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Greece did not suffer from an asset bubble, the other countries you mentioned did. Interest rate convergence was one of the criteria for introduction of the Eu
by mohawk 11y ago
Greece did not suffer from an asset bubble, the other countries you mentioned did.
Interest rate convergence was one of the criteria for introduction of the Euro:
https://en.wikipedia.org/wiki/Euro_convergence_criteria#Criteria https://en.wikipedia.org/wiki/Euro_convergence_criteria#Crit...
Point 5, long-term interest rates
The ECB's mandate is to worry about price-stability, not the German economy
https://www.ecb.europa.eu/mopo/intro/objective/html/index.en.html https://www.ecb.europa.eu/mopo/intro/objective/html/index.en...
Practice may of course deviate from theory, but i don't think it did much here.
German unification was 1990, we are talking about the time around 2000. Many central banks in the world lowered interest rates after the dot-com crash & 9-11 and the economic slowdown that followed.
You might argue that this caused asset bubbles, and i would tend to agree.
If it were up to me, i would add "avoiding asset bubbles" to the ECB mandate, if you want to you could regard it as a kind of price-stability mandate for assets.
- jackgavigan 11y ago> Greece did not suffer from an asset bubble... Greece's House price index (2007=100) shows a cumulative rise of 44.3 from 2001 thru 2007, and a cumulative drop of 49 from 2008 thru 2014 - http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.A.GR.N.TD.00.4.R1 http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.A.G... As of February 2014, "Greece [had] suffered the second biggest property crash in the EU since the debt crisis began." - http://www.theguardian.com/world/2014/feb/28/home-ownership-greece-property-market http://www.theguardian.com/world/2014/feb/28/home-ownership-... From Q3'08 to Q2'14, Greek house prices declined by 41.6% in real terms - http://www.bankofgreece.gr/BogDocumentEn/PRODEXPO_Oct_2014.pdf http://www.bankofgreece.gr/BogDocumentEn/PRODEXPO_Oct_2014.p...
- mohawk 11y agoThanks for the numbers, you are right. The charts are remarkably similar for Greece http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.Q.GR.N.TF.00.3.00 http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.Q.G... Spain http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.Q.ES.N.TD.00.0.00 http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.Q.E... Portugal http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.Q.PT.N.TD.00.5.00 http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.Q.P... But i would still claim that in the case of Greece, the (masked) public debt crisis preceded the asset bubble whereas in Spain, Portugal and Ireland the public debt crisis followed the asset bubble.