3 ms·

> It's also unclear what exactly "too much debt compared to GDP" means. What number is too much, and under what circumstances? It is clearly meant according to

by wolfgke 11y ago

> It's also unclear what exactly "too much debt compared to GDP" means. What number is too much, and under what circumstances? It is clearly meant according to the Maastricht criteria: https://en.wikipedia.org/wiki/Euro_convergence_criteria https://en.wikipedia.org/wiki/Euro_convergence_criteria "2. Government budget deficit: The ratio of the annual general government deficit relative to gross domestic product (GDP) at market prices, must not exceed 3% at the end of the preceding fiscal year (based on notified measured data) and neither for any of the two subsequent years (based on the European Commission's published forecast data)." "3. Government debt-to-GDP ratio: The ratio of gross government debt (measured at its nominal value outstanding at the end of the year, and consolidated between and within the sectors of general government) relative to GDP at market prices, must not exceed 60% at the end of the preceding fiscal year. Or if the debt-to-GDP ratio exceeds the 60% limit, the ratio shall at least be found to have "sufficiently diminished and must be approaching the reference value at a satisfactory pace"." Or in easier words: > https://en.wikipedia.org/wiki/Maastricht_Treaty https://en.wikipedia.org/wiki/Maastricht_Treaty "2. Government finance: Annual government deficit: The ratio of the annual government deficit to gross domestic product (GDP) must not exceed 3% at the end of the preceding fiscal year. If not, it is at least required to reach a level close to 3%. Only exceptional and temporary excesses would be granted for exceptional cases. Government debt: The ratio of gross government debt to GDP must not exceed 60% at the end of the preceding fiscal year. Even if the target cannot be achieved due to the specific conditions, the ratio must have sufficiently diminished and must be approaching the reference value at a satisfactory pace.".

Amezarak 11y ago
> It is clearly meant according to the Maastricht criteria: It was not clear to me, but thank you for the explanation. What insanity that the European nations would cripple their economic tools with a treaty like this. There are times when debt/GDP absolutely should be in great excess of 3%, and times when debt must be greater than 60%, and no country should require 'approval' to tackle their own economic problems. Fortunately, I suppose, it looks like these sections of the treaty are not enforced very strongly.
- toyg 11y ago
  > it looks like these sections of the treaty are not enforced very strongly. Or at all, for certain countries. Germany and France routinely break pretty much any parameter, in various directions, and absolutely nothing happens. But as soon as a minnow spends a little bit more, oooh boy...
  - wolfgke 11y ago
    > Or at all, for certain countries. Germany and France routinely break pretty much any parameter, in various directions, and absolutely nothing happens. Germany has been very strict on their own budget in the last four years and tries hard to satisfy the Masstricht criteria. For the following data, cf. http://www.tagesschau.de/wirtschaft/wirtschaftsdaten104.html http://www.tagesschau.de/wirtschaft/wirtschaftsdaten104.html budget deficit/surplus of EU countries (% of GDP) (Haushaltsdefizite/-überschuss der EU-Länder): -3 is allowed, Germany has 2012: +0,1 % 2013: +0,1 % 2914: +0,7 % 2015 (estimate): +0,6 % 2016 (estimate): +0,5 % which is (IMHO) exemplary. From the Maastricht criteria only "total debt (% of GDP)" (Gesamtschulden (in % des BIP)) is problematic, since there only 60% is allowed. But also here Germany is working very hard to satisfy this criterion: 2012: 79,3 % 2013: 77,1 % 2014: 74,7 % 2015 (estimate): 71,5 % 2016 (estimate): 68,2 %
    - gutnor 11y ago
      Well it does illustrate how transient "exemplary" is. Ireland and Spain were exemplary in the years leading to the crisis, beating Germany in the debt and surplus metrics.[0][1] Media like to show "feel good metric" to put a patriotic positive spin (us good, them bad) on the result of regular political arm-wrestling between temporarily weaker countries. You won't see those metric in France however the media will use different things to achieve the same effect. The idea is to build a moral high horse so that your people can forget that over there, few people have benefited but a lot will pay. [0] http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=teina225&plugin=1 http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&l... [1] http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1&language=en&pcode=teina200 http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1...
toyg 11y ago
The problem with the Maastricht criteria is that they reflect the reality of 25 years ago. They were basically drawn by a bunch of French civil servants (some of them quite young), at a time when France had a 5% ratio and the French government was looking for excuses to reduce it a little bit. 5% was off the table for the abovementioned reason, 1 or 2% would have been too harsh, so 3% was born. This at a time when overall growth in what is now the Eurozone was much higher than it has been almost ever since. There is no real economic study that says "3% good, 4% bad" (and it would be idiotic, really -- you need many more parameters to judge a State credit-worthiness, as Japan proves every day). It's all about politics.
gutnor 11y ago
The bit that probably make GP puzzled - out of the EURO countries, only Estonia, Finland, Latvia, Lithuania, Luxembourg, Slovakia matches those requirements. Or less than 20 millions out the 330 million people living in the EURO zone.[0] The Debt-To-GDP ratio is a mess. You can see the combined effect of austerity and crisis on some economies. And countries like France have only been twice within the target and not recently. [1] At the end of the day, as many things with the EU, the real rule is around the interpretation of what means "satisfactory pace" and "exceptional cases" - which is regular political hidden under a layer of pseudo-righteous mathematics. (which is not unusual at all for an international treaty) [0] http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=teina225&plugin=1 http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&l... [1] http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1&language=en&pcode=teina200 http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1...
- nickik 11y ago
  The problem is that eurocrats think pushing their project is more important then the rules to make it a workable projects. The rules are more or less lies that they allowed to be written to convince people that the EU is a good thing, but then they ignored the rules. The EU is a horrible project and a complet failure in every way.

by wolfgke 11y ago

Amezarak 11y ago

> It is clearly meant according to the Maastricht criteria: It was not clear to me, but thank you for the explanation. What insanity that the European nations would cripple their economic tools with a treaty like this. There are times when debt/GDP absolutely should be in great excess of 3%, and times when debt must be greater than 60%, and no country should require 'approval' to tackle their own economic problems. Fortunately, I suppose, it looks like these sections of the treaty are not enforced very strongly.

toyg 11y ago
> it looks like these sections of the treaty are not enforced very strongly. Or at all, for certain countries. Germany and France routinely break pretty much any parameter, in various directions, and absolutely nothing happens. But as soon as a minnow spends a little bit more, oooh boy...
- wolfgke 11y ago
  > Or at all, for certain countries. Germany and France routinely break pretty much any parameter, in various directions, and absolutely nothing happens. Germany has been very strict on their own budget in the last four years and tries hard to satisfy the Masstricht criteria. For the following data, cf. http://www.tagesschau.de/wirtschaft/wirtschaftsdaten104.html http://www.tagesschau.de/wirtschaft/wirtschaftsdaten104.html budget deficit/surplus of EU countries (% of GDP) (Haushaltsdefizite/-überschuss der EU-Länder): -3 is allowed, Germany has 2012: +0,1 % 2013: +0,1 % 2914: +0,7 % 2015 (estimate): +0,6 % 2016 (estimate): +0,5 % which is (IMHO) exemplary. From the Maastricht criteria only "total debt (% of GDP)" (Gesamtschulden (in % des BIP)) is problematic, since there only 60% is allowed. But also here Germany is working very hard to satisfy this criterion: 2012: 79,3 % 2013: 77,1 % 2014: 74,7 % 2015 (estimate): 71,5 % 2016 (estimate): 68,2 %
  - gutnor 11y ago
    Well it does illustrate how transient "exemplary" is. Ireland and Spain were exemplary in the years leading to the crisis, beating Germany in the debt and surplus metrics.[0][1] Media like to show "feel good metric" to put a patriotic positive spin (us good, them bad) on the result of regular political arm-wrestling between temporarily weaker countries. You won't see those metric in France however the media will use different things to achieve the same effect. The idea is to build a moral high horse so that your people can forget that over there, few people have benefited but a lot will pay. [0] http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=teina225&plugin=1 http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&l... [1] http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1&language=en&pcode=teina200 http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1...

toyg 11y ago

The problem with the Maastricht criteria is that they reflect the reality of 25 years ago. They were basically drawn by a bunch of French civil servants (some of them quite young), at a time when France had a 5% ratio and the French government was looking for excuses to reduce it a little bit. 5% was off the table for the abovementioned reason, 1 or 2% would have been too harsh, so 3% was born. This at a time when overall growth in what is now the Eurozone was much higher than it has been almost ever since. There is no real economic study that says "3% good, 4% bad" (and it would be idiotic, really -- you need many more parameters to judge a State credit-worthiness, as Japan proves every day). It's all about politics.

gutnor 11y ago

The bit that probably make GP puzzled - out of the EURO countries, only Estonia, Finland, Latvia, Lithuania, Luxembourg, Slovakia matches those requirements. Or less than 20 millions out the 330 million people living in the EURO zone.[0] The Debt-To-GDP ratio is a mess. You can see the combined effect of austerity and crisis on some economies. And countries like France have only been twice within the target and not recently. [1] At the end of the day, as many things with the EU, the real rule is around the interpretation of what means "satisfactory pace" and "exceptional cases" - which is regular political hidden under a layer of pseudo-righteous mathematics. (which is not unusual at all for an international treaty) [0] http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=teina225&plugin=1 http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&l... [1] http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1&language=en&pcode=teina200 http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1...

nickik 11y ago
The problem is that eurocrats think pushing their project is more important then the rules to make it a workable projects. The rules are more or less lies that they allowed to be written to convince people that the EU is a good thing, but then they ignored the rules. The EU is a horrible project and a complet failure in every way.