Austerity cuts raised the debt-to-GDP ratios of Eurozone crisis states.

Evidence

So PIIGS cut their budgets and as their economies shrank, their debt loads got bigger not smaller, and unsurprisingly, their interest payments shot up. Portuguese net debt to GDP increased from 62 percent in 2006 to 108 percent in 2012, while the interest that pays for Portugal’s ten-year bonds went from 4.5 percent in May 2009 to 14.7 percent in January 2012. Ireland’s net debt-to-GDP ratio of 24.8 percent in 2007 rose to 106.4 percent in 2012, while its ten-year bonds went from 4 percent in 2007 to a peak of 14 percent in 2011. The poster child of the Eurozone crisis and austerity policy, Greece saw its debt to GDP rise from 106 percent in 2007 to 170 percent in 2012 despite successive rounds of austerity cuts and bondholders taking a 75 percent loss on their holdings in 2011. Greece’s ten-year bond currently pays 13 percent, down from a high of 18.5 percent in November 2012. — Mark Blyth, Austerity, 30

Categorization

• XREF: Direct quantitative evidence for the core thesis Mattei’s foundational austerity scholarship builds on — that debt ratios rose precisely where austerity was imposed. — connects to: The IMF itself admitted Eurozone fiscal multipliers were underestimated 1.5-fold — Mark Blyth, Austerity: The History of a Dangerous…, 586; Austerity increased rather than reduced debt in the Baltic states. — Mark Blyth, Austerity: The History of a Dangerous…, 608; Austerity transmitted sovereign-risk to the banks that held the bonds. — Mark Blyth, Austerity: The History of a Dangerous…, 31 (+8 more)

Broader Connections

• Austerity failed to reduce Greek debt-to-GDP projections #exemplifies (0.95) — Mark Blyth, Austerity, 201
• Austerity transmitted sovereign-risk to the banks that held the bonds. #expands (0.80) — Mark Blyth, Austerity, 31
• European bank exposure to periphery sovereign debt reached dangerous multiples of national GDP #expands (0.80) — Mark Blyth, Austerity, 239
• Europe’s rising debt ratios resulted from private financial crisis, not government profligacy #complicates (0.80) — Mark Blyth, Austerity, 149
• Denmark’s austerity cuts occurred during a boom, not a slump #qualifies (0.72) — Mark Blyth, Austerity, 564
• The 2008 crisis pushed whole nations toward bankruptcy and austerity #responds-to (0.70)