European Debt

Discussion in 'Economics' started by morganist, Jul 26, 2010.

  1. As requested the excel file with EU debt is attached.

    The table is evaluated below with the mean average, standard deviation.

    The boxes on the left that have a red arrow in the corner give you information on the cells if you put your mouse above.

    Do you see what I mean now.

    Before you ask the figures are from Eurostat.
  2. Thanks appreciated. I may to have a chat with my Czech in-laws after this. They may have more money in on bank than the government insures. Thanks again.
  3. I don't really understand... So you've taken annual budget deficit/GDP from 2000 and summed them up, right? The "Cumulative Total" row is supposed to give you the latest public debt/GDP in %?

    Firstly, there's some issues with your calculation. Secondly, even if your calculations are correct (which they aren't), figures like 41% debt/GDP is something the Western economies can only dream about.
  4. No the figures are the net deficit or surplus each year. The cumulative total is just the cumulative total of the figures without the compounded interest. The figures are not so much about how much debt but how dependent they are on debt. If they have continual deficits it means they are dependent. If they continual surpluses it means they are not dependent. If they have high volatility it suggests they borrow when in a downturn as it follows the business cycle and in my opinion suggests they are very centrally controlled or dependent on central intervention.

    The figures look at the debt history to see how each country borrowed in the past. It has little to do with the current level of debt but could indicate what it might be. High deficits mean high dependency on outside investment and a poor free market especially if there is a high standard deviation.

    This is where I got the data from.

    Remember the current debt figures are important but the reason why they got there is also important. If it was a short period of high borrowing in the later years it indicates they are strongly affected by the global market. If they have long term debt it indicates there is a deeper problem. The countries with the long term debt are less likely to succeed without action.

    Remember the figures are not the annual debt it is the annual borrowing or surplus. So if they borrowed five percent of gdp one year it would show five percent not the five percent added to the existing debt. The figures reflect habits not the cumulative amount. I thought the cumulative total could be useful to show the affect of each countries decisions over that period without the existing debt taken into consideration.

    Is that better now.
  5. No, it's not better now...

    Why do you start with 2000? Why do you sum up the figures, if not to arrive at some sort of a debt/GDP number? Finally, what's wrong with data publicly available from the IMF already?

    You will find it here (scroll down to the "Economies of Member States" section):

    It's pretty exhaustive and it really doesn't suggest that there's something particularly horribly wrong with Poland or the Czech Republic.
  6. The reason I start with 2000 is because that is when the figures start. The reason for this is because this is when European statistical regulation was enforced more heavily to regulate the SGP.

    The reason I sum up the figures is just to give an idea of the total borrowing habits, it is just another measure and I had to do it to get the mean average. You are right it does give me a debt number the accrued debt over the period (without interest), this show me how dependent they are on debt and gives me an idea of how the free market works (is it limited or constrained etc). Also if you do a statistical analysis you need to know the total amount so you can work out the other things like the interquartile range and the spreads and variances etc. For example if they have cumulative borrowing and they have a high end period quartile range it indicates they borrowed to help with the global situation and suggests they are sensitive to the credit crunch.

    Finally this is publicly available data from Eurostat. I cannot believe you get your information from wiki. First you don't know if it is true plus there is no analysis.

    It really does suggest there is something wrong. There is a history of high borrowing even without the current situation. The fact that you think the analysis is exhaustive worries me. It only show the cumulative total, mean average, standard dev, min and max. These are the basic statistical tools for analysis.

    I predicted Hungary would be in trouble a couple of months ago using this data you can look back at my posts. Perhaps I am wrong but my money is that Slovakia, Czech Republic, Poland, Malta and a couple of others will be the next issue.

    Have you not done statistical analysis before. If anything I thought this would be too basic. I was going to do things like regression, maximisation and minimisation etc to do predictions but I thought that would be a bit too much.
  7. Well, the Wiki data comes directly from the IMF World Economic Outlook. The link is provided, so I don't really see why you'd assume that this information is less trustworthy than the Eurostat data. Secondly, you can't just look at the deficit figures in countries like Poland and the Czech Republic out of context. Have you seen what GDP growth was like in these countries during the period 2000-2007? Surely, 5% budget deficit in this context is an entirely different story?

    Anyways, in the final reckoning, as of Apr 2010, here's what we've got, according to the IMF:
    Poland: GDP growth 1.7% yoy, public debt/GDP 51%, deficit/GDP -7.1%
    Czech Rep: GDP growth -4.3% yoy, public debt/GDP 35.4%, deficit/GDP -5.9%
    France: GDP growth -2.19% yoy, public debt/GDP 77.6%, deficit/GDP -7.5%
    Italy: GDP growth -5.04% yoy, public debt/GDP 115.8%, deficit/GDP -5.3%

    Now pls tell me who looks worse in this simple comparison?
  8. Like I said it is my opinion that the eastern block countries will be next. We have different strategies otherwise we would agree on everything. I still don't think you see my point. The nature of the spending habits are as important as the level of debt because they indicate the reaction of government and the strength of the private sector. I don't feel I have to justify or explain my point again, but I think you are still ignoring the point I am making.

    The figures you have just given seem a bit strange to me too. I will have another look.

    One final point. You state I have ignored the growth rate. That is true. However another point I would like to make is if there is high debt to attain that growth rate it indicates the economy requires outside investment. This in itself is reason for concern due to the lack of funds available and increasing cost. When the ability to borrow is taken away will they still be able to maintain growth?

    By having to borrow for a long period whether they have growth or not means they are dependent on that debt. What if that debt is no longer available to them. Can they still grow? Long term debt figures give more than just the current situation it suggests previous actions and strengths and weaknesses of economies. I take it you are not a fan of statistics?
  9. Martinghoul what your outlook on the US and the world economy.

    Everything back to normal ? S&P new highs in a few years?
    #10     Jul 27, 2010