Daily Archives: April 12, 2012

Claire Jones

A puzzling aspect of European leaders’ fixation on fiscal profligacy is that, of the five PIIGS (ie, Portugal, Italy, Ireland, Greece and Spain), two had government debt-to-GDP ratios that were among the lowest in the eurozone. At least until the outbreak of financial turmoil in 2007.

As the chart below — taken from an article in the European Central Bank’s monthly bulletin — shows, back in 2007 both Ireland and Spain were well within the 60% debt-to-GDP limit prescribed by the Maastricht criteria. And Portugal was only a touch above it.












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