I wish the title of this post was really my band name and 1st album title but alas it’s not. Debt, debt, and more debt. We are in a serious amount of debt globally, nationally, and as individuals. All of whom I can expand on in upcoming posts but for now I reserve my dismay at the situation in Europe or, more precisely, the PIIGS – a nasty acronym relating to sovereign debt markets used by financial types likes bond analysts, the international press and academics alike when referring to the economies of Portugal, Ireland, Italy, Greece, and Spain.
There has been much written and said in the past year about the PIIGS but just how bad is it? This article from the Economist (from May2010) sums it up nicely replete with charts and interactive graphics showing just how messed up troubled the euro-zone PIIGS are.
Portugal, Ireland, Italy, Greece and Spain share the currency (the euro) and an ugly acronym (the PIIGS). Each lost competitiveness after 1999, seeing prices and wages rise more quickly than the euro-area average. As members of the euro, the PIIGS cannot devalue their currencies, making the struggle out of recession harder. Portugal, Ireland, Italy, Greece and Spain share the currency (the euro) and an ugly acronym (the PIIGS). Each lost competitiveness after 1999, seeing prices and wages rise more quickly than the euro-area average. As members of the euro, the PIIGS cannot devalue their currencies, making the struggle out of recession harder.
Add high wage costs, poor productivity, love of cheap imports, and running of huge deficits, the perfect storm many have predicted, is finally here. The economic havoc she reeks worldwide is evident and more remains to be seen but the fiscal health of the PIIGS will remain in question as concerns about the health of banks in Europe have escalated and the tenuous fiscal and financial conditions continue to weigh on the Euro. On the sorta bright side, the dollar has gained in recent months in large part to Europe’s woes and the resilience of our own economy.
The debt crisis is very, very real. And while the battle rages on in DC on whether to practice austerity or stimulate the economy with more state aid, unemployment benefits, small business loans, etc, the regular folks are left to pick up the pieces of a battered economy. But at least the problems are no longer being hidden or shuffled, all this bad news has been out there plain as day. OK world, accountability is the order of the decade. Time to move on…and up from here.
