Friday, December 09, 2011

Government Debt and the economy



The above chart of Government debts for Germany, France, Spain, Portugal, Iceland, United States and United Kingdom makes clear some facts.

1. Running a surplus during the boom changed nothing, maybe even made things worse.  Iceland and Spain both ran large surpluses during the boom and neither economy benefited at all, in fact nations taht improved their balance sheet during this time tended to do worse after the 2008 bust.

2. Event is essentially global and everyone was impacted.

3.  Event was more a factor of exposure to housing boom and related banking sector, and not government spending.

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