Has Deleveraging in EU only just Begun?

Only in Ireland private debt has gone down notably. In Greece and Italy only the growth stopped, no deleveraging can be seen yet. For a fast recovery in all of these countries, private debt needs to decrease more. 

Washington Post

Declining Italian Growth and Governments

Reuters constructed this graph showing economic growth in Italy during the last five decades. Notice the constant declining in the trend growth. Also the beginning of each new government is depicted by the vertical lines.

Global Housing Market Update

This table from The Economist shows average house prices in Developed and Bric countries compared to their respective income and rent levels. House prices in Hong Kong, Canada and New Zealand are most overvalued. While house prices in Japan are highly undervalued. Also, the graph shows that Hong Kong saw the highest average price increase over the last year. The Netherlands had the biggest decline.

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

View the graph here

Projected Government Spending For Developed Countries in 2013

Denmark has the highest projected government spending as a percentage of GDP, with 58.4 percent. France and Austria also have notably high expentiture percentages, even above Noric countries Finland and Sweden. Greece doesn't have that high government spending after all with 48.3 it is around the average. Australia has the lowest government spending for the selected countries.

History of EU/Euro Zone (1929-2013)

Large overview of the history of the EU and the implementation of the Euro. From the first suggestion for a common European currency in 1929 until Croatia joining the EU in the beginning of 2013.

EZ Banking Sector As a Percentage of GDP (2000-2013)

This great chart by Thomson Reuters shows the Euro Zone bankings sectors of their respective countries GDP. With Luxembourg leading with a big gap, Ireland and Cyprus follow. Slovenia and Greece have notably small banking sectors.


Click on the picture for a bigger version.

Breakdown of holders of Italian Government Debt

This chart gives a detailed breakdown of the current owners of Italian government debt (Q2 2013). Notice that quite some debt is owned by European Central Banks.

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

Euro Zone Unemployment Spreads Q4 2012

When people talk about Euro Zone spreads they normally refer to the difference between the government borrowing interest rate of a particular Euro Zone country in comparison to the interest rate for the German government. German government bonds are taken as the benchmark since lending to the German government is basically seen as risk free. When lending to other countries, especially the southern Euro Zone countries, a risk premium is added on top of the German interest rate to reflect the higher default rate of those countries.

Besides this financial interpretation of spreads, a different form of spreads can be constructed to show the differences in the real economy between the Euro Zone countries: unemployment spreads. Unemployment spreads for the Euro Zone are defined as the difference between the unemployment rate in a particular Euro Zone country and the unemployment rate in Germany. As can be expected Euro Zone countries most hit by the Euro crisis have the highest unemployment spreads, with Greece and Spain even above 20 percent. This is a lot higher than the Euro Area average of 5.8 percent and the EU average of 5,3 percent. Austria, the Netherlands and Finland on the other hand have unemployment rates comparable to that of Germany.

OECD Yearly 2012 GDP Growth

More and more countries have been reporting their fourth quarter GDP growth for 2012 lately, and hence the yearly 2012 GDP growth rate. For the countries that have reported their figures China had the highest yearly growth rate of 7.8 percent. Indonesia and Norway are following China with 6.2 and 3.0 percent respectively. Yet, most countries had a growth rate of less than 2 percent, with most all European countries on the lower end. Portugal and Italy saw their economy's decline the most, in Portugal even with 3.2 percent.

2012 Euro Area Bond Yields

Compared to the beginning of the year, especially Greek and Portuguese, bond yields have come down quite a lot during the year. As is noted in the graph the Greek debt restructuring for Greek debt and the verbal commitment by the ECB president Draghi in July dampened the exit and breakup risk and hence brought down sovereign debt yields.

Where will the bond yields go in 2013?

The Economist

Changing Top Manufacturing Countries (1980-2010)

The developing countries have made their way more and more in the top 10 of global manufacturing countries. While you might expect China on the first spot, the United States as being the world's biggest economy is still the largest manufacturing producer. Brazil has advanced up to the sixth place. India just entered the top 10 in 2010 and Russia especially made a big jump from place 12 in 2000 to 11 in 2010.

ZeroHedge

EU Countries 2012 Government Debt Projections

Reuters constructed this graph, with data from the European Commission, which shows the projected government debt ratio's for the selected EU countries. As you cansee for most countries the debt to gdp ratio is well above it's 10 year average.

As you might have expected Greece has the highest debt to gdp ratio. On the other hand, Sweden's debt is even lower than it's 10 year average. Euro Area avearge government debt is expected to be at 95 percent.

Reuters

Household Debt Versus Disposable Income (1995-2011)

This graph gives the ratio of total household debt divided by the total of disposable income of the households in countries of the Euro Area and the USA. On average the household debt to income rate was relatively stable in the Euro Area approaching the 100 percent just before the credit crisis from around 70 percent at the beginning of the Euro. The household debt to income ratio was already higher in 1999 in the USA and saw a much bigger increase, but unlike in the Euro Area the ratio has come back quite a lot already in the United States.

The average of around 100 percent currently in the Euro Area is mainly formed by the bigger economies: Germany and France, who have a ratio close to the Euro Area average. There are notable outliners, especially Denmark, The Netherlands and Ireland that have a way bigger ratio of 200 to almost 300 percent.

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Credit Ratings, U.S., Japan and Euro Zone (Oct 2012)

Thompson Reuters created this graph with the long term sovereign debt ratings for the Western countries. For the three major credit rating institutions the ratings are listed.

Thompson Reuters

Government Debt in the EU Countries (second quarter 2012)

This great graph from Reuters shows per EU country the government debt it had at the end of the second quarter, as a percentage of GDP.

Since the crisis Portugal, Ireland have been accumulating debt at a high rate, while seeing their economy shrink significantly. This is shows in the government-debt-to-GDP measure, for which they are in respectively  the third and the fourth place in having the highest government debt in the EU.

Estonia and Bulgaria have the lowest government debt in the EU.

IMF Euro Zone Inflation Forecasts to 2017 (WEO Fall 2012)

Greek inflation is slowing down tremendously, from more than 4 percent in 2010 to expected deflation in 2013 and 2014. The other countries are expected to have their inflation rates to be relatively close to the EU average. Lower in Spain and Italy and higher in Germany.

Bondvigilants

Some Convergence Actually Took Place In The Euro Zone

This graph, from a presentation of the ceo of the Dutch Central Bank, shows that some convergence actually  took place since the implementation of the Euro. The graph shows the difference in the growth of the listed countries with the growth of Germany. Especially Ireland, Greece and Spain grew a lot faster than Germany. In 2007 that difference was even 40 percent for Ireland, cumulatively. Portugal and Italy were not able to generate more growth than Germany.

DNB

One of the causes for this convergence may be that Ireland, Spain and Greece saw their real interest rate decline significantly. This graph shows that the extra growth was actually partly financed with borrowed money:

DNB

Also this was accompanied by inflation:

DNB

IMF Euro Zone GDP Forecasts (WEO Fall 2012)

This graph shows the latest IMF forecasts for the GDP growth rates for a number of selected countries. For most countries the next few years won't be easy, but will see GDP growth rates get out of negative territory gradually. Greece is even expected to grow by more than three percent from 2016.

Bondvigilants

IMF Euro Zone Unemployment Rate Forecasts (WEO Fall 2012)

This graph shows the unemployment rates the IMF has projected for several Euro Zone countries. Note that the institute expects the high Greek unemployment to go down faster than the high unemployment in Spain.

Bondvigiliants