csmonitor.com/World/Europe/2011/1202/The-eurozone-crisis-explained-in-5-simple-graphs/Debt-as-a-percentage-of-GDP
= = = = = = = = = = = = = = = =
Deficit spending as a percentage of GDP
Highest deficit percentage to lowest
United States
Greece
Spain
Portugal
France
Italy
Germany
None of these nations a running a balanced budget – they are all borrowing
http://www.csmonitor.com/World/Europe/2011/1202/The-eurozone-crisis-explained-in-5-simple-graphs/Deficit-spending-as-a-percentage-of-GDP
= = = = = = = = = = = = = = = =
Interest rates on ten-year government bonds
This figure provides a warning of a possible default if those bonds are paying above 7%. In the last year, Greece has moved from 13.5% to 17.78%. Portugal was at 8.7% in 2011, when Ireland was at 9.6%. At that time, Spain was about 5.5%. Three months ago, Germany was paying 1.83% interest on ten year bonds.
http://www.csmonitor.com/World/Europe/2011/1202/The-eurozone-crisis-explained-in-5-simple-graphs/Interest-rates
= = = = = = = = = = = = = = = =
The Shadow Economy
The shadow economy is the marketplace that eludes government management and regulation. It is also called the "underground economy." It includes the black market as well as unrecorded cash transactions, for example, domestic help paid in cash. Here is a list of the percentage of a nation’s economy that consists of the shadow economy:
Greece 24.3%
Italy 21.2%
Portugal 19.4%
Spain 19.2%
Germany 13.7%
France 11%
USA 7%
http://www.csmonitor.com/World/Europe/2011/1202/The-eurozone-crisis-explained-in-5-simple-graphs/The-shadow-economy
= = = = = = = = = = = = = = = =
Exports as a Percentage of the Economy
"Does this country have anything that the world wants to buy?" Only Germany does well at this measure.
Germany 41%
Portugal 28%
Italy 24%
Spain 23%
France 23%
Greece 19%
USA 11%
http://www.csmonitor.com/World/Europe/2011/1202/The-eurozone-crisis-explained-in-5-simple-graphs/Exports-as-a-percentage-of-GDP
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