European Investment Correspondent
Jeremy's Feed
Apr 23, 2012
Apr 23, 2012
via MacroScope

Never mind the pain, feel the austerity

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Austerity in the euro zone seems to be working — at least as far as the headline,  dry, soulless numbers of  budget balancing are concerned. Bailed out  Greece and Ireland have reported substantial improvements in last year’s profligacy performance.  Spain, while going in the wrong direction, at least has the satisfaction of being told it is not telling fibs.

We will get to the smoke and mirrors in a bit.

First Greece, the euro zone’s poster child for budget ill-discipline. The 2011 budget deficit to GDP ratio  – basically the annual overspend — came in at 9.1 percent. This may seem like a lot given the EU target is 3 percent, but it was down from 10.3 percent  a year earlier and from 15.6 percent the year before that. Furthermore, if you take out all the debt repayments costs that Athens has to make , you end up with only 2.4 percent (although in truth that is like pretending you don’t have a mortgage).

Apr 19, 2012
Apr 19, 2012
Apr 17, 2012
Apr 16, 2012
Apr 13, 2012
Apr 13, 2012
via MacroScope

The Law of Diminishing Greeks

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The Law of Diminishing Returns  states that a continuing push towards a given goal tends to  decline in effectiveness after a certain amount of effort has been expended. If this weren’t the case, Usain Bolt would be able to run the mile in  less than 2-1/2 minutes.

From an economic standpoint, this law now seems to be fully in force in Greece. The latest jobs figures from the twice-bailed out euro zone country paint a bleak numerical picture of the impact of unrelenting austerity in ordinary Greeks, regardless of whether it was self-inflicted or not. To wit:

Apr 12, 2012
Apr 12, 2012
    • About Jeremy

      "Chief Desk Editor, Economics & Markets, based in London. Previously European Investment Correspondent, Bureau Chief for Greece and Cyprus in Athens and Senior Correspondent for the European Union in Brussels. Began career covering U.S. politics in Washington D.C."
      Joined Reuters:
      1990
      Languages:
      English, French, some Greek
      Awards:
      State Street Investment Correspondent of the Year, 2007
      Part of Emmy-nominated team for
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