Thursday, July 20, 2017

20/7/17: Euro Area's Great non-Deleveraging


A neat data summary for the European 'real economic debt' dynamics since 2006:

In the nutshell, the Euro area recovery:

  1. Government debt to GDP ratio is up from the average of 66% in 2006-2007 to 89% in 2016;
  2. Corporate debt to GDP ratio is up from the average of 72% in 2006-2007 to 78% in 2016; and
  3. Household debt to GDP ratio is down (or rather, statistically flat) from the average of 58.5% in 2006-2007 to 58% in 2016.
The Great Austerity did not produce a Great Deleveraging. Even the Great Wave of Bankruptcies that swept across much of the Euro area in 2009-2014 did not produce a Great Deleveraging. The European Banking Union, and the Genuine Monetary Union and the Great QE push by the ECB - all together did not produce a Great Deleveraging. 

Total real economic debt stood at 195%-198% of GDP in 2006-2007 - at the peak of previous asset bubble and economic 'expansion' dynamism, and it stands at 225% of GDP in 2016, after what has been described as 'robust' economic recovery. 

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