Difference Between Europe and the United States: Larger Transfer Payments

Please click on the graphs to view a bigger size.


This first graph shows the difference between European payments and European taxes paid received by all the member states.

(Where Duitsland=Germany, Belgie=Belgium, Nederland=Netherlands, Verenigd Koninkrijk=UK, Griekenland=Greece)

This next graph shows the same as the first graph, yet now for the United States. Please especially look at the difference in the scale of the graphs.

Created by Jessse Frederik 

What Internal Devaluation in Greece Looks Like

As you can see wages in greece have declined by more than 20 percent nominally from 2010 up until 2014.

Why Draghi Changed His Tone at Jackson Hole

Draghi's speech at Jackson Hole was different compared to his last speech at the ECB's governing council meeting. The ECB has a mandate of inflation just under two percent. What Draghi always underlines in this speeches is that, while inflation in the short run may deviate from the target, inflation expectations are at just below 2 percent. What you can see in the next graph is that inflation expectations have actually been declining quite fast. This probably was the reason Draghy changed his tone.

Business Insider

Euro Zone Inflation Rates Distribution Core Versus Periphery (2009-2014)

Notice that the distribution of the periphery inflation rates is much larger, more different levels in inflation, than in the core countries.

Vincent - Reuters

Total Debt (Public and Private) in the United States, Euro Zone, China, Japan and the U.K.

This graph shows the total debt (government, households and firms) for the biggest economies in the world. First, what I think is remarkable is that total debt is for the developing world (except Japan) all around 250 percent of GDP. Second, total debt did not decline since the crisis. In Japan and China (perhaps as expected) it is even rising again.

BBVA Research

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

Private Debt As A Percentage of GDP (2013)

Data is already from a year ago, yet it is still very interesting. It shows very clearly that private debt to gdp is higher in developed countries versus developing countries. This might very well have something to do with property rights. Ireland is clearly on top with almost 300 percent of private debt to GDP. While the Nordic countries are known for their low government debt levels, Denmark and Sweden are second and third in this ranking. Notice Germany which is on the bottom half. Also Italy and Greece are far from the top.

Shahin Kamalodin (Economist at DNB)

Portugal Country Chart Spring 2014

Today Portugal issued 10-year bonds for the first time since it received a bailout from the EU and the IMF in 2011. Average yield of today's issuance stands at 3.58 percent. In May 2014 the bailout ends and with these yields Portugal may not need an extension. The chart of this post shows government debt, government deficit (inverted) and unemployment rate of Portugal from the start of the bailout until 2015 (projections for 2014 and 2015).

While the budget deficit has decreased in 2013 versus 2012, the rate of unemployment remains relatively high. The government debt is also expected to keep rising to almost 130 percent in 2015.

Euro Zone Inflation 2008 - Q1 2014

This graph by the Wall Street Journal shows inflation in the Euro Zone from 2007 until the most recent data. Since 2012 a downward trend has started. With Spanish inflation even becoming negative, the inflation rate in the Euro Zone is nearing it's lowest rate since 2010. Will the ECB act to get inflation closer to it's target of just below 2 percent?

Twitter

Spanish Bond Yields at 8 year low

Spanish bond yields have come down from 7.5 percent in 2012 during the height of the crisis to 3.5 percent now. This is a dramatic decrease with yields now at levels not seen years before the sovereign debt crisis erupted.

Matthew Phillips

Projected 2013 Government Deficit

With OECD data this chart graphs the projected government balance for 2013, for most developed and emerging countries. Japan has the biggest projected deficit, of over 10 percent. Slovenia, Ireland and the U.K are also running big deficits. Contrary to the number of countries with a deficit, there are only a few that are expected to have a budget surplus. Examples are Norway and Switzerland.

Sober Look

Banking Sector: Percentage of GDP Across the World

This chart shows the banking sector in terms of assets as a percentage of GDP forcseveral continents. What stands out, are the extremely large banking sectors in European countries.

ZeroHedge

Cyprus Bailout Pictured

After many days of uncertainty finally a deal has been made between the Troika and Cyprus. The island was required to raise 5.8 billion euro's (bail-in), when Europe would contribute 10 billion (bailout) to save the banks in Cyprus hit by huge losses incurred on Greek assets. In this deal Laiki bank was agreed to shut down, which means that Senior bondholders and savers over 100.000 (also for Bank of Cyprus deposit holders) are seized by the government.

Reuters

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.

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

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

2013 Greek Budget: More Austerity

The Greek Government will again implement significant budget cuts in 2013, which it agreed on in November with the Troika. Pensions and state salaries are the main places where the cuts will take place. The reduction in the deficit consists for about 4/5th of budget cuts and 1/5 of tax increases. This total planned tax increases and budget cuts in 2013 are 9.4 billion euro's.

The reduced budget deficit will still increase the government debt however.

Note: the Greek parliament has approved the budget in November.

Sovereign Credit Rating Update: Greece Upgraded

An update in the Sovereign Credit Rating chart from Reuters, which shows the credit ratings for the Western economies from the three major rating institutions. The difference with the last chart is that Greece has been upgraded by S&P from 'Selective default' to 'Very high risk'.

Reuters

Greek Debt Composition 2012

One reason the Northern European countries bailout out Greece was because banks, for example German en French banks, heavily invested in Greek government debt. Since then the European Commission (EFSF) and the ECB have bought quite a lot of debt from the banks. This means that the bond holders of Greek debt shifted from only private parties to mostly public holders now.

This means that when there would be a second round of writedowns on Greek debt the European tax payer will have to pay as well.