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Why is it that northern Europe is doing so well (relatively), and southern Europe so badly? Is it something more than corruption in Greece and Italy???
by Roboprog 15y ago
Why is it that northern Europe is doing so well (relatively), and southern Europe so badly?
Is it something more than corruption in Greece and Italy???
- parfe 15y agoI heard the situation explained as Italy and Greece had systemic spending/borrowing issues before joining the Euro zone. Everyone knew this and thought once those countries no longer had their own currencies they would shape up. Unfortunately, the opposite happened and these nations started borrowing more thanks to their new found access to cheap money Germany and France's economies basically subsidized the borrowing. Rather than cutting back on benefits, slimming corporate and government budgets, ending nepotism hires and enforcing sane tax policies, Italy and Greece just continued their lifestyles all while issuing more and more Euro backed debt. Now the party ends.
- nhaehnle 15y agoWithin the Eurozone, a large part of the problem is the relative development of wages. Obviously wages are higher in, say, Germany than in Greece. However, the rate of change of the quotient of wages divided by productivity has been higher in the southern nations relative to Germany and other northern nations. In fact, in the particular case of Germany, the quotient has decreased, i.e. German employees have been screwed by their own political and business elite. The result is that German exports are cheaper than they should be, which creates trade and therefore balance of payments imbalances.