PIIGS Current Account 2011-2012

Société Générale made this chart on the current account balance as a percentage of GDP for Greece, Italy, Spain, Portugal and Ireland. In October 2012 Ireland, Spain and Greece had a positive balance on the current account, meaning that the value of their exports was higher than the value of imports. Especially for Greece this is a tremendous improvement since the huge negative numbers in the beginning of 2011. Both Italy and Portugal also temporarily had a positive balance in the beginning of 2012.

The question is whether these improved current account balance mainly reflect better export fundamentals or lower imports due to lack of economic growth.

Societe Generale

Manufacturing Activity Down Around the World

This chart from The Economist compares manufacturing activity around the world for last june compared to the last two years. Most countries saw a shard decline this year, compared to last year, although less in the Emerging Markets.

Due to a request by the Economist this graph has been removed. 

View the graph here

Target2 (im)balances in the Euro Zone (end of 2011)

In this post you can see the Target2 balances in the Euro Area. Target2 is the payment system in the Euro Zone that makes sure payments can be easily made between residents in the various countries. When a customer of a bank wants to transfer money to a bank in another country, the bank in the home country can send the money to the bank abroad if it sends an asset as well. The foreign bank would not accept the money alone, because the savings will show up as an liability on its balance sheet and its balance sheet would need assets by the same amount to remain in balance.

There are many ways for the home bank to do this. One way for the home bank is to borrow the corresponding asset at the central bank in the home country. The central bank would then borrow the amount from the ECB (incurring a more negative Target2 balance), the central bank in the foreign country will complete the transaction to lend the amount from the ECB (incurring a more positive Target2 balance), to give the asset to the bank which recieved the transferred money. As you can see on average this process occured more from southern countries to northern countries. This shows the capital outflow from the PIIGS countries, which could be of great concern.

Target2

Spain: Impact of Housing on GDP

As you can see a big part of the total investments in Spain consisted of housing investment. Especially so in the years closer to the crises. In the lower panel you can see construction raised GDP before the crises and has lowered it since the crises started.Banque de Espana

Overview of the Deficit And Debt History for Euro Zone (2000-2010)

The next two chart give a great overview of the government finances in the first decade of this century in the Euro Zone. It also shows which countries broke the rules of the Stability and Growth Pact. Which says countries can't have deficits higher than three percent and debt higher than sixty percent, both as a percentage of GDP.


Before the crisis Ireland, Spain, Estonia, Luxembourgh and Finland were the only countries that never broke the rules. Especially notice France and Germany, which both had a debt higher than 60% every year since 2003. France had a deficit higher than 3% for 2002-2004 and Germany for 2001-2005.


This chart shows the deficits per year for all the Euro Zone countries from 2000-2010.

This chart shows how the government debt changed per year for all the Euro Zone countries from 2000-2010.

Macrobusiness

Italy's Deficit Compared to the other PIGS and Belgium

Italy has the lowest deficit forecast of the six countries for 2011.

Thompson Reuters

Reminder Bank Holdings of PIIGS Government Debt --> Italy

This chart from Business Insider shows how the banks are exposed to Government Debt of the PIIGS-countries. You can see the problem with Italy..

Source: Business Insider

Who has claims on the PIGS CDS derivatives?

This chart shows the exposure from European and United States Banks to Credit Default Swaps in the PIGS countries. Business Insider: 'a default woud trigger a ''credit event'' payout on these insurance.'

Bond Vigilantes

Holders of Greece, Ireland and Portugal Debt

'Who holds the sovereign debt of Greece, Ireland and Portugal? Not an easy question. So, RBC Capital Markets compiled figures and MarketBeat/WSJ published them. Bellow, are the charts  of the estimated debt exposure.'

LisWires

Bank Exposure To PIIGS As A Percentage Of GDP

Bank exposure to the PIGS - public and private debt - as a percenatage of GDP in Q4 2010. This chart from Business Insider shows the total stake foreign banks of selected countries have in the public and private debt of the PIGS countries. You can see that Greece is not the big problem.

Source: Business Insider

Bank Holdings of PIIGS Government Debt

This chart from Business Insider shows how the banks are exposed to Government Debt of the PIIGS-countries. You can see the problem with Italy..

Source: Business Insider